CPN Negotiation Psychology & Cognitive Biases 2 — Questions and Answers
Question 1: The 'fixed-pie assumption' is a cognitive bias that causes negotiators to incorrectly assume:
- Both parties have identical reservation prices
- Resources and value in a negotiation are strictly limited and cannot be expanded (Correct answer)
- The first party to make an offer will always secure the larger share of value
- A deal must be finalized within a predetermined number of sessions
Correct answer: Resources and value in a negotiation are strictly limited and cannot be expanded
The fixed-pie assumption is the erroneous belief that negotiation is purely zero-sum, preventing negotiators from discovering integrative trades that could expand total value.
Question 2: The availability heuristic affects negotiators most when they:
- Use only publicly available market data to set their opening position
- Make probability judgments based on how easily examples come to mind rather than actual data (Correct answer)
- Evaluate counterpart proposals based on their available authority to decide
- Prioritize issues that are available for discussion early in the agenda
Correct answer: Make probability judgments based on how easily examples come to mind rather than actual data
The availability heuristic causes negotiators to overestimate the likelihood of vivid or recent outcomes (like deal failures) simply because those examples are mentally accessible.
Question 3: Status quo bias in negotiation is best described as:
- A preference for maintaining the current state of affairs, even when a change would be beneficial (Correct answer)
- The tendency to treat all parties equally regardless of their bargaining power
- A bias toward accepting the counterpart's initial offer to preserve the relationship
- The tendency to anchor future negotiations to past agreements
Correct answer: A preference for maintaining the current state of affairs, even when a change would be beneficial
Status quo bias causes negotiators to irrationally prefer the existing situation over alternatives, even when objective analysis shows the alternative offers superior outcomes.
Question 4: In negotiation psychology, the principle of reciprocity is most accurately described as:
- The legal obligation to match any concession made by the other party dollar for dollar
- The social norm that causes people to feel obligated to return favors or concessions (Correct answer)
- A tactic where negotiators explicitly promise future concessions in exchange for current ones
- The tendency to reciprocate aggressive tactics with equally aggressive counter-moves
Correct answer: The social norm that causes people to feel obligated to return favors or concessions
Reciprocity is a deeply embedded social norm whereby receiving a concession or favor creates psychological pressure to give something in return, even when the exchange is asymmetric.
Question 5: The endowment effect in negotiation describes why sellers typically:
- Undervalue their own assets relative to market price when under time pressure
- Demand more for items they own than they would pay for identical items they do not own (Correct answer)
- Overestimate the value of the other party's concessions
- Endow their opening offers with excessive justification to appear credible
Correct answer: Demand more for items they own than they would pay for identical items they do not own
The endowment effect causes people to assign greater value to things simply because they own them, which inflates seller reservation prices and creates barriers to agreement.
Question 6: How does the contrast effect influence a negotiator's perception of a counteroffer?
- A moderate offer appears more attractive when presented immediately after an extreme offer (Correct answer)
- Negotiators perceive offers from familiar counterparts as more reasonable due to familiarity contrast
- Written offers are perceived as more credible than verbal ones due to format contrast
- A concession appears larger when offered in stages rather than all at once
Correct answer: A moderate offer appears more attractive when presented immediately after an extreme offer
The contrast effect causes us to evaluate an option relative to what immediately preceded it — a reasonable offer looks especially good after an unreasonably extreme opening demand.
Question 7: Which psychological phenomenon explains why people are more likely to comply with a large request after first agreeing to a small one?
- The door-in-the-face technique
- The foot-in-the-door technique (Correct answer)
- Reactive devaluation
- Commitment escalation
Correct answer: The foot-in-the-door technique
The foot-in-the-door technique leverages the consistency principle — once someone agrees to a small request, they feel psychologically compelled to remain consistent and agree to larger related requests.
CPN Negotiation Psychology & Cognitive Biases 2
The 'fixed-pie assumption' is a cognitive bias that causes negotiators to incorrectly assume: