Perception and Cognitive Biases

Chapter 5

Perception and Negotiation• The role of perception

– “Perception is the process of screening, selecting, and interpreting stimuli so that they have meaning to the individual.”

– Complex environments. Perceptual shortcuts

• Perceptual errors in negotiation– Stereotyping: assign attributes to another solely on basis

of other’s membership in a social or demographic group

– Halo effects: generalize based on one attribute.

– Selective perception: single out certain info to support a prior belief, filters out info that doesn’t confirm.

– Projection: ascribe to others the characteristics of feelings they possess themselves.

Stereotyping• “A distortion of the perceptual process where one

individual assigns attributes to another solely on the basis of the other’s membership in a particular social or demographic group.”

• Recognizing differences is NOT necessarily stereotyping.

• E.g., “Men are taller than women.”– Means “Comparing the average height of men to the

average height of women, the average height of men is greater than the average height of women.” This is a true difference, it is not a stereotype.

– Does NOT mean, “John is a man, therefore he is taller than most women, and also he’s better for the job.” This is stereotyping.

Types of Stereotyping• Not recognizing individual variance around a mean

– Though men are taller than women, there are many men who are shorter than many women and many women who are taller than many men.

• Inaccurate measure of mean– The average height of men is 5’8” and women 5’4.” But

is that data correct, old, skewed by ethnicity?

• Bundle– If men are taller, does that mean they are therefore also

more aggressive?

• Evaluation of stereotyped characteristics– Is it better to be tall or short?

More Cognitive Biases

• Mythical fixed-pie beliefs– “More for you means less

for me”

• Anchoring & adjustment– Small movements from a

stated point, regardless of reality

• Winners’ curse– Settle quickly, feel bad.

Also, buyer’s remorse

• Overconfidence – “The judge will obviously

agree with me.”

• Law of small numbers– Draw conclusions from

small sample.

• Self-serving biases– “I mess up, it’s bad luck.

You mess up, it’s your fault.”

• Ignoring of others’ cognitions (don’t listen)

• Reactive devaluation– “I don’t like you, so I

don’t value your opinion, even if it’s right”

Managing Misperceptions and Cognitive Biases in Negotiation• Be aware of biases, but hard to change

• Reframing– “Opportunity to gain” rather than “a loss”– Perceive situation from different

perspectives• Broader/narrower, bigger/smaller, riskier/less

risky

• Be flexible, invent options

How to Improve Communication in Negotiation• Use of questions

– Manageable vs. unmanageable questions (p. 125)

– “Why not” vs. “why” to unblock negotiations

• Listening – Active listening, reflecting– Levels of listening

• Role reversal– Actively arguing the other parties’ position

until they are convinced they are understood

Dollar Auction – A, B, C 3 Cognitive Biases

• Irrational escalation of commitment– Maintain commitment

to course of action even when irrational behavior

– Seek supportive evidence for that choice, ignore disconfirming evidence

– Save face, impression of expertise or control

• Framing – Perspective when

problem-solving

– A: positive frame. Gain.(risk-seeking)

– B: negative frame. Not lose. (risk-avoiding)

• Availability of information– C: low availability

– Instead, make vivid