CBN Cognitive Biases & Psychological Influences in Negotiation

Question 1

A seller opens with an asking price of $500,000 for a property worth approximately $380,000.
The buyer's subsequent counter-offers tend to cluster higher than they would have if no price had been stated first.
This phenomenon is called:

Accepted Answer

The anchoring effect

Answer

Reactive devaluation

Answer

Loss aversion

Answer

Reciprocity bias

Question 2

Loss aversion, as described by Kahneman and Tversky's Prospect Theory, implies that in a negotiation context:

Accepted Answer

The pain of losing a concession is psychologically more powerful than the pleasure of gaining an equivalent one

Answer

Negotiators will always prefer certain outcomes over uncertain ones

Answer

Parties avoid making the first offer to prevent anchoring

Answer

Negotiators overestimate the value of items they already own

Question 3

A negotiator consistently rejects ideas proposed by the other side, even sound ones, simply because they came from the counterpart. This is an example of:

Accepted Answer

Reactive devaluation

Answer

The endowment effect

Answer

Confirmation bias

Answer

Overconfidence bias

Question 4

To counteract the anchoring effect when a counterpart opens with an extreme first offer, the MOST effective technique is to:

Accepted Answer

Explicitly reject the anchor, state your own well-justified reference point, and reframe around objective criteria

Answer

Accept the anchor as a starting point and negotiate incrementally from it

Answer

Remain silent until the counterpart moderates their own offer

Answer

Make a symmetrically extreme counter-offer to split the difference

Question 5

The endowment effect in negotiation refers to the tendency to:

Accepted Answer

Overvalue items or positions simply because you currently possess or hold them

Answer

Assign more value to items offered as gifts or concessions

Answer

Underestimate the counterpart's BATNA

Answer

Give excessive weight to the first piece of information received

Question 6

Framing a proposal as 'you will retain $40,000 in savings' rather than 'you will pay $60,000 less than the list price' is an example of using which psychological principle?

Accepted Answer

Gain/loss framing combined with loss aversion

Answer

Reciprocity

Answer

Commitment and consistency

Answer

Social proof