We often say that we have to approach things without bias. This is true across a range of activities and scenarios, from entering into negotiation with another party to simply moving through an introduction with someone. Though we might say that we want to approach these situations without any bias, the reality is that we might not be able to.
Our experiences and knowledge inherently combine to create cognitive biases that we might not even be aware of, but they will inform our decisions. This can create ethical issues further down the line, whether we have been aware of our bias while making decisions or not.
Understanding cognitive bias and being self-aware enough to recognise it in ourselves is incredibly important. To succeed in the world of negotiation, we have to be prepared to learn how to do so, even if we are forced to reconsider our own opinions in doing so.
What is cognitive bias?
Cognitive biases are processes in the brain caused by the creation of mental shortcuts as we attempt to understand something. When encountering something new, people tend to filter it through their own experiences and preferences as a way to quickly process the new information. We, as human beings, are extremely good at this, and in doing so, we can quickly understand pretty complex topics. Unfortunately, it can also leave us open to errors in human judgment and poor choices further down the line.
They represent a complex juxtaposition. Sometimes they can be negative and unhelpful, others are adaptive and can give us a leg up where we might otherwise be completely lost. While they aren't inherently a bad thing (analysing past events can help to keep us safe and spot danger in our present after all), cognitive bias can get in the way of objective evidence that could better inform an outcome.
Cognitive psychology studies how we behave and the effects that bias can have. In the context of negotiation, psychology can help negotiators understand the various types of biases and how they can affect our own judgement.
What are the types of cognitive bias?
There are so many types of cognitive biases that we could not do them justice to name and explain all. Instead, we thought we'd list 10 of the most common that you might encounter, allowing you to then make better decisions at the negotiating table and become more self-aware of how you also use biased thinking.
1. Sunk cost fallacy
A sunk cost fallacy is based on looking backwards at resources already used in previous investments. Whether good or bad, what has happened before can have quite an effect on how we approach negotiations. To get around a sunk cost fallacy, we should focus on the resources available to us here and now, and not dwell on the past. Focus on making rational decisions backed up by data and predictions in front of you.
2. Hindsight bias
Hindsight is 20/20, and it is sometimes easier to sit back and say, "I knew it all along," rather than focus on why the negotiation went so poorly. Gut instinct does have a role to play in guiding you through a negotiation, but sitting around claiming you knew the outcome before it even happened will never result in progress. Hindsight bias can also cause memory distortion or even an overconfidence bias. Take notes and focus on the data in front of you rather than what you perceive as happening.
3. Self-serving bias
Someone with a self-serving bias is likely to claim responsibility for success and shirk away from their failures. We have all probably met with someone like this: that person who claims all the success for themselves in positive scenarios and pinning responsibility for negative events on anyone but themselves. It can be very frustrating to work with someone who thinks like this.
Precise delegation and a shared understanding of responsibilities can help, as can developing a no-blame culture so no one feels ashamed of any actions they took that led to failure.
4. Confirmation bias
One of the most common cognitive biases to watch out for is confirmation bias. This is a tendency to interpret information based on our own preconceived notions. It has become very prevalent in the world of politics, where supporters of one political party might write off negative reports as biased or falsified while accepting positive or praiseful reports regardless of whether or not the information in that second report is factually correct.
In this, however, we also discover how to get around confirmation bias. Fact-checking! Fact-check as much as you can and use real, credible sources so you always have the most accurate information at hand.
5. Anchoring bias
Anchoring bias is actually one of the tools that negotiators often use to get a price or deal that works best for them. It provides a starting point for negotiation and can often be used to get a proposal down on the table first. It is one of the many negotiation strategies that can lead to great success when utilised properly. At the same time, negotiators need to know how to recognise when someone is trying to use an anchoring bias against them so they can reposition themselves and work towards a deal that is more favourable to them.
6. Availability bias
An availability bias can occur when limited information is handed over to create a certain picture, whereas a broader viewpoint might create a different understanding. For example, if a client tries to negotiate a price because they have heard of one other competitor achieving this deal, they might think it achievable for them without looking at the wider market. To avoid availability bias, ask for second opinions and conduct extensive, diverse research to ensure you have the most accurate picture possible.
7. Actor-observer bias
This bias is fascinating because it splits the same behaviour into two different outcomes depending on whether we are the ones exhibiting it (the actor) or witnessing it (the observer). In negotiation, someone might explain away their own concessions due to things like market conditions or internal policies, but view the other party's concessions as defensive or indicative of a lack of commitment. It creates an "Us vs Them" situation.
To negate this bias, ensure that open communication is practised at all times and don't be afraid to turn to a third-party mediator if no progress is being made.
8. The halo effect
The halo effect is a really interesting cognitive bias caused by our impression of a person and their traits. In short, we can become "blinded by their halo" because we perceive them as being competent across all actions based on just one small area. For instance, if an opposing party is particularly well-dressed and charming, negotiators might assume that they are more trustworthy than they are.
To avoid the halo effect, work on separating your professional and personal impressions, and do your research so you have an understanding of what may be happening beyond a well-tailored suit and warm words.
9. Status quo bias
When a status quo bias occurs, someone is influenced to keep moving forward with the current situation rather than consider alternatives. This might come to the forefront when a company sits down to review its contracts and partnerships for the year. Even if some are not fulfilling their obligations or promises, the company might decide to continue with them rather than risk finding a new partner. A thorough research process and risk assessment will help empower a decision-maker to pursue new opportunities.
10. Bias blind spot
Are you sitting there thinking that none of these are going to catch you out because you consider yourself to be less biased than your peers? We hate to break it to you, but you might have a blind spot towards your personal biases. This can also be a larger part of an egocentric bias where the person overestimates their importance or relies too heavily on their own perspective.
You will be working with other people during the negotiation, even if it is just the people across the table from you. Work together to reach an outcome that benefits everyone.
Everyone is biased!
No matter what, we all have our personal biases that we need to overcome. The sooner we can make that realisation, the sooner we can move towards deconstructing our own biased behaviours and recognising them in others.
Cognitive biases, however, should not always be thought of as an inherently bad thing. While many biases can lead to negative outcomes when not challenged, a good negotiator can leverage helpful ones such as anchoring biases, and may even be able to use an opponent's bias against them. This is just one of the many skills a good negotiator should have in their arsenal!
Do you feel like your negotiation skills could use some improvement? Perhaps you want to learn some new ones? No matter your goals, Scotwork's experts can help you to become a more confident and knowledgeable negotiator. Get in touch today to find out more about our negotiation training.
