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June 18, 2013

In recurring negotiation, first, be nice. Then, mirror

Have you ever had a coworker that you felt was a bit of a bully? Maybe a flat out autocrat, or someone that makes you feel that, most of the time, he is just not cooperating. How do you deal with this?

This can happen when there is a mismatch between the collective and the individual interests of the parties. Then, each actor must decide whether they want to cooperate (seek the collective interest) or defect / compete (pursue their own interest).

Assume that you are buying a house. The collective interest is for the transaction to occur (the seller wants to sell, you want to buy). So a cooperative approach is for each party to make some reasonable concessions to allow the transaction to occur. But the parties’ individual interests differ. If the seller adopts a competitive stance, he won’t want to drop the price. If you, as a buyer, also adopt a competitive position, you might not want to pay the full price. As a result, the transaction might not happen.

Buying a house is a one-off transaction, but you could face a similar situation in long-term relationship. Assume you want to go to dinner with your spouse. She wants to go to a French restaurant. You foolishly prefer Italian food. Should you push to have it your way? How is that going to influence your long-term relationship?

In recurring negotiation, first, be nice. Then, mirror

Bazerman and Neale offer a simple strategy: first, cooperate, then imitate their action. The key, they argue, is to realize that you and the other party are communicating with one another through your actions. Starting nice (cooperating) sends the message that you are willing to make some accommodations. If the other party adopts a dominating strategy, then the next time you are in that situation, reciprocate. Carry on imitating their last move on each subsequent instance.

This creates a cooperative environment where the parties learn to search for an integrative agreement. I was in a course last year where Harvard professor Kathleen McGinn echoed Bazerman and Neale’s approach. In her words: “Never be the first to defect. If you start nice, you’re signaling that it’s appropriate.”

McGinn continued: “Nice might work: cooperators create a good environment and a competitor in it will be short lived. So, if you can create a cooperation environment, being nice pays off.”

Bazerman and Neale continue by offering four prescriptions for this strategy to work: -1- don’t be envious (if they are the first to defect, they will have it their way one more time than you, accept this and move one), -2- don’t be the first to defect, -3- reciprocate both cooperation and defection, and -4- don’t hide your game: communicate unambiguously that you will reciprocate their action.

So if you are in a one-off situation—buying a house from someone that you can safely assume you won’t have a relationship with in the future—it might be OK to adopt a dominating stance. But if your negotiation takes place with a recurring partner, you’re better off to start nice and then mirror their action.

Unless your spouse wants to eat French food. French food is always the right answer.

References:

Bazerman, M. H. and M. A. Neale (1992). Negotiating rationally. New York, The Free Press.