Article: Psychology in negotiations: What you should know about perception, cognition and emotions

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Psychology in negotiations: What you should know about perception, cognition and emotions

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Negotiation is an essential soft skill for leaders and professionals to outperform in today’s hyper connected business environment.
Psychology in negotiations: What you should know about perception, cognition and emotions

As complex interactions become the norm in businesses, skills such as persuasion, collaboration, critical reasoning, problem-solving, negotiation are growing in demand. On the face of it, negotiation may look like a process of coming to an agreement/disagreement, but in reality it is heavily reliant on human psychology. Therefore, to master the skill of negotiation, it is essential to first understand the basics of human psychology. 

What shapes great negotiation skills? 

Research on negotiation covers a wide ground – on how disparate and diverse parties arrive at a mutually agreeable pact. The building blocks of all social encounters are perception, cognition, and emotions. Framing is a critical element because negotiators rely on the strategic use of information to define and articulate a negotiating issue or situation. Framing is the subjective mechanism through which people evaluate and make sense of the situation. As a skill, framing helps us focus, shape and organize the information around us, and this extends to negotiation situations as it helps make sense of complex realities. There are three common frames:

  • Interests: people talk about their ‘positions’ but often what is at stake is their underlying interest.
  • Rights: people may be concerned about who is ‘right’ – that is, who has legitimacy, who is correct, and what is fair.
  • Power:  people may wish to resolve a conflict based on who is stronger.

Frames shape what the negotiating parties define as the key issues and how they talk about them. And as the negotiation evolves, frames change.

Understanding perception and its errors

Perception is the process by which persons connect to their environment. It is a sense-making process where people interpret their environment to respond appropriately. The fact is that the environment is more complex than ever, hence interpreting it aptly is not always easy. People, therefore, develop ‘shortcuts’ to process and connect, which may at times lead to perceptual errors like: 

  • Stereotyping: It involves assigning attributes to a person solely based on the membership to a particularly large group or category such as his or her social, racial, religious or sexual orientation, etc. 
  • Halo effect: This involves generalizing many attributes based on the knowledge of one attribute of the individuals without any consistent relationship between them. 
  • Selective perception: It is the process by which the human mind singles out certain information that supports a prior belief and filters out information that does not confirm the belief.
  • Projection: Negotiators may assign to others, the characteristics or feelings that they possess themselves. This usually arises out of a need to protect one’s self-concept

Understanding cognition and its errors

Cognition is about how we acquire knowledge and understanding through thought, experience, and the senses. Negotiators tend to make systematic errors when they process information.  These errors are collectively called cognitive biases and they tend to hamper a negotiator’s performance and outcomes. 

  • Irrational escalation of commitment: Negotiators may maintain a commitment to a course of action even when that commitment constitutes irrational behaviour. This can be avoided by employing an advisor who works as a ‘reality check’. 
  • Mythical fixed-pie beliefs: In this type of error,  negotiators assume that all negotiations (not just some) involve a fixed pie. This is avoided by consciously introducing accountability in the negotiation context. 
  • Anchoring and adjustment: Negotiators start with an initial idea and adjust their beliefs based on this starting point. Because the initial “anchor” might be based on faulty or incomplete information, the outcome can be misleading. This error is best avoided through periodic checks. 
  • Issue framing and risk: In this cognitive bias, people decide on options based on whether the options are presented with positive or negative connotations; e.g. as a loss or as a gain. For example, people tend to avoid risk when a positive frame is presented but seek risks when a negative frame is presented.
  • Availability of information: This bias is a result of information being presented in a vivid or attention-getting way, thereby making it easier to recall that particular information and getting influenced by it. 
  • The winner’s curse: Negotiators often tend to settle quickly on an item and then subsequently feel discomfort about a win that comes too easily.

Understanding emotions and errors: 

Negotiations create both positive and negative emotions. Positive emotions generally have positive consequences for negotiations, creating a positive attitude towards the opponent, and leading to more integrative processes. Positive emotions are a result of fair processes, such as favourable social comparisons. On the other hand, negative emotions may lead parties to define the situation as competitive or distributive, leading to conflict escalations and retaliations. Emotions can be used strategically as negotiation gambits to achieve one’s desired outcome.

Each of the above impedes achieving proper negotiation-outcomes, and hence must consciously be avoided. For this, the negotiating parties must start with developing awareness about these biases, and accepting that they may be exhibiting some or all of them. Openly discussing the possible biases in a structured manner within the team and with counterparts is an essential step in any negotiation. To do this, professionals must understand the theory as well as learn to apply it practically. This open approach helps acknowledge the possible pitfalls and can go a long way in fruitful negotiations.

To find out how these factors play out in a real business environment and how to win a negotiation, register for a course on winning negotiations by FLAME University.

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Topics: Executive Coaching, Leadership, #FutureReadyHR

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