Bilateral complex negotiations
How can Behavioural Economics help?
In complex bilateral negotiations, failing to develop a complete understanding of the opposing side’s behaviours can lead to suboptimal negotiation outcomes. Through careful application of the science dedicated to studying human actions and reactions, we can help you enter one-on-one negotiations with a better picture of how the other side of the table will react. We can also influence others in ways which they may not even perceive, by leveraging well-researched biases in human behaviour and decision making.
This methodology is highly complementary to TWS’s Game Theoretical bargaining approach, enabling the use of truly holistic strategies in bilateral negotiations. Along with building leverage and searching for win-wins, the use of behaviourally optimised messaging and communications methods allows you to more effectively drive across your key messages and subtly influence your counterpart in a negotiation.
Framing in negotiations can result in statistically backed improvements to your negotiation outcome, leveraging, for example, people’s loss aversion – a consistently found bias of human decision makers. Whether bilaterally negotiating pay rates with a union, prices with a supplier, or even fees with a client, subtle wording changes can make all the difference.
The basic “we will need to adjust pricing this year to maintain our current levels of support”, converted with the two behavioural principles of loss aversion and focal points to “we will need to adjust our pricing up by 10% this year so that you do not lose any quality of support”, can result in a statistically backed improvement in results.