W H E N R AT I O N A L I T Y FA I L S : B I A S E S

OF THE MIND

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BIASES OF MIND
When Reason fails us.
People make systematic and predictable mistakes. Four critical systematic errors on
regular basis.
Fixed pie bias
Vividness bias
Non rational escalation of commitment
Susceptibility to framing

FIXED PIE BIAS

Parties often enter a negotiation with a fixed-sum/pie
even when there is possibility to increase the size of
the pie
Affects negotiators to focus on win-lose perception.
During negotiations, parties often compromise to settle
for a different outcome
Overcoming Fixed Pie Bias
Wise tradeoffs for mutual gain

THE VIVIDNESS BIAS

The tendency to overweight vivid or prestigious attributes of a decision and
underweight less flashy issues.
Confusion between recall & occurrence
Overcoming Vividness Bias
Scoring system
Separate information from Influence
Recognize vividness as a potential source of bias
Know what you want before negotiation begins
Use vividness wisely

NON RATIONAL ESCALATION OF

COMMITMENT
Negotiators have strong psychological need to justify their prior decisions and
behaviors.
Difficult for negotiators to admit that their initial strategy was ill-conceived or they
made mistake.
Real world examples: custody battles, labor strikes, price wars. Often looks like a smart
strategy but gives disastrous results.
Escalation Forces:
1.Hope of victory
2.The need to justify initial strategy
3.Desire to beat other side
4.When simple commonsense flies out

NON RATIONAL ESCALATION

OF COMMITMENT
Escalation is more likely if negotiators believe they have :
1.Invested too much to quit
2.If they dislike the other party and want to win at any cost
3.If they have made a public comment to their position
Overcoming this bias
Start negotiation with preplanned strategy-point at which to cut the negotiation
Assign and reward a devils advocate
Anticipate and prepare for the escalation forces you are
likely to encounter- refrain commiting in public,etc.

SUSCEPTIBILITY TO FRAMING
Negotiators treat risk involving perceived gains differently from risks
involving perceived losses.
More likely to make concessions and compromises over how to allocate
gains but more likely to be inflexible and risk reaching impasse when
negotiating over how to allocate losses.
Overcoming this bias
Constantly readjusting reference point.
Evaluating your strategy with respect to reference point you chose.

THE ASIAN DISEASE EXAMPLE

Possitive
Option A: 200 of 600 lives are saved
Option B: 1/3 Probability that 600 survive, 2/3 that no one survive
Negetive
Oprion C: 400 out of 600 die
Option D: probability is 1/3 that no one die, and 2/3 that all 600 will die

Thank you