Behaviour Change

PROPAGANDA FOR CHANGE is a project created by the students of Behaviour Change (ps359) and Professor Thomas Hills @thomhills at the Psychology Department of the University of Warwick. This work was supported by funding from Warwick's Institute for Advanced Teaching and Learning.

Monday, March 17, 2014

Phoebe the haggler!

Although the above clip is more of a comical portrayal of a relatively unsuccessful negotiation, there are some lessons about the dos and don’ts of negotiation to be learnt through it.

Lesson 1- How excited should one appear in the negotiation?
Do: Phoebe initially attempted to appear disinterested and tried to convey the message that they were not desperate to purchase the ring.
Don’t: Chandler was clearly excitable and everyone could tell that this was a man who was looking for a ring to propose. The salesman then clearly knew that he would be willing to pay a good price for something he likes.

Lesson 2- How much should the counter offer be?
After the salesman revealed the price of the ring to be $8,600, Phoebe did a good job of offering a lower price. However, this amount was ridiculously low ($10) and it backfired, with the saleman asking if they were indeed interested to buy the ring. In my opinion, $7000 would have been a great counter offer and serve as an anchor. Malhotra and Bazerman (2007) found that anchors strongly influence the final outcome of a negotiation.

Lesson 3- Know your alternatives
After sensing that Chandler did not really appreciate her help, Phoebe took a step back and the salesman basically got a very good deal out of Chandler subsequently. It seemed clear that Chandler has done little research before shopping for the ring. For a start, he does not ask many questions about the ring.  The salesman capitalised on this by going on to comment on the scarcity of the ring- “this ring is from the 1920’s, it is a one and a half carat diamond with sapphires on either side.” Worchel, Lee and Adewole (1975)’s study provides evidence for the scarcity principle. They asked 200 female undergraduates to rate the value and attractiveness of cookies that were either in abundant or scarce supply. It was found that cookies in the scarce supply condition were rated as more desirable than in the abundant condition.

If Chandler had been more knowledgable about rings, he might have been able to ask questions to strengthen his negotiation position. Sadly, he agreed rather hastily after knowing that he was given a $600 discount.

Gates (2011) stated that a completely skilled negotiator is someone that has their ego in check, is balanced in their thinking, and are focused on understanding the priorities and interests of the other party. As can be seen, Chandler clearly did not possess any of the above qualities and could be left to rue his purchase at the end of the day.

Jason Hong

Gates, S. (2011). The Negotiation Book: Your definite guide to successful                         negotiating. John Wiley & Sons.

Malhotra, D., & Bazerman, M. H. (2007). Negotiation genius: How to overcome                 obstacles and achieve brilliant results at the bargaining table and beyond. New York: Bantam Books.

Worchel, S., Lee, J., & Adewole, A. (1975). Effects of supply and demand on ratings of object value. Journal of Personality and Social Psychology, 32, 906-914.

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