Cognitive Bias in 

Negotiations

Presented by 

Carolyn Brommer & Dave Moora
Agenda

What is a cognitive bias?

How do biases impact us?

Biases that impact us in 

negotiations

Tips for navigating negotiations 

more effectively 
implicit/cognitive/unconscious bias

: a bias or prejudice that is present but not 

consciously held or recognized

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Why this topic?

• Allows us to see that the way people act in negotiations is perfectly normal!

• Can suggest approaches to help work through negotiations

• Can make us more effective
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Deciding on your initial offer

• Offers are signals - taking a strong position you are saying you expect a 

favorable outcome

• Three kinds of opening offers (fair, moderately unreasonable, absolutely 

unreasonable)

• Advantage to going first

• Allows you to frame negotiations

• Clear understanding/confident of case value - go first

• Disadvantage to going first

• Forces you to set the outer limit of bargaining range

• Uncertain of value - let other side go first 

• do this by delaying or asking questions

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Anchor Bias

Cognitive bias that causes us to rely too 

heavily on the first piece of information 

given on a topic.
What is the 

impact? • Starting point for all further 

negotiations 

• Final decision is biased towards 

the initial information value

• Subjects who see a higher 

number will give higher 

estimates about an unknown 

fact

• Less clear you are on your case’s 

value the more you are affected

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First Offer 

Strategies • Set the anchor to expand 

outer limits of the 

bargaining range 

• Anchor impacts 

bargaining relationship

• Compromise is expected • Include multiple options 

to negotiate in opening 

offer

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Confirmation Bias

The tendency to seek out and/or 

favor information that confirms an 

existing belief

Image Source: Capital.com
Great Quotes on Confirmation Bias . . .

• “What the human being is best at doing is interpreting all new information so 

that their prior conclusions remain intact.”

— Warren Buffet

• “The human understanding when it has once adopted an opinion, draws all 

things else to support and agree with it. And though there be a greater 

number and weight of instances to be found on the other side, yet these it 

either neglects and despises, or else by some distinction sets aside and 

rejects.”

— Francis Bacon
Confirmation Bias in 

Negotiations

• Can lead you to incorrectly assess proposals and their 

outcomes

• Can lead you to ask questions that support original beliefs 

rather than seek an honest appraisal of what is intended

• Can prevent you from building a better relationship with your 

counterpart

• In summary . . . lost opportunities that may have been better 

for your team
Confirmation Bias—

Antidote

• Slow down

• Ask questions

• Look at all of the information before 

drawing conclusions

• Seek the perspective of another person 

who may not have the history you do

• Try to prove yourself wrong

• Finally, if you can’t express a respectful 

“no” and explain your reservations—ask 

the other party how they would answer 

them so that you could say “yes”
Poll 

• You are offered a wager on a coin toss.

• Tails – you lose $100

• Heads – you win $150

Do you take the bet?
Loss Aversion

• Losses are twice as powerful, 

psychologically, than gains

• Pain of loss more acute than 

pleasure of gain

• Tendency to strongly prefer 

avoiding losses over acquiring 

gains
Negotiation Strategies to Address Loss 

Aversion

• Loss is viewed based on original reference 

point (anchor), not actual net value

• Negotiators discount value of gains and 

overvalue unexpected losses

• Losses felt more when they occur in series of small 

steps

• Bundle losses together and offer at one time

• Small gains felt more valuable than same total gain 

in lump sum

• Offer series of small gains in small steps for 

maximum impact

• Look for ideas not previously discussed

• Agreement is often reached if neither side 

in a negotiation feel that it has “lost”
Poll

• Would you accept a bet that offers a 10% chance of winning $95.00 and a 90% 

chance of losing $5.00?

• Yes

• No

• Would you buy a $5 lottery ticket that offers a 10% chance to win $100?

• Yes

• No
Framing 

The idea that our judgments

and decisions about 

information, events, motives, 

etc., can depend upon the way

it is presented to us.

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Two focus groups were asked the same questions framed 

differently

• Do you get headaches frequently? If so, how often? 2.2/week

• Do you get headaches occasionally? If so, how often? .07/week

• How long was the movie? (minutes) 199 

• How short was the movie? (minutes) 130

• How tall was the basketball player? (inches) 79

• How short was the basketball player? (inches) 69 

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Get the Language 

Right

Parties consistently report that a 

shift in positive or negative 

framing shifts their feelings about 

reaching resolution

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Why does Conflict 

Lead to the Downward 

Spiral?

Fundamental Attribution Error

Natural tendency to ascribe negative events to actors’ character or 

ill motive.
Fundamental Attribution Error

• Everyday human behavior is heavily 

influenced by external factors

• Over-emphasizing personality-based 

explanations for other people’s 

behaviors while under-emphasizing the 

actual situation

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Why does 

this matter?

• Brain fills in gap with negative story

• Placing blame on PEOPLE instead of 

Circumstances, we feel less obligated to find 

solutions

What can you do?

• Share as much information as you can, share 

the why

• Unpack with questions and good explanations
Why it can be more 

important who says it 

than what is said

Reactive Devaluation • Devalue a proposal as reaction to 

its source, rather than apparent 

value

• Occurs when we distrust the 

offeror

• Example: an offer is rated less 

highly after it has been put on 

the table than beforehand

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Reactive Devaluation - Tips

• Prior to making a proposal, ask your negotiating partner what their goals 

and interests are around a topic, and then present the proposal in 

response to their stated interests 

• Have the concept or proposal presented through a third party neutral or 

other person who is respected by your negotiating partner
How Does Loss Aversion Drive Decision Making?
Risk Tolerance

• Risk-averse as to gains

• Loath to give up something gained in favor of 

strong chance of gaining more

• Risk-seeking as to loss

• To avoid loss, more willing to take a risk, if there is 

some chance, however small of evading any loss 

• Status quo bias 

• Overvalue current known state

• May attach greater-than market value because it is 

yours
Watch Traps and Tendencies 

• Good offers may nevertheless be rejected because:

• Negotiators may reject reasonable offers b/c they are 

seen as a loss compared to a high reference point 

(e.g., the original demand)

• Our motivation to avoid loss leads to preference for 

status quo 

• Sunk costs trap: costs to date becomes part of the “value” 

that must not be “lost”

• Aggregate losses, enumerate gains!
Mitigating 

Cognitive Bias

• Seek out people who disagree and 

ask them genuinely curious questions

• Ask someone to play “devil’s 

advocate”

• Surround yourself with a diverse 

group of friends and associates

• Practice self-awareness

• Empathize and put oneself in the 

other party’s shoes

• Separate the person from the issue

• Focus on objective facts
Harnessing 

Cognitive Bias

• Set your anchor to expand the range of settlement without shutting down 

your negotiating partner

• Frame proposals in terms of gain (not loss)

• Give the bad news all at once; dole out the gains bit by bit

• Think carefully about who should present a given proposal (consider using a 

mediator)
In closing . . .

Thoughts, takeaways, 

questions?