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The unreliability of our gut: Intuitions in negotiation

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The recent summit between President Trump and Kim Jong Un has brought the issue of intuition in negotiation to the fore. The North Korean dictator reportedly spent years planning for such a meeting, trusting little to his gut and everything to his analysis and preparation. President Trump, in contrast, is widely known to rely on his gut, for example by saying that he would simply intuit whether a deal with Kim was possible within the first minute.

Given these two divergent approaches, each with its own appeal, it’s probably worth considering the reliability of our intuitions in negotiations. Unfortunately, I’m here to suggest that they are not very reliable at all.

In the spirit of making life (if not world events) negotiable, consider the following five ways that our intuitions can fail us. Our intuitions often tell us…

  1. To avoid making the first offer. Seems intuitive to let the other party move first. That way, we can learn about their preferences and maybe get a great deal. Right? Well, often wrong. As I’ve suggested often before, if we do that, we miss the golden opportunity to focus the other party’s attention on our own goals and desires, making us counteroffers very much in line with our own thinking. Instead, we end up making offers very much in line with theirs.
  2. To deal with one issue at a time. Seems intuitive to agree on each issue in turn, and probably the easiest first. Right? Typically wrong again. If we do that, we treat each each issue as a competitive fight, losing the opportunity to link and trade issues. Accordingly, we leave ourselves with a tremendous problem when we come to the truly contentious issues, typically at the end.
  3. That if I want something, you don’t. Seems intuitive that two negotiators want two opposite things. Right? Wrong more often than you’d think. People do want the opposite of some things, typically money or other quantitative issues. But, as I’ve suggested often before, they often want the same thing on qualitative issues—or at least care less about some qualitative issues than others, paving the way for tradeoffs. Intuition fails us again, precluding the possibility of a win-win.
  4. To focus on our bottom line. Seems intuitive to focus on our bottom line, and especially whether the deal under discussion is better than said line. Right? Wrong or at least woefully incomplete. If we focus exclusively on our bottom line, chances are that we’ll settle for something just better than that line, which is often not very good at all. Instead, we need to focus on our target, only coming back to our bottom line when we need to, at the end.
  5. That everyone negotiates pretty in much the same way. Seems intuitive that everybody around the world pretty much thinks about and approaches negotiations the same that way we do. Right? No, totally wrong. Mountains of evidence now indicate that negotiators from different cultures very markedly in their strategies, interests, and the ethical or legal standards they bring to the table. Intuition fails us again, and this time with a bang.

So you see that, appealing as our gut may be, it’s not particularly reliable in negotiations. And now that we all understand as much, maybe we can collectively convince our political leaders.

Negotiations across cultures: To make or not to make the first offer?

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Every day, most of us interact with several people from unfamiliar cultures. In many of our cross-cultural interactions, our inclination is to tread carefully, lest we commit an unwitting cultural faux pas. In a word, many of us act tentatively across cultures.

In general, that’s a good thing, reflecting a genuine desire to avoid offense and the correct intuition that cultures extensively differ. But what about when we negotiate with a cross-cultural counterpart? Should we bargain tentatively too? Our cross-cultural negotiations will be more negotiable if we don’t.

To see why, recall one of my previous posts, which generally advised you to make the first offer in a negotiation if you can. By doing that, I argued, you can direct your counterpart’s attention to your own goals rather than theirs. As a result, they will use the first offer to estimate the value of the commodity being negotiated, and their subsequent offers will look very much like your first offer. Many years of research have supported this so-called “first offer effect,” attributing it to the basic hardwiring of our brains and showing, for example, that the person who moves first does better.

But what about when you negotiate across cultures? Should you still make the first offer or should you follow the inclination to be tentative? It turns out that the previous research on the first offer effect had come almost entirely from Western cultures, so some colleagues and I recently conducted new research to find out. Recognizing that people from different cultures differ in several ways, many of which are relevant to negotiation, we predicted that they wouldn’t differ in the fundamental hardwiring of their brains. From Baltimore to Beijing, we expected the first mover to walk away from negotiations happy.

Almost uniformly, they did. Across two studies, the first offer effect still emerged in a prototypical East Asian culture: Thailand. In addition, the effect emerged in negotiations among individuals representing 32 cultures and all continents except Antarctica. Regardless of culture, then, making the first offer produced advantageous outcomes, and failing to make the first offer produced a problem.

The bottom line? Being tentative is probably a good antidote to cultural offense, but it’s also a recipe for getting hammered in cross-cultural negotiations. Though you may convey your cultural sensitivity, waiting for an offer is also likely to put you in a perilous position.

With that said, here’s an important reminder before applying this advice: making the first offer doesn’t mean making the first offer right away. In fact, in many cultures (especially Latin American and East Asian), it’s vitally important to build a strong relationship before anyone makes an offer. (Future posts will discuss this and other things that actually do differ across cultures). So the point is not to start making offers the second you meet a cross-cultural counterpart. The point is that it’s worth trying to make an offer before they do, whatever their culture.

Have you ever made the first offer in a cross-cultural negotiation? Or felt uncomfortable doing that?