BazermanMoore

172 Chapter 10: Negotiator Cognition
absorbed by inappropriate objectives was the team owners’ gleeful reaction to the cancellation
of the 1994 World Series. Too busy congratulating themselves for sticking
together, they failed to notice that they were bonding over their destruction of $1
billion in profits. Just four years later, it became apparent that National Basketball
Association team owners had learned nothing from baseball’s mistakes. Repeating this
escalatory pattern, the NBA entered a 202-day lockout that cost the owners over $1
billion and the players more than $500 million in lost salaries.
Diekmann, Tenbrunsel, Shah, Schroth, and Bazerman (1996) explicitly studied escalation
in the context of negotiation. They found both sellers and buyers of real estate
to be affected by the price that the seller had earlier paid for the property. This ‘‘sunk
cost’’ does not affect either party’s assessment of the property’s value, but it does affect
their expectations, reservation prices, and final negotiated outcomes. An understanding
of such escalation of commitment can be very helpful to a negotiator in anticipating an
opponent’s behavior. When will the other party really hold out, and when will he give
in? The escalation literature predicts that the other side will hold out when he has ‘‘too
much invested’’ in his position to quit. Announcement of one’s position increases one’s
tendency to escalate nonrationally (Staw, 1981).
Strategically, the findings on escalation in negotiation suggest that you should avoid
inducing bold, firm statements from an opponent, lest your adversary later feel trapped
in a corner. If your adversary has taken a rigid position on an issue, you may be able to
find creative ways for him to concede to make a deal possible. For example, a colleague
of ours was negotiating the purchase of a condominium in Chicago. The condo’s seller
announced a rigid position on price: ‘‘I’m not going to sell the condo for less than
$350,000. That’s my final offer.’’ Our colleague, who also teaches negotiation, suggested
other ways for the seller to concede. In the end, she paid the $350,000 that he was
demanding, but got him to agree to make a number of changes and upgrades to the
condo and to throw in an additional and quite valuable parking space for ‘‘free.’’
OVERESTIMATING YOUR VALUE IN NEGOTIATION
As the 2006 baseball season ended, Matt Harrington, a 6-foot-4-inch, 210-pound,
twenty-two year-old right-hander, was finishing his fourth season pitching for the Fort
Worth Cats in the Central Baseball League. Over these four years, Harrington’s baseball
salary averaged less than $1,000 per month; during the off-season, he stocked
shelves at Target. So far, Harrington probably sounds like a typical independent leaguer.
But in 2000, at age eighteen, Harrington was featured on the covers of USA Today
and Baseball America. He was described in the press as a hard-working, modest
young man who was probably the best pitcher available in the major-league draft.
That year, Harrington and his family hired Tommy Tanzer, a well-known player’s
agent, to represent him. To scare away teams with limited budgets, Tanzer told MLB
teams with high draft choices that they would need to offer at least a $4.95 million firstyear
bonus to sign Harrington to a contract. The Colorado Rockies selected Harrington
as the seventh pick in the draft but insisted they would not pay the price demanded by
Tanzer. After the draft, the Rockies offered Harrington $4.9 million for eight years,
then $5.3 million over eight years, and finally $4 million over only two years. Claiming