BazermanMoore

170 Chapter 10: Negotiator Cognition
An offer comes in for $280,000. Does this offer represent a $30,000 gain in comparison
with the original purchase price or a $10,000 loss in comparison with your current target?
The answer to this question is ‘‘both.’’ From a rational perspective, and based on
our intuition, we can easily determine that the difference in the two points of view is
irrelevant. However, as discussed in Chapter 4, Kahneman and Tversky (1982a) have
demonstrated that important differences arise from individuals’ responses to questions
framed in terms of losses versus gains. This difference is critical to describing negotiator
behavior.
To understand the importance of framing in negotiations, consider the following
labor–management situation. A trade union insists that management must increase the
pay of union members from $16 to $18 per hour and that anything less, given current
inflation, represents underpayment. Management argues that any raise above $16 per
hour imposes an unacceptable expense. What if each side had the choice of settling for
$17 per hour (a certain settlement) or going to binding arbitration (a risky settlement)?
Since each side views the conflict in terms of what it has to lose, following Kahneman
and Tversky’s (1981) findings, we can predict that each side will be risk seeking and
therefore unwilling to accept the certain settlement. Changing the negotiators’ framing
from positive to negative, however, results in a very different predicted outcome. If the
union views any raise above $16 per hour as a gain, and management views any raise
under $18 per hour as a gain, then both sides will be risk averse, and a negotiated
settlement will be likely. Neale and Bazerman (1985) found that negotiators with positive
frames are significantly more likely to make concessions and to reach mutually
beneficial outcomes than their negatively framed counterparts.
What determines whether a negotiator will have a positive or a negative frame?
The answer lies in the selection of a perceptual anchor. Consider some of the anchors
available to a union leader negotiating a wage with management: (1) last year’s wage,
(2) management’s initial offer, (3) the union’s estimate of management’s reservation
point, (4) the union’s reservation point, or (5) the bargaining position that the union
publicly announced to its constituency. As the anchor moves from (1) to (5), a modest
gain in comparison to last year’s wage becomes a loss when compared to the higher
goals touted publicly, thus moving the union negotiator from a positive to a negative
frame. Specifically, for workers who are currently making $16 per hour and demanding
an increase of $2 per hour, a proposed increase of $1 per hour can be viewed as a
$1-per-hour gain over last year’s wage (anchor 1) or a $1-per-hour loss when compared
to the goals of the union’s constituency (anchor 5).
Framing has important implications for the tactics used by negotiators. Framing
effects suggest that, to induce concessionary behavior in an opponent, a negotiator
should always create anchors that lead the opposition toward a positive frame. This
means you will be negotiating in terms of what the other side has to gain, thereby increasing
opportunities for tradeoffs and compromise. In addition, when you recognize
that your counterpart has a negative frame, you should encourage him to recognize that
he has adopted a risky strategy in a situation where a sure gain is possible.
Finally, the impact of framing has important implications for mediators. When the
proposed goal is a compromise, the mediator should strive to convince both parties to