By cold calling the leads he is given, Seth happens upon someone willing to listen to his pitch. Harry, a gourmet foods purchasing manager, gives Seth the opening he needs to negotiate a sale. When Seth offers Harry an investment opportunity, Harry raises his first line of defence: "I'm not really in the market for that right now". Seth, being a pro, uses humour to wrongfoot Harry with an unexpected question, "Tell me Harry, are you married are you happy?", which provokes the desired laughter response. King (1988) showed that humour can be utilised as an effective tool to diffuse tension and aid the negotiation process. 1-0 Seth.
Seth keeps asking questions throughout the negotiation and discovers that Harry has some blue chip stocks already, which have not seen much return. He contrasts this with a "explosive situation right now" stemming from a new birth-defect-busting drug to be produced imminently by a pharmaceutical company. The sense of urgency is clear: buy these fast moving stocks to get aboard the gravy train, but do it quick. Research has shown that in time-pressured negotiations participants tend to explore alternatives less and will make less advantageous deals (Stuhlmacher & Champagne, 2000). However, Harry ain't buying this one, and counters with his second line of defence: "Look I really can't buy anything right now, my wife and I are getting to buy a house this month, and we're really trying to save every last penny." 1-1, advantage Harry.
It's here that Seth shows Harry his hand: the size of the deal is not important, he is looking to prove what he can do for Harry off the back of this deal. Seth is really using the Foot in the Door technique with a view to generating future business. Studies have established that if someone agrees to a safe, relatively small request then they will be more likely to comply with a larger request later on (Freedman & Fraser, 1966; Taylor & Booth-Butterfield, 1993).
He reinforces the point by using humour again: "I show you 30 or 40% you'd be pretty excited about my next idea right? Of course you would, you'd be handing out my business cards, right?" Furthermore, he brings a number into it, and a relatively low one at that: "pick up 100 shares, the bare minimum.... start small". Seth is using the anchoring heuristic to make the request seem a small one (Tversky & Khaneman, 1974). 2-1 Seth.
Harry equalises with his third and final line of defence, the 'I need to talk to my wife/husband/dog/oracle' tactic. The need to seek approval from an absent authority figure is a commonly used and effective strategy to buy time to ensure rational decisions are made, which would give Harry Houdini an escape from a deal he's not really that into. 2-2 and into stoppage time.
Seth, realising this could scupper his sale, again attempts the time-pressure strategy: "I'm going to lunch in 5", but to no avail. He then attempts to utilise psychological reactance, the idea that we will rebel against constraints placed on our behaviour (Brehm & Brehm, 1981), by essentially mocking Harry for having to consult his wife to make any decisions.
Lerner and colleagues (2004) showed that in negotiation emotional thinking can impair decision making. Seth uses this combined with anchoring to make his final pitch: "We're not talking about a lot of money here, and just think what your wife's gonna say when you come home with a big fat cheque because you had the foresight to see a good thing coming." Harry concedes under this pressure and agrees to buy the shares. 3-2 Seth, game set and match. Seth goes through on aggregate.
Paul O'Connor - Blog 5
Brehm, S. S., & Brehm, J. W. (1981). Psychological reactance. New York: academic press.
Freedman, J. L., & Fraser, S. C. (1966). Compliance without pressure: the foot-in-the-door technique. Journal of personality and social psychology, 4(2), 195.
King, K. N. (1988). "But I'm not a funny person": Humor in dispute resolution. Negotiation Journal, 4, 119-124.
Lerner, J. S., Small, D. A., & Loewenstein, G. (2004). Heart strings and purse strings carryover effects of emotions on economic decisions. Psychological Science, 15, 337-341.
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.
Taylor, T., & Booth‐Butterfield, S. (1993). Getting a foot in the door with drinking and driving: A field study of healthy influence. Communication Research Reports, 10(1), 95-101.
Tversky, A. & Kahneman, D. (1974) Judgement under uncertainty, heuristics and biases. Science, 185, 1124-1131.