I was really happy that we managed to talk a little about rational/ irrational behavior on the last classes. First of all, it was interesting and secondly, I'm a big fan of behavioral economics, which deals with that matter. There are many things, that can be used in negotiation, but I will describe those 5, that are actually useful for me.
1. Anchoring effect
It is widely known, that people tend to be biased by random numbers and those can actually affect their perspective and rationality. Man can easily use anchoring. It is very effective, especially in bargaining. It is easy to anchor higher price when saying the initial price. Just make it slightly higher, than it should have been. Remember the famous Liebeck vs McDonald's lawsuit? Lawyers who represented Mrs Liebeck were able to get a great deal only because they started from the extremely high anchor. Case study is well described in the book "Priceless" (W. Poundstone) or in this link: http://www.lectlaw.com/files/cur78.htm
2. Endowment effect
"Do you want to give it a ride?". If you have bought a car at least once in your life, you had probably heard it. Used car dealers intuitively know the power of endowment effect. Multiple research showed that people value things more they actually own or... even hold in their hands. If you drive a car, you instantly think about it as yours, so you're more willing to buy it.
3. Loss aversion
People hate when they have to give something back, even if they're not using it. Imagine kids, who have to give their Lego blocks to younger cousins or Americans who don't have guns, but removing the 2nd amendment would make them riot. If you own something (endowment effect), you don't not only value it more, but also feel bad about giving it back. In negotiations, people feel uncomfortable when they have to compromise and give something they agreed to before. It is good to remember about it.
4. Paradox of choice
Barry Schwartz perfectly described this phenomenon in his book titled as the headline above. Imagine the situation where you're going to buy a pair of jeans. You want to buy them in the same way you used to several years ago. But then the shopkeeper asks you, cause maybe you want slim fit, regular, baggy or in a different type. I don't even have to mention the color. When there are many options and we have to choose only one, we feel bad, cause our alternative costs (costs of not choosing the other options) increase and that distinctly diminishes our utility - which is satisfaction in this particular case. It is good to frame the possible options in limited ways. Just give 2 or 3 options - your client will feel more comfortable. Schwartz described it here: https://www.youtube.com/watch?v=VO6XEQIsCoM
5. Will to take the default option
Do you remember the last time when have you been installing something on your computer or registering into new internet shop? You probably just check everything what was needed, clicked OK and didn't bother. It's pretty much the same with written agreement - many people don't read them anyway. Presenting the deal like the default option may actually be a good idea. "If you don't agree, please sign here" or "If you don't want us to send you some additional things, please write us a special letter, which..." Sometimes picking up the pen is treated like a cost. Stupid, I know, but that's how it works. Ariely described it here: https://www.ted.com/talks/dan_ariely_asks_are_we_in_control_of_our_own_decisions
Even United Kingdom's government used some default option stuff in their administrational policy. They even hired Richard Thaler, one of the inventors of behavioral economics.
To be successful in business we need to constantly think about our limitations as humans. After all, we're not homo oeconomicus, but homo sapiens, so we can be fooled all the time, by heuristics, biases, incentives around us. It is better to think that we're irrational - it's easier that way.
Brak komentarzy:
Prześlij komentarz