Negotiating, Fast and Slow
Many of you probably have read the 2011 best-selling book Thinking Fast and Slow by Nobel laureate Daniel Kahneman who takes us on a groundbreaking tour of the mind and explain the two systems that drive the way we think. System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberative, and more logical. I had the fortunate opportunity to attend a webinar yesterday with Daniel Kahneman hosted by the Harvard Law School: Negotiating Fast and Slow. Prof Kahneman touched on many aspects of negotiations but focused mostly on the relationship between psychology and decision making and how to avoid biases during negotiations. The fact we human all have biases shape the world we live. Here are some interesting nuggets I was able capture based on my notes:
On the conditions for System I decision making: regularity of the world, extensive experience and immediate feedback.
On the impact of technology on System I vs System II decision making: there are a lot of information but many important decisions are still made the old fashion way.?It is still an open question if the quality of decisions have improved with technology or not.
On group negotiation: there are cost and benefit for group negotiation. When it is a diverse group and people are free to express opinion, the person with different opinions generally is the unpopular person on the team but the most useful in the group.
On tips for calming down System I thinking: slow down, sleep on it, and get advice.
On seeking advice: you should seek advice from people who care about you but do not care about your feelings. Someone identifies too much with your emotion is not good for providing advice. In fact, seeking advice with people with similar ideas lead to group thinking and further polarizes positions.
On avoiding personal biases: ?For making important decisions, you should not trust your guts, but decision should inform your guts.
On intuition: System II decision making is often based on an accumulation of learnings from System I decisions. When you make judgement or decision based System I thinking, it is important to ask yourself where those judgements or intuitions come from.?
On avoiding biases: gather as much information as you can. Break down the problems into elements. Do not allow your judgement in one element influence your judgement in another element.?
On driving force vs restraining forces: you can influence behavior by either increase driving forces (e.g. threat, authority) or reduce restraining forces (e.g. changing negotiation environment) to achieve the same results for a negotiation. The difference is the system will have a lot of more stresses if you leverage driving forces rather via reducing restraining forces.?
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On role of sympathy in negotiation: when you have sympathy, you have a better chance not only to understand what the other party needs and wants, but also their emotion and the underling reasons for their needs and wants. You will also be better at anticipating anchoring position from the other party.
On trust in negotiation: you will always look worse than you think. You might think you are making a good faith offer but the other party might think otherwise. Seek advice from someone to understand “the worst way the other party could interpret your position”.
On loss aversion: we human always have stronger feeling on loss aversion than gain. As a result, we walk away from a perfectly good deal to avoid the loss of a great deal. One way to avoid loss aversion is to not focus on the change of status quo but the final outcome, or totality of the deal rather than painful concession you have to make.
On unreasonable anchor: when the other party makes an unreasonable anchor position, you should refuse to negotiate on that base. Change to a different base for negotiation or try alternative option such as arbitration.
On negotiation control: good negotiators probe and ask questions. They do not respond intuitively. There is always a system at work based on System II thinking.
Overall, it was a delightful, insightful and profound discussion. I am so happy to have the opportunity to attend.?Finally, I thought I would mention that I had the opportunity to ask a question but Prof Daniel Kahneman did not have an answer. I was asking if people think and negotiate differently in different cultures in terms of relying on System I vs System II thinking. If you have any thoughts or comments, I would love to hear from you in the comment section.
Related Article
Business Negotiation in China (8/8/2019)
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2 年Hi Xinjin, please contact me when convenient next week re leadership and my researched experience. My email [email protected] and or mobile 0419000745
Associate of Arts and Sciences (AAS) at The Cooper Union for the Advancement of Science and Art
3 年There is always different options and opinions when dealing with different cultures with foreign business. The mindset and philosophy can be opposite of each other. In the human do business. Western versus Eastern thinking. For example some business what get to know you personally before any business is conducted ( Eastern philosophy) as towards with western philosophy could be how much not caring for any personal emotions
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3 年Xinjin Zhao thank for the summary notes, appreciate your effort to write down for us, ??
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3 年We learn a lot from your articles. Inspirational. Good for china and Africa development.
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3 年people don’t think and negotiate differently in different cultures in terms of relying on System I vs System II thinking but what really matters is the situation they are in(physically, emotionally). They can seem to be predictably irrational in certain situations to one group of people and could sound rational at the same time to another set/group of people. Negotiations are majorly based on intuitive thinking and would get affected by their surroundings but not culturally.