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MBA presentation on psychological bias in negotiations.


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Psychological Factors that Bias Rational Decision-Making in Negotiations:

Psychological Factors that Bias Rational Decision-Making in Negotiations Nicholas Johnson MGT 348 - Gilead Cohort 8 December 4, 2016


Overview What is Psychological Bias? How Psychological Bias Affects Negotiations Avoiding the Pitfalls of Psychological Bias Conclusion 2

What is Psychological Bias?:

What is Psychological Bias? Also referred to as Cognitive Bias Affects logical thinking and decision-making ability Selectively using data Outside influences and pressures Often at odds with common sense and clear judgement Results in missed opportunities and poor decision-making 3

Identifying Psychological Bias :

Identifying Psychological Bias 4

Filtering Through Too Much Information:

Filtering Through Too Much Information Heightened awareness of repeated information Bizarre or visually striking things stick out more Notice changes and magnitude of them Drawn to details confirming own beliefs Notice flaws in others 5

What to do with Limited Meaning or Context:

What to do with Limited Meaning or Context Look for stories and patterns Fill in gaps with stereotypes, generalities, and prior history Familiar things have high quality or value Simplify problems and numbers for easier processing Think we know what others are thinking Project current mindset on our past and future 6

When We Need to Act Swiftly :

When We Need to Act Swiftly Always constrained by time and information Confidence in our ability to make important/impactful decisions Favor the immediate relatable thing in front of us instead of the delayed and distant Inclined to complete efforts already underway Tendency to choose the option perceived as the least risky Preference to do the quick simple thing 7

Determining What To Remember:

Determining What To Remember Edit and reinforce memories after the fact Discard specifics to form generalities Reduce events and lists to their key elements Store memories differently based on how they were experienced 8

How Psychological Bias Affects Negotiations:

How Psychological Bias Affects Negotiations Filtered information could be useful and important to the negotiation Filling in too much meaning can created altered perceptions or illusions Quick decisions can be seriously flawed and counterproductive to the process Flawed memory only further complicates other forms of cognitive bias 9

How to Avoid or Mitigate Bias:

How to Avoid or Mitigate Bias Focus on increasing individual objectivity Challenge personal opinions and that of counterparts’ Take more time if needed and avoid rush decisions 10

Increasing Objectivity:

Increasing Objectivity Look for ways to introduce objectivity into decision making Use tools that help evaluate background information systematically Break down an argument into components Look for ways to gather comprehensive, objective data 11

Challenge Opinions:

Challenge Opinions Look for ways to challenge what you think you see Review information from sources with different perspectives Surround yourself with a diverse group of people and look for dissenting views Seek out people and information that differs from your opinion, “Devil’s Advocate” 12

Take More Time:

Take More Time Give yourself more time to make decisions Time will allow you to carefully evaluate all sides Rushed decisions likely do not involve all the necessary information If someone is pushing for a decision, they are likely pushing against your best interests 13


Conclusion Bias is always present in any individual negotiator or negotiation process There is no way to eliminate it since it is human nature Therefore, it is important for negotiators to be mindful of these facts to mitigate negative effects of their bias and have awareness of bias that may be affecting their counterparts 14


References http://www.huffingtonpost.com/entry/map-of-cognitive-biases_us_57e40b0fe4b0e28b2b52b3ec?section=& http://www.businessinsider.com/cognitive-biases-that-affect-decisions-2015-8 https://www.mindtools.com/pages/article/avoiding-psychological-bias.htm https://betterhumans.coach.me/cognitive-bias-cheat-sheet-55a472476b18#.rtc2zrceg 15

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