The above video is a clip from Boiler Room, a film about working as a broker for an investment firm. In it, a broker played by Vin Diesel is seen negotiating a deal with a wealthy Doctor. To do this, his character uses a whole host of effective negotiation tactics which result in a successful sale. To see this, watch from 1:38 onward.
The first tactic that can be viewed here is the use of higher authority and in this case is deployed by the Doctor, by saying he will have to run the decision by his people first. This would allow the Doctor to go away from the conversation and spend time to think about it, a good strategy surely. Stuhlmacher & Champagne (2000) showed that when decisions are made in time pressured situations buyers gave less notice to alternatives and in doing so, gave more concessions to the seller. Alas, in this instance, this does not work as Vin Diesel’s character clearly knows how to keep a buyer interested as seen with his use of scarcity.
By stating that the Doctor will miss an opportunity, whilst watching colleagues get rich, Vin Diesel’s character makes the Doctor feel as though access to the stocks are limited and soon will be unattainable. This decreases the availability of the opportunity and thus increases the Doctor’s desire to attain the stock. Brehm (1966) explains that when scarcity of something is increased, we will react against the interference of obtaining it by wanting to try and possess it more strongly than before. With this tactic, the Doctors use of a higher authority has been bulldozed.
This is then backed up with through influencing the Doctor with social proof. Vin Diesel’s character “opens his office” to reveal loud noise of everyone trying to apparently sell the stock to prospective clients. By hearing this, and being told that the stock is being bought by many people currently, the Doctor is more inclined to want the stock as they see others buying it and infers that this would be a valuable way to behave as if everyone else is doing it, it has to be right, doesn’t it? Milgram, Bickman and Berkowitz (1969) showed this to occur in even simple situations. When confederates were placed on a street and looked upward, they influenced others to do so as well, showing that by seeing others perform a behaviour it provides a social proof about what to do. This works well on the Doctor, who becomes extremely interested in the stock as a result.
Following this, the broker then uses anchoring to influence the Doctor. Anchoring is a cognitive bias that results in a tendency to rely too heavily on the first piece of information offered in decision making. By stating that the Doctor cannot buy more than 2000 shares as it he is a new client, this value acts as the anchor. By also making this seem like a small trade, the broker manages to sway the Doctor from seeing this as a large investment which it initially seems to eventually buying all 2000 shares. Tversky and Kahneman (1974) showed that providing an arbitrary value to participants before asking them to make a quantitative decision effected them in that a lower value, resulted in them giving a lower answer, whilst a higher value lead to them giving a higher answer. This neatly shows the effects of anchoring.
Clearly here, the Doctor never stood a chance, as the Broker managed to reel off a number of tactics to sway the odds of the negotiation in his favour.
George Coe - Blog 5
Brehm, J.W. (1966) A theory of Psychological Reactance. New York: Academic Press.
Milgram, S., Bickman, L, & Brkowitz, O. (1969) Notes on the Drawing Power of Crowds of different sizes. Journal of Personality and Social Psychology, 13, 79-82.
Stuhlmacher, A. F., & Champagne, M. V. (2000). The impact of time pressure and information on process and decisions. Group Decision and Negotiation, 9, 471-491.
Tversky, A. & Kahneman, D. (1974) Judgement under uncertainty, heuristics and biases. Science, 185, 1124-1131.