A632.4.5.RB - Deception in Negotiations

When it comes to negotiations, how do we know whom to trust? How can we tell when someone is lying to us?  Have we gotten the best deal?  These are questions many of us have faced when dealing with negotiations, and sometimes the answers favor us and sometimes they don’t.  While we cannot control others actions or personalities in negotiations, we can protect our own.  Our reputations and our predilection for lying are both tools we use to negotiate deals everyday. 

My first step in negotiations is to do my research and prepare my questions.  As Hoch, Kunreuther, and Gunther (2001) stated, negotiators should identify missing information and prepare to ask questions multiple times.  Today’s world of Internet makes it even easier to shop around to just about any item one would want.  I like cars and I like to trade and buy cars often, this has made me a pretty good negotiator with dealerships.  I will spend weeks looking at different dealerships for the car I want and then use the information I have to work against them.  I start as far away from my home as possible (within driving distance) and then work my way back.  This gives me the opportunity to work the dealerships that are far away to give me the best deal to make it worth my drive to them.  I then ask questions of my local dealerships to see where they stand in price and availability. 

By asking the dealerships direct and specific questions, I can assure I am making similar comparisons.  According to Hoch et al (2001), direct questions are more difficult to answer with a lie.  Vague questions give the responder the opportunity to think up an indirect way of answering.  I want to know exactly what is included in the deal, what they are going to do for me, and why I should buy from them.  These questions are not always easy for dealerships to respond to. I have found that the quicker the response a person gives the more honest it is, they don’t have time to create a lie.  I also find that the slower a person talks the more apt they are to be telling the truth.  When people talk fast I fell like they are trying to gloss over something. 

Another important part of negotiations is to get everything in writing, that way there is no question about what the deal entails.  Hoch et al (2001) stated that it is important to put things in writing, inspect records and insist on guarantees.  When details are made and agreed upon a written record should be created, and both parties should have access to it before ending negotiations.  Verbal agreements can be easily changed or reworded which may change the outcome, even a simple email can be sufficient proof.

Managing one’s reputation is just as important after the sale.  By taking a step back and reflecting on the negotiation can give good insight as to what went well and what could have gone better.  I also like to follow up with the other party a few days after the deal is closed to thank them.  Hoch et al (2001) advised to never reveal additional confidential information, such as what you would have been willing to pay, this can harm future relationships. 

My best negotiation was with buying a new van.  I had bought a van but did not like it, in fact, I hated it and within a year, I wanted a new one.  I did my research and chose the make and model I wanted.  I then went online to find all the dealers that had that model in stock and narrowed my choices down from there.  It was down to two dealerships, one not far from my house and the other that was over two hours away.  The dealer that was further away gave me a better price but it wasn’t a color I liked, so I took their price to the closer dealership, who had acquired the color I wanted from another dealership. When I arrived at the dealership, on a Saturday, I presented the cheaper price to them and they refused to match it.  My husband and I went to lunch to discuss the deal and decided that if they would not match the price we would go to the other dealership or not purchase the van at this time, as we did not need the van I simply wanted it.  We returned to the dealership and told them to match the price or we were leaving.  They still said no and we walked out.  On Monday morning, I received a phone call from the dealer saying they would match the price and they would deliver the van to my house.  I accepted and was a very happy customer.  I have bought other cars since then and I always give that dealership, and that salesman, the first opportunity.  They may have played hardball at first but in the end, they realized I was not going to give up and the amount of money they may have lost was worth keeping the sale and the opportunity for future sales as well.            

Hoch, S., Kunreuther, H., & Gunther, R. (2001). Wharton on making decisions.

Hoboken, New Jersey: John Wiley & Sons, Inc.

A632.3.4.RB - Reflections on Decision Making

Falling onto frames can limit one’s ability to see the entire picture, which can lead to making poor decisions.  There are ways to avoid falling into frames such as realizing that reframing requires a willingness to live with discomfort for a while, appreciating people’s emotional commitment to their frame, and understanding that complex issues can seldom be solved within a single frame.  It can be difficult to overcome falling into certain ways of thinking that may have worked in the past, but it can be helpful to understand why you fell into that thought to begin with.

We all have certain ways of thinking that have evolved from our past and our opinions, and having the ability to overlook these beliefs can be difficult.  Hoch, Kunreuther, Gunther (2001) pointed out that sometimes we are unaware of our cognitive frames that underlie our own perceptions and decisions.  When we do become aware of these frames it can be difficult to overcome them.  I had an experience where I was convinced that my view on the situation was the right one and I was not very open to other options.  When I worked for the airline a few other people and myself were determined to bring a nonstop flight from our station, Burlington, VT to Fort Lauderdale, FL.  We would gather information about how many passengers we had who were flying to FLL and send it to corporate daily. We would also talk to passengers flying to West Palm Beach (PBI) to see if they would drive to FLL if it were a direct flight.  We thought we truly had a change to implement a nonstop flight until we lost our nonstop to Orlando, and looked at the reason why we lost it.  We didn’t lose it because it was not selling seats; it flew out at an average of 95 percent capacity daily.  We lost it because we had just won a bidding war for slots at Washington DC Reagan Airport and that aircraft could fly from DC to Boston four times in the same time frame as it took to go from Orlando to Burlington and back.  The decision came down to time in the air versus how many people traveled on it; this was a difficult frame to overcome.  Our station was just not that important in the grand scheme of day-to-day airline travel.

When people have created a certain frame it can be the result of some very personal experiences, which can make it difficult for others to change their minds.  Hoch et al (2001) stated that people often cannot see or hear anything outside their frame, and in order to convince them of anything different one must speak to their frame.  Taking other’s frames into consideration when trying to convince them to change their minds is important.  One must convince them that they do understand where they are coming from but that there may be another way to look at it.  I feel like I used this a lot during my customer service days.  During the winter school break season, we would often have a bunch of flight cancellations due to weather, and we would not have enough seats to get people out for days.  While I understood why this was the case, the passengers may not.  All they could see and understand was that they were going to be inconvenienced and their plans were going to have to be changed.  It took a lot of understanding and convincing to assure them that we could find a solution to the problem.  They were much more emotionally involved with their trip and their plans than I was and that meant I needed to find a way to make them feel that I understood their way of thinking and that I would work with them to find the best possible way to solve it. 

There is not one way of thinking that will fit every issue, just as one frame will not fit all the problems encountered.  Different situations call for different ways to solve problems and ask yourself if the frame you are in best fits the situation.  Hoch et al (2001) suggested asking yourself if the frame you are in is effective and will it get the job done.  Being stuck in a frame can affect the way the problem is looked at, and sometimes it will require multiple frames in order to solve it best.  I have been guilty of looking at situations from only one frame and it definitely affected the outcome.  One issue that comes up a lot in my family is whether or not my husband should move to Vermont with us, and I always tend to look at this from the perspective of having someone here to help me every day.  However, this is not the way it would work out in reality.   In the real world one of us would be working almost every day and in opposite shifts so it would only be one parent home at any given time and that does not work well.  I have had a hard time realizing this and it has clouded my judgment a few times.  It took my husband many years to make me shift my frame in order to see the big picture.  Now that I have shifted, and I no longer work out of the home, I realize that we have so much more quality time together now than if he lived here. 

It can be hard to change a person’s frame of thinking, even when it might be clear that there is a better way.  We protect our frames, as they are personal parts of ourselves.  As a manager we are called on to challenge not only our own frames but the frames of others daily, the more sensitive we are to others thought, feelings and beliefs the more open they are to listen to ours as well.  As Hoch et al (2001) explained we must learn how to recognize and challenge other people’s frames and master techniques to help others accept better frames.  The more sympathetic we can be to others way of thinking the more likely they are to listen to ours.  Frames can be dangerous when we become stuck in them for a long period of time, but they can also be helpful when looking for answers.                         

Hoch, S., Kunreuther, H., & Gunther, R. (2001). Wharton on making decisions.

Hoboken, New Jersey: John Wiley & Sons, Inc.

A632.2.3.RB - Sheena Lyengar: How to Make Choosing Easier

Sheena Iyengar identifies four techniques to help make decisions: cut, concretize, categorize, and condition for complexity.  With the help of these four techniques not only can businesses make decision making easier for consumers, but also individuals could make decision making easier for themselves.  The key is finding ways to deal with choice overload.

The first of the four techniques is to cut or get rid of extraneous alternatives.  This gives the decision maker less chance to become overwhelmed.  When there are too many choices people can shut down and not make a decision at all.  Concretize means to make the choice real; this can be done by using visuals or photos in place of words.  With categories, the decision maker can handle more categories because they can quickly eliminate the ones they are not interested in and focus on the ones they are.  Finally, condition for complexity, which means decisions, should be presented in order from lowest to highest in choice, or from easiest to hardest.  This sets the decision maker up to be able to make the difficult choices.

As a decision maker I like having options but at some point it becomes overwhelming, this is where limiting the number of options available can help.  When I shop at the grocery store I have two basic options when choosing what to buy, I either stick to a brand I like or I am looking for a certain flavor, taste or purpose of a product.  If I am buying based on brand then I am usually aware of the options they offer and can make a decision based on that, this is the easiest of my grocery store decisions.  If I am looking for a certain taste, flavor or purpose then things become more complicated, such as choosing a jam for the kids.  I know they have a favorite flavor, strawberry, but we don’t have a particular brand we prefer so my decision becomes more difficult.  I then have to narrow things down by criteria I have set forth, such as no sugar added, seedless and price.  If I have used my criteria to narrow down the choices and I still have fifteen options I am most likely to become frustrated and walk away without anything.  However, if I have narrowed things down and I am left with three to five options (or less) then I am more likely to choose one and move on to the next product without any frustration at all.  Cutting the amount of choices a decision maker has may seem counterintuitive but it can actually be more helpful in the long run.  The last thing anyone wants is an overwhelmed decision maker.

I am a huge fan of categories when it comes to decision-making.  By allowing me to narrow down the categories to only those that pertain to me the retailer has already eliminated the chances of my becoming overwhelmed.  I recently experienced a great use of categories by a website that made my decision to purchase from them obvious.  About ninety percent of my family’s purchases are online, and I spend a lot of time researching the options available to me.  Over the past week, I have been on the hunt for a pair of skis for my oldest, and he has some specific guidelines as to what he wants and I have my own guidelines as to price and shipping options.  I had narrowed my search to two websites, and I began to look for skis on each website.  I quickly came to the realization that one website was going to win based on ease of use alone, it allowed me to shop via categories and break them down into subcategories as I went on.  This was a major factor in my decision.  I was able to choose outlet skis, then from there I chose Twin Tips (as that was the type of ski he wanted), and from there I chose skis with bindings, length and I sorted the results my price.  After a few short minutes, I had eight options to choose from, which I narrowed down to two (based on price) and gave my son the option of those two and he picked the one he liked most.  This entire process took about 10 minutes start to finish and it was all because I was able to weed out the skis I was not interested in by using the categories provided by the website. 

To me, making decisions is all about first deciding what I do not want, these options are easily eliminated in the first few minutes.  From there things become more difficult when I have to actually decide what I do want.  Cutting options and organizing them into categories can make decisions easier.  We live in a world of instant gratification and wanting multiple choices for everything, but is that always the best option?  We seemed to have survived for years with fewer options and waiting to obtain the things we need or want so why the change to have an overwhelming amount of options that are available at a moments notice.  I think sometimes the simpler the better.           

Iyengar, S. (2011). How to make choosing easier. Retrieved January 24, 2016, from

http://www.ted.com/talks/sheena_iyengar_choosing_what_to_choose

A632.1.4.RB - Multistage Decision-Making

Coming from a mathematical background I can appreciate the beauty of the equations shown in this chapter, however, I believe that math has a place in everything but may not hold the entire answer.  Equations can answer questions involving risk, profit and other measurable aspects, but they may not show the entire picture.  When making dynamic decisions one must weigh all the options and look at them in different ways.

The first step in solving problems for me is to gather information and lots of it.  I like to have as much information as possible in order to make an informed decision; sometimes I might go overboard and gather too much information, which can send my mind into overload.  Once I have gathered information, I need to sort through it to eliminate that which may not be relevant to the specific problem at hand.  Hoch, Kunreuther, and Gunther (2001) described this as accumulation of knowledge. 

Once I have gathered and sorted through all the information, I will try to form two options and weigh them against each other.  This is similar to what Hoch et al (2001) described in decision policies, this is where math equations can be helpful.  When I am making a decision with two outcomes I prefer to use a simple T-chart to help me weigh the options.  A T-chart is a graphic organizer, which compared pros and cons, advantages and disadvantages, or facts for both sides.  Once I fill in the chart I can weigh which option will be right for me.  Sometimes the decision is obvious sometimes it’s not such a clear choice. 

Two points Hoch et al (2001) made that resonated with me were complete forward planning and optimal learning.  With complete forward planning all aspects, possible choices, and outcomes are considered.  This is very similar to the way that I make decisions, I look at all the possible outcomes no matter how unlikely they may be to happen.  This not only offers multiple options for decisions but can also rule out any options that don’t fit into the plan.  Optimal learning is about using past information to make future decisions.  This is along the same lines as excepting and learning from feedback.  Ever experience is a process in learning no matter the outcome, positive or negative.  If we are able to look back on our past choices and learn what went right and what didn’t then we are better prepared for future decisions. 

The combination of looking forward and learning from the past are the keys to making dynamic decisions.  Where we can’t predict the future we can learn from the past and use it to make better decisions.  Feedback is one of the most powerful tools we have to help us make better choices and learn from our mistakes.  Feedback isn’t always easy to take but it is important.  If the old adage “history always repeats itself” is true then the more we learn from the past the more we will succeed in the future.           

Hoch, S., Kunreuther, H., & Gunther, R. (2001). Wharton on making decisions.

Hoboken, New Jersey:John Wiley & Sons, Inc.