Wake up Brain! Cognitive Bias in Negotiation & Navigating Selective Perception

“Brains are awesome, everybody should get one!” was a popular mock during my school years.

I have to think about this every time I share the research showing how little of our total brain capacity we are actually putting to use for an average decision.

While it would be difficult to go through our days making every decision with 100% of our attention and brain power, our typical, every day, low-effort decisions also have significant risks - especially for our negotiation outcomes!

Today, we are talking about cognitive biases.

Fast and Instinctive System 1 - Slow and Rational System 2

Kahneman and Tversky's famous work "Thinking Fast and Slow" describes two modes of thinking:

System 1 is fast, automatic, and intuitive. It operates with little effort but is also prone to biases and errors. It is responsible for quick judgments and impressions. We make the majority of our daily decisions using System 1 (think about 95%).

System 2 is slow, deliberate, and analytical. It requires more cognitive effort and is used for complex reasoning and problem-solving. It monitors and evaluates the decisions made by System 1 but is often lazy and easily distracted, leading to reliance on System 1’s quick but sometimes flawed conclusions.

Here is a summary of how System 1 and System 2 thinking relates to selective perception and confirmation bias from Kahneman and Tversky’s book:

In his essay “How Mental Systems Believe,” Daniel Gilbert builds on Spinoza's idea that understanding a statement starts with believing it.?

System 1 quickly and automatically generates belief by making sense of any given statement, even nonsensical ones. System 2, responsible for doubt and unbelief, requires more effort and is prone to laziness or distraction.?

Experiments showed that disrupting or exhausting System 2 thinking among participants makes it hard to reject false statements. This highlights our tendency to believe and confirms how associative memory contributes to confirmation bias, leading to overestimations of improbable events.

The moral of this experiment above is that when System 2 is occupied, people tend to believe almost anything due to System 1's gullibility. System 2, responsible for doubt and unbelief, can be lazy, busy, or depleted.?

One example discussed in the book is how we would respond to the questions “Is Sam friendly?” or “Is Sam unfriendly?” When asked these questions, different instances of Sam’s behavior will come to mind. We’ll then do a deliberate search for confirming evidence, called a ‘positive test strategy.’

Kahneman and Tversky go on to say that people, when testing hypotheses, tend to look for data that is compatible with their current beliefs. “The confirmatory bias of System 1 favors uncritical acceptance of suggestions and exaggeration of the likelihood of extreme and improbable events.” For instance, imagining tsunamis when asked about a tsunami's likelihood of hitting California in the next thirty years can lead to an overestimation of the disaster happening.

This makes individuals more susceptible to persuasive messages, especially when tired. Associative memory and confirmation bias further influence belief, as people seek evidence supporting their beliefs rather than refuting them, leading to an exaggerated perception of events. This leads to multiple cognitive biases like selective perception.

Selective Perception

Selective perception refers to people’s tendency to interpret information in ways that confirm their existing beliefs, impressions, and experiences. This can go as far as selectively filtering out information that doesn’t help us get what we want.?

For a legal example, if you give the same evidence and information to a plaintiff’s lawyer and a defendant’s lawyer, they may not come back with the same notes as they zoom in on facts that support their respective clients’ cases.

In negotiations, this can lead negotiators to overlook critical details that don't align with their preconceptions. It can also lead to the following outcomes:

1 - Misinterpretation of Intentions

We may misread the other party's intentions or proposals based on our own biases and preconceived notions, leading to misunderstandings and conflict.

2 - Confirmation Bias

We may focus only on information confirming our beliefs and ignore contrary evidence, reducing the likelihood of finding mutually beneficial solutions.

3 - Reduced Collaboration

When negotiators selectively perceive information, it may hinder open communication and collaboration, making it difficult to build trust and reach a consensus. This makes it harder to find win-win solutions and could result in more money left on the negotiating table.

Reducing the Effect of Cognitive Biases

How can we avoid falling into these cognitive bias traps??

Here is a quick list of what you can do:

1 - Keeping an Open Mind

Never fall back into the ‘this is how we’ve always done it’ mindset. Monitor how you take in and process information.

2 - Summarise and Reframe?

You can summarise what your counterparty has said to ensure that you haven’t left out or filtered anything they have said and that you understand their points correctly. Reframing the information they shared can also help you not get caught in gain/loss framing.

3 - Think through and be honest while seeking the opinions of others?

You can discuss and think through the negotiation’s progress with an assistant, a colleague or a coach. During the discussion, make sure you try to objectively look through the strengths and weaknesses of your side and theirs.

4 - Take Your Time

Never rush to a conclusion. Although System 1 thinking may be fast, it will result in biased and poorly thought-through results. Give yourself enough time to consider the results and options with System 2 thinking.

In conclusion, yes, "brains are awesome" (:P), it's great we all have one, and we need to use it selectively to get through our day without absolute decision fatigue by the time we have our second coffee.

But be aware not to let your brain get 'lazy' when it comes to important decisions in negotiation. Because that 'laziness' can allow your System 1 to take over, resulting in unconscious biases sneaking in and shaping your decisions for you.

To brains, everyone! May we use them wisely :)

Yours,

Dr. Claudia Winkler

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