Negotiate Without Fear by Victoria Medvec

Author:Victoria Medvec [Medvec, Victoria H.]
Language: eng
Format: epub
ISBN: 9781119719113
Publisher: Wiley
Published: 2021-07-14T00:00:00+00:00

Framing Your Offer Correctly

When developing your offer, you want to build a rationale that focuses on the other side, highlights their interests, and frames the discussion correctly. Framing is one of the most powerful influence tools that exists, so you need to understand it well as you prepare to negotiate or resolve a dispute. Daniel Kahneman and Amos Tversky found that people are risk averse in the domain of gains and risk seeking in the domain of losses. They first explained this in Prospect Theory (Kahneman & Tversky, 1979), a theory so critical to describing human behavior that Danny Kahneman was awarded the 2002 Nobel Prize in Economics for his work developing this theory and his broader body of research. I had the privilege to meet Danny Kahneman, co-author a paper with him (Gilovich, Medvec, & Kahneman, 1998), and, when he invited me to present a paper at Princeton, I even got to have dinner at his home with him and his incredible wife, Anne Treisman. He is an amazing scholar who is an inspiration to social psychologists and economists across the globe.

Kahneman and Tversky (1979) explained that people are risk averse in the domain of gains, preferring a certain gain over the risky chance of getting more. On the other hand, people are risk seeking in the domain of losses and prefer the risk of a bigger loss over a certain loss. We like to hold on to our gains and prefer certain gains over the chance of a bigger gain. We do not like losses. We would prefer to take the risk of losing more to avoid having certain losses. I often use the analogy of an American soccer game (known as football in many other countries) to explain this idea. If you have ever played soccer or watched a professional soccer match or watched your children play soccer (as I have done for many years), you will notice that when a team is leading the match at the end of the game, they often become more risk averse and will pull back and play more defensively. On the other hand, when they are losing, they may become much more risk seeking and may even pull their goalie up on to the field to press forward with their attack, especially in the final minutes of the match.

Prospect theory (Kahneman & Tversky, 1979) explains that we are risk averse in the domain of gains, risk seeking in the domain of losses, and that losses loom larger than gains at a two-to-one ratio. That means that a loss is weighted two times more heavily in our minds than a gain of the same size.

How does this affect your strategy when you are building your rationale? You should first ask yourself what you want the other side to do. Do you want the other side to maintain the status quo and continue to do what they are currently doing or planning to do, or do you want them to move off

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