BazermanMoore

CHAPTER
NINE
Making Rational Decisions
in Negotiations
When two or more parties need to reach a joint decision but have different preferences,
they negotiate. They may not be sitting around a bargaining table; they may not
be making explicit offers and counteroffers; they may even be making statements suggesting
that they are on the same side. But as long as their preferences concerning the
joint decision are not identical, they have to negotiate to reach a mutually agreeable
outcome.
Until this point in the book, we have focused on individual decision making. Yet
many managerial decisions are made in conjunction with other actors, and it is common
for the different parties to have different interests. In this respect, negotiation is central
to organizational life. Yet, just as our individual decisions are often irrational, so, too,
are our negotiated decisions—and for many of the same reasons. Negotiation outcomes
are affected not only by one person’s decisions, after all, but also by the decisions of
others. This fact can make decision making in negotiation even more complicated than
individual decision making. When negotiators improve the rationality of their decisions,
they increase the likelihood of reaching an agreement when it is wise to do so as well as
the quality of negotiated outcomes.
People often believe that the outcomes they reached in a negotiation were inevitable.
In fact, in most negotiations, a wide variety of outcomes are possible. When teaching
negotiations to MBA students and executives, we typically use simulations in which
half of the participants play one role and the other half play another role. All dyads
negotiate the same problem and have access to the same data. When the participants
reach an agreement or an impasse, they record their results on the chalkboard. The
amazing result is that even within fairly homogenous groups, the range of outcomes obtained
is enormous. The lesson? The decisions and behaviors of each negotiator matter.
This chapter outlines a framework for thinking rationally in two-party negotiation
contexts. In Chapter 10, we will use this framework to examine how individual biases
and heuristics are manifested in the negotiation context. Chapter 10 also provides information
on cognitive biases created by the competitive environment. Essentially, this
chapter provides a structure for System 2 thinking in negotiated environments, while
the next chapter highlights some of the biases that occur due to System 1 thinking.
151