Why is negotiation so difficult?
Reactive devaluation, explained.
What is Reactive devaluation?
Reactive devaluation refers to our tendency to disparage proposals made by another party, especially if this party is viewed as negative or antagonistic. This cognitive bias can serve as a major barrier in negotiations.
Where this bias occurs
Suppose that Sarah and her next-door neighbor have an ongoing feud. Sarah finds herself exhausted, after disputing about property lines, garbage collection, noise complaints, and general upkeep for years. She knows at some point, something has to change.
One day Sarah’s neighbor knocks on her door with a proposal. He says that he won’t let garbage pile up between their houses if she moves her fence over one foot and keeps down the noise on weekdays. Sarah sees that this agreement could be helpful in some ways, but feels uncertain. She thinks, “Why would he propose this agreement if it didn’t benefit him more than her? It must be unfair. ”
Even though Sarah discussed a similar agreement with her husband the other day, she remains uneasy about her neighbor’s offering. Thus, Sarah declines the offer in order to keep the ball in her court. Her evaluation of the proposal is clouded by her opinion of her neighbor as well as her unwillingness to accept the terms proposed by another party. This is an example of reactive devaluation.
Ultimately, this bias negatively affects Sarah in the long-run and contributes to further animosity between her and her neighbor.
Debias Your Organization
Most of us work & live in environments that aren’t optimized for solid decision-making. We work with organizations of all kinds to identify sources of cognitive bias & develop tailored solutions.
We inevitably face conflict in all realms of our lives. Whether we are in line for the grocery store, at home with friends and family, or in the workplace with colleagues, our wants and needs can clash with those of others. The ability to resolve disputes and negotiate terms is a necessary but difficult skill to cultivate. For many, reactive devaluation can serve as a significant cognitive hurdle in conflict resolution. If we are unable to hear out and objectively consider the proposals of others, we may find ourselves in harmful stalemates and costly circumstances.
The cognitive biases we experience on an individual level reverberate within our institutions and social systems. These irrational tendencies become embedded in institutional psychology and large scale global conflicts. Negotiation between laborers and management shapes wages, working conditions, and company profits. Even further, negotiation between warring countries determines the fate of many. Thus, barriers to negotiation like reactive devaluation can have life-altering consequences.
For example, amidst decades of violence and unrest in the Gaza strip, researchers Ifat Maoz, Andrew Ward, Michael Katz, and Lee Ross applied the theory surrounding reactive devaluation to real-life conflict resolution between Israel and Palestine.2 Participants in the study were either neutral or pro-Israel and were provided with a peace treaty supposedly authored either by the Israeli Labor Party or by a Palestinian organization. Even though the peace treaty was the same in both cases, both pro-Israel and neutral participants viewed the proposal as more favorable to Palestine when connected to Palestinian authorship.
It is normal to make such an inference, to assume that the creator of a proposal is thinking of their own interests. However, when the researchers probed further into the reasoning behind these perceptions they found more elaborate cognitive mechanisms at play. The pro-Israel participants construed the meanings of treaty points differently based on the authorship. The researchers stated:
For example, pro-Israeli subjects reading the Israeli-authored plan construed “limited militarization” of the Occupied Territories to mean something akin to the presence of a typical city police force, whereas pro-Israelis who read the Palestinian-authored plan construed it to be something closer to the presence of a national army.
In contrast, neutral subjects did not tend to construe meanings differently. Here we can see how opposition heightens the effect of reactive devaluation. The variable meanings we personally attach to the words of others, charged by our own position, can cause misconstruals and rejection of concessions that would ultimately benefit us. Reactive devaluation can alter public opinion, support of a policy, and political judgments at the highest levels.
Why it happens
We can rationally infer that someone offering concessions must also require significant gains in return. Yet, the rejection or devaluation based solely on that knowledge can be entirely irrational and result in poor decision-making. Depending on the situation, there are various cognitive processes underlying reactive devaluation. One of such processes is evident in the Israel-Palestine study, as we saw how a construal bias based on authorship yields “less charitable interpretations of any ambiguous provisions in the proposal”.2 The incorrect meanings we may project onto the points made by an opposing party cyclically validates our disdain and strengthens barriers to negotiation.
We can be limited by a “zero-sum” perspective
In situations of extreme enmity, the two parties can view the conflict as “zero-sum”, meaning the two sides are so diametrically opposed that a gain for one party equals a loss for the other. 3 We can see this type of conflict in the common image of a scale weighing good and evil: any win for “evil” results in a loss for “good”. Thus, in a zero-sum game, any proposal made by an adversary is typically distrusted and dismissed. While oppositional tension can make the conflict feel black-and-white, it is often not truly the case. This perspective can fuel reactionary thinking and block resolution at the cost of both sides.
We want what we can’t have
The popular saying “the grass is always greener on the other side of the fence” captures our tendency to desire what is just out of reach. Stanford psychology researchers Lee Ross and Constance Stillinger have found evidence that a change in preferences is another cognitive underpinning of reactive devaluation.4 For example, say you are trading old items with your friend. You want his yo-yo, but once he actually offers it to you, you start to think that maybe the slingshot would be a better trade. Even if there is no animosity towards the party we are negotiating with, this change in preference causing us to want what we can’t have can fuel reactive devaluation.
We weigh our losses heavily
In their pivotal 1979 paper, lauded behavioral economists Daniel Kahneman and Amos Tversky demonstrated that the displeasure we feel from a loss is much greater than the pleasure we feel from a gain of equal magnitude.5 The resulting fear of losses, otherwise known as loss aversion, is rooted in an evolutionarily advantageous instinct to take threats seriously and avoid potentially costly circumstances.6 However, in situations where our survival is not on the line, loss aversion can hinder us from making smart decisions and prevent us from taking gambles that are actually in our favor.
Negotiations often entail making concessions in order to get certain things that we want. In response to such asks, our aversion to losses can cause us to devalue a proposal off the bat. As much as it hurts to give up some of our power or resources, it is ultimately to our benefit to view the negotiation within a broader scope.
Why it is important
We are social creatures. Our ability to successfully interact with others can be a major determinant of our overall success and well-being. Even on an implicit level within our personal relationships, we negotiate our needs with the needs of others, taking into consideration what we have to offer. Negotiation is embedded within social relationships, and thus within the framework of our society. Fields like business, politics, and law are all comprised of conflict, concessions, negotiations, and resolutions between parties. Regardless of the scale of the dispute, our biases can creep in and impact our ability to negotiate. Reactive devaluation can limit our ability to resolve conflict and lead to negotiation failure, as shown in real-life and laboratory settings.
How to avoid it
Research on the underlying mechanisms and motivations of reactive devaluation has provided insights on potential methods of overcoming this cognitive barrier to effective negotiation. It is to our benefit to be forceful and critical when necessary, yet remain open to compromise in order to move forward. Here are some ways we can attempt to lessen the effect of reactive devaluation.
We can take a moment to self-affirm.
When we are in tense disputes, we often perceive the opposition as a threat to the self. Thus, accepting proposals made by the opposing party can feel like we are conceding certain defining characteristics, such as strength or integrity. Our tendency to devalue and reject attempts at negotiation can serve as a method of protecting the self. Following the terms made by someone else can feel like we are relinquishing our control and ability to make choices.
Researchers have found that practicing “self-affirmation”, where we run through our values and the components we see as integral to our self worth apart from the context of the conflict, can diminish reactive devaluation.7 If we can maintain our overall sense of adequacy when assessing a proposal from another party, making concessions can feel like less of a personal loss. Taking a second to ground ourselves outside of the conflict is not always easy, but with practice, it can promote more objective decision making.
Consider tactics of prior elicitations and concession menus.
One key to a successful negotiation and reduction of reactive devaluation is being as direct as possible. This can involve certain formal pre-negotiation outlining by both parties.
Social psychologist Lee Ross suggests that the two sides should exchange lists of preferences and values so that they can explicitly link proposed concessions to the “prior elicitation” of terms.8 For example, let’s say Jack and Jill decide to follow this strategy. When Jill offers up a proposal to Jack, the concessions she makes will be explicitly linked to the preferences he has stated. Consequently, when Jack receives this proposal there is less of a chance that he will say, “Well.. if Jill is offering this up to me it must not have any value” and reject it.
Ross also suggests a similar tactic of creating “concession menus”, where we create a list of choices of concessions that the other party can pick from. This initiates a back-and-forth between the two parties and allows each side to maintain some level of control.
How it all started
Prompted by the ongoing arms race between the Soviet Union (USSR) and the United States, Ross and fellow Stanford psychologist Constance Stillinger sought to understand the psychological barriers preventing settlement of conflicts. It seemed obvious to Ross and Stillinger that both nations would benefit from coming to an agreement, as sustaining the Cold War required an incredible expenditure of resources. Yet, the Cold War continued for over 40 years.
In a 1991 paper, Ross and Stillinger dissected the different psychological, strategic, and institutional barriers to conflict resolution.3 Through theoretical and observational research, the researchers saw reactive devaluation arise as an obstacle in the negotiation processes. They administered a sidewalk survey to assess participants’ positions on a mutual reduction of arms by the United States and the Soviet Union. The proposal was presented as either written by US President Ronald Reagan, a neutral party, or President Mikhail Gorbachev of the USSR.
The results of this survey reflected the researcher’s predictions. People rated the proposal highly when ascribed to the United States, less highly when proposed by a neutral party, and considerably lower when it was tied to the Soviet Union. Reactive devaluation caused biased evaluations of the proposal, heightened especially by negative associations surrounding the Soviet Union.
Example 1 - Student body sentiment
Amidst growing global dissent against the South African apartheid state in the early ’90s, universities faced pressure to pull out of any economic investments in South Africa. Stillinger and his colleagues administered a series of studies on the Stanford University campus assessing the students’ evaluations of university divestment plans, and looking for evidence of reactive devaluation in the students’ responses.8
In one study, the students were presented with the two following divestment plans:
- “Specific Divestment”, meaning that the school would immediately divest from any corporations involved with the South African military or police force
- Deadline Divestment”, meaning that the school would entirely divest two years down the road
Some students were told that the university was adopting the Specific plan, some were told it was the Deadline plan, and some were told nothing of the university’s intentions. The results showed significant evidence of reactive devaluation. If the students were told that the university was going forward with the Specific plan, they would value it as less impactful than the Deadline plan (and vice versa). When the students were not informed of the university’s chosen plan, the results fell in the median of the experimental conditions. Regardless of the divestment plan in front of them, the students’ preferences were majorly impacted by what was proposed versus what was not proposed.
Example 2 - High-cost litigation
As much of the legal system relies on negotiation, reactive devaluation has notably costly consequences within the context of litigation. When we are unable to accept reasonable settlements due to our reactionary thinking, we may be subject to significant financial detriment.
UCLA academic and legal expert of negotiation Russel Korokbin discusses how reactive devaluation plays out in a legal setting.1 Let’s say we are the plaintiff in a case claiming harm inflicted by another party. A settlement of $50,000 dollars may seem reasonable to us before it is offered. Yet, when the defendant makes a $50,000 settlement offer, our reactionary nature may push us to reject their offer and ask for more. Consequently, the litigation will continue, racking up hefty legal fees and consuming more of our time. Harvard legal scholar Robert. H Mnookin corroborates this account, adding that clients frequently respond to reasonable offers by saying, “Obviously they must know something we don’t know. If $7,000 is a good settlement for them, it can’t be a good settlement for us.” 9 Here we can see how this cognitive bias works against our best interest, even though we might think we are advocating for ourselves.
What it is
Reactive devaluation refers to our tendency to devalue and reject proposals made by another party, especially when we feel negatively about the other party.
Why it happens
This reactionary response happens because we may interpret points made by the other side differently than intended. We also can assume a “zero-sum game”, where any gain of the opposing side results in our own detriment. Additionally, we are averse to losses, causing us to reject any suggested points of a concession made by another party.
Example 1 – How reactive devaluation can impact student body sentiment
A study on Stanford University students during the South African apartheid showed that students favored whatever plan for divestment was not offered by the school. This showed a change in preferences reflecting that “the grass is always greener on the other side”.
Example 2 – How reactive devaluation can lead to high-cost litigation
In a legal setting, reactive devaluation can cause plaintiffs to refuse offers and settlements. This results in high legal fees for both parties and lengthy legal battles.
How to avoid it
We can practice taking a moment to self-affirm to attenuate the effect of reactive devaluation. We can also set up negotiation guidelines such as prior elicitation of preferences and values, so we can be as explicit as possible of our intentions when making proposals.
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