Negotiation Myth #1

Be careful what you start. Situations worthwhile entering may not be worthwhile pursuing. Continuing a course of action beyond what is rational is common in negotiation – the initial goal may remain despite new information that changes the value of the outcome. Be aware of persistence and consistency in this regard. We must recognise that time; money and effort already expended are sunk costs that cannot be recovered. The reference for whether a bargain is of value is whether it is of present value. When looking at options consider:

Present (costs + benefits) + Future (costs + benefits)

So why do we stay committed to a sometimes irrational course of action?

• To justify prior decisions and offers
• Perception often filters in what confirms the decision and filters out what goes against it.
• Consistency is valued – we like to act consistent with our prior actions because we assume that if we did it before it must be a good idea.

Sometimes winners quit because to keep negotiating will give them a deal that leaves them worse off than no deal at all.