Do Not Assume a Fixed Pie During Your Negotiations

21.12.2016 |

Episode #2 of the course Psychological tools and traps in negotiation by George Siedel


Welcome to the second lesson of the course. The key message in this lesson: beware of the fixed pie assumption in your negotiations.

We live in a world dominated by competition that is characterized by sporting events. Someone wins the Masters golf tournament; others lose. Someone wins the Wimbledon tennis tournament; others lose. One team wins the World Cup; other teams lose.

We bring this sense of competition into negotiations by assuming that we are in competition for slices in a fixed pie in which one side wins and the other side loses. As Bazerman and Moore note, the fixed pie assumption is a fundamental bias that distorts negotiators’ behavior: “When negotiating over an issue, they assume that their interests necessarily and directly conflict with the other party’s interests.”

After recognizing this bias, your challenge is to ask whether the other side’s interests are really in conflict with your own. By conducting an interests analysis that lists your and the other side’s interests side by side, you might be able to find interests that are not in conflict. For example, assume that two friends are negotiating to determine who should receive the biggest share of a gourmet anchovy pizza. Each side wants as much of the pizza as possible. That is their position. The pizza is the mythical—and literal—fixed pie.

However, what are each side’s interests, and are these interests really in conflict? When asked why they want the pizza, one person states that he wants the crust, which he uses to make croutons. The other person states that he wants only the center of the pizza because he doesn’t like pizza crust. By identifying these interests and recognizing that the fixed pie assumption is a myth in this negotiation, they are able to develop a solution that satisfies both interests.


Reactive devaluation

A special challenge in overcoming the mythical fixed pie assumption is what researchers call “reactive devaluation.” That is, when the other side in a negotiation makes a proposal, we react to it by devaluing it without considering the merits simply because it comes from the other side.

In one study by Stillinger and others, for example, the researchers gave an arms reduction proposal to individuals in the United States and told them that it came from President Reagan. Ninety percent thought that it was neutral or favored the United States. When the researchers gave the same proposal to other individuals and told them it came from President Gorbachev of Russia, this dropped to 44%. For a summary of reactive devaluation research, see this link, where other studies are cited.

I see the impact of reactive devaluation in my courses. I give students an exercise that involves litigation between their employer, a company that sells a software package, and its licensee. When the licensee proposes a reasonable settlement, most students reject the offer because they think that it must indicate that the licensee has a weak case. By focusing on the source of the proposal, the licensee, rather than on the substance of the offer, they miss an opportunity to negotiate an agreement that would avoid considerable litigation expense.

In the next lesson, we examine anchoring, an especially important tool that impacts your first offer strategy.

Best, George


Recommended book

Judgment in Managerial Decision-Making by Bazerman and Moore


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