When it's time to negotiate, people "tend to believe niceness will buy them better deals," but Martha Jeong, an assistant professor of management at the Hong Kong University of Science and Technology, and her colleagues at Harvard University have found that "when put to the test, this prediction turns out to be wrong," they write for Harvard Business Review.
How to negotiate win-win technology contracts
Jeong's co-authors include Julia Minson, Mike Yeomans, and Francesca Gino, all of Harvard University.
Negotiation experts usually agree that "being warm and friendly pays off at the bargaining table," the Jeong and colleagues write. And a previous study conducted by Jeong and colleagues found that people think being nice will get them the best deal.
But, they write, new research reveals that being a friendly buyer may not get you the best deal.
For the new research, Jeong and colleagues conducted four experiments with more than 1,500 participants to determine the economic and interpersonal implications of being nice during a negotiation.
In one experiment, a research assistant, under the gender-neutral name pseudonym Riley Johnson, contacted 775 people selling smartphones online. Johnson asked every seller for an 80% discount on the original price.
For the initial message to the seller, the researchers randomly assigned Johnson to use "warm and friendly" or "tough and firm" language. The researchers had three sample messages for each tone.
The researchers found that Johnson's warm messages were just as likely to elicit a counteroffer as the tough messages. But sellers were more likely to offer larger discounts in response to firm messages, according to the study. Sellers gave a discount to 13% of firm messages compared with less than 9% of friendly messages. Overall, the firm messages generated about $35 more in savings per phone compared with warm and friendly messages.
A different study observed the entire negotiation process between 140 participants who were randomly assigned the role of buyer or seller. All participants were incentivized to reach the best deal for a bowl.
One friendly participant wrote they "would love" to have the bowl to complete their set. "It's the last piece I need to complete what a dear relative of mine used when we would spend time together and it would mean a lot for me to have it, but I don't have so much to offer. If you'd be willing, I can offer $250 for it," the participant wrote.
The tough participant, on the other hand, wrote: "Hi! I want to buy this sugar bowl from you, and I can offer you $250 for it. Do we have a deal?"
The researchers here too found that the different communication styles "had a significant impact on their success."
Namely, warm and friendly negotiators ended up paying 15% more for the bowl than the tough negotiators.
As far as the interpersonal impacts of the different communication styles, the researchers found tough buyers were more satisfied with their outcome than friendly buyers, but sellers said they enjoyed negotiating with both types of buyers equally. "Thus, buyers did not seem to benefit economically, personally, or interpersonally from a warm and friendly style," Jeong and colleagues write.
The results revealed that "being firm can sometimes lead to better deals … than being warm," Jeong and colleagues write.
According to the researchers, sellers were likely to perceive friendly buyers as "low in dominance" and "perhaps thought they could extract larger concessions from them." They also speculated that sellers didn't view their friendly buyer negotiations as more enjoyable "because these negotiations took longer or perhaps left the seller feeling guilty."
But while the findings "highlight the clear economic costs of being 'warm and friendly,' they do not imply that everyone should become a jerk," Jeong and her colleagues write.
In fact, in some contexts, being warm and friendly may be worth potentially paying more for a certain item.
"For example, if you are negotiating with a senior colleague over divvying up a trivial project, it might be worth getting clobbered in the short-term, in order to preserve the relationship for the long term," the researchers write. "Negotiators should incur those costs knowingly and intentionally, instead of holding onto the assumption that being easygoing will lead others to return the favor" (Jeong, et al., Harvard Business Review, 9/6).
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