Biases in Negotiations

On January 14, 2019, the Rational Think Tank started the new year by giving a talk on the effects of cognitive dynamics on negotiation. Board member Philip Hattemer spoke as guest speaker at Bonn Negotiators e.V.. In his lecture, he demonstrated the boundaries of rational behavior of everyone inside the room by using the Ultimatum Game (Güth et al. (1982)) and the case “Steve” (cf. Kahnemann (2011)). He then opened rational solutions to the given problems, namely the Bernoulli Principle and Bayesian Rationality. Based on the two systems of the mind, Philip explained how heuristics lead to biases – and how these biases can have effect on legal professionals in their daily practice.

In the main part, Philip explained in detail how selected biases influence decisions and estimates during a negotiation. He covered the Anchoring Effect, Certainty Effect, Sunk Costs Fallacy/Escalation of Commitment, as well as the Loss Aversion. The participants then tried to use their gained knowledge in the final negotiation scenario.

Bonn Negotiators e.V. is a negotiation initiative at Rheinische Friedrich-Wilhelms-University in Bonn, Germany. The NPO consists of students and young professionals, keen to develop and strengthen their negotiation skills. It was a pleasure for us to send a speaker to these highly motivated students and young professionals.