How to Shape Human Behavior

Published in 2001 by Basic Books, Max H. Bazarman, Jonathan Baron, and Katherine Shonk‘s book You Can’t Enlarge the Pie cites pertinent case studies  and makes logical arguments on how decision making strategies could best apply ‘wise tradeoffs’ to political negotiation.”

Business (wo)men vs Politicians

The best management university graduates are taught two major non-adversarial strategies for efficient, successful negotiations:

1. Identify and neutralize cognitive biases that affect decision making, both in themselves as well as in the other parties’ logic.
2. Whenever there is disagreement, seek to ‘expand the pie’ and maximize ‘wise tradeoffs’ for mutual benefit

[EDITOR’S NOTE: For more on negotiation strategy, check out my interviews and lectures on negotiation.]

Politicians, You Can’t Enlarge the Pie argues, seem to lack this negotiation training, and as a result goverments grow ‘increasingly combative… continually making decisions and crafting policies that everyone (including businessman and President Donald Trump) ‘knows’ are imprudent.

Six psychologically flawed assumptions outlined in this book that prevent effective government include:

1. Do no harm
2. Their gain is our loss (win/lose)
3. Competition is always good
4. Support our group
5. Live for the moment
6. No pain for us, no gain for them

2. Their gain is our loss (win/lose)

A common negotiation misconception is that if something benefits the other party, then somehow it MUST be bad for you. When all parties hold this viewpoint rather than look for tradeoffs which allow all parties to enlarge the pie and improve everyone’s position, deadlock is imminent. One major reason for this problem is when a party’s intentions are misunderstood or misinterpreted.

The pareto efficiency is “a state of allocation of resources from which it is impossible to reallocate so as to make any one individual or preference criterion better off without making at least one individual or preference criterion worse off.”

[EDITOR’S NOTE: Point 815 in How to Shape Human Behavior 3rd Edition is that “Negotiations are usually a combination of:

• Zero-sum distributive negotiations whereby all parties fight over a fixed sum of value, and a gain by one party means a loss to the other. Most people irrationally tend to over-simplify negotiations, automatically assuming that the other negotiator is using this strategy, and therefore that anything which benefits the other party must somehow be bad for them. (Their gain is our loss)
• Win/win integrative negotiations whereby all parties cooperate fully and pool resources to achieve maximum return on investment. (The pareto efficiency)

Even in balanced, give-and-take, win/win negotiations there will be times when you must choose between cooperating for mutual-gain and cheating to gain an unfair advantage. This is known as the negotiator’s dilemma.

In a professional long-term relationship whereby all parties agree to a cooperative, mutually-beneficial, win/win relationship with each other, your optimal negotiation strategy would be a forgiving tit-for-tat strategy (FTFT) whereby involved parties:

• Ensure the rules, expectations and definitions are clear and understood from the very beginning
• Assume good faith by the other party and begin the relationship trusting the other person by revealing your true intentions and not taking advantage of the other party. If the other party responds in the same trusting manner, then your relationship is off to a good start
• Seek Pareto efficiency – a mutually-beneficial state where all involved parties are using 100% of their available resources so efficiently that no further improvements can possibly be made without damaging an involved party
• Understand that at some point the other party may cheat to gain an advantage over you, and that the other party also assumes that at some point you may cheat to gain an advantage over them. Don’t be angry about it, just be cautious of it and conduct business accordingly. Trust but verify
• If at some point you discover the other party has, or is attempting to cheat and take advantage of you, retaliate by cheating for the advantage as well, and continue cheating until the other party returns to cooperating with you, at which time you forgive their cheating and return to being cooperative and friendly with them in so far as they are not continually taking advantage of you and simply expecting you to forgive them
• Understand that as long as a person is benefiting from a particular behavior or strategy, that person will likely continue using that strategy until no more benefit is being derived from it, at which point they will likely change tactics. Firmly showing that underhanded and manipulative tactics will not be tolerated will very quickly either get the other party to be more cooperative, or will end negotiations altogether
• Understand that at some point communications will be misinterpreted, and what you interpreted as cheating by the other party – which provoked your cheated as retaliation – may not have been cheating, and vice versa, and so be willing to keep dialogue open and forgive. As long as they stay open to communication, you have to stay

You may lose a few short-term battles with this FTFT strategy, but with a strong reputation for diplomacy and cooperation, and with an ability to show firmness and retaliation, you stand a greater chance of winning in the long-term, provided the other party’s cheating isn’t so devastating that you cannot recover from it.

Relationships which develop beyond a FTFT relationship become a more mature and nurturing communally-based relationship whereby parties are no longer keeping score of each other’s activities and assessing whether or not the other person is abusing the relationship. ^{111,123,136,155,224]}

3. Competition is always good

A professional sports team begins talks with a stable yet financially struggling town promising to potentially relocating to their city and bring more jobs and greater economic stability IF they can offer a better deal than their current hometown. Meanwhile, the professional sports team corners their current hometown government (ideally just before an election year) and threatens to uproot and change hometowns, thus costing local taxpayers tons of money and increasing the unemployment rate, UNLESS they agree to offer a better deal than a competiting city…

The result is a city versus city bidding war for the professional sports team, and in the end the highest-paying city gets far less than they bargained for in terms of an increase of low-paying, minimum wage jobs, increased air pollution from cars and sports fans, and an increased strain on locals as low- to middle income tax brackets are the ones who feel the brunt of the tax increases.

This is dysfunctional competition. No matter what happens the professioal sports team owners win at the expense of the local tax payers. When one party at the negotiation table obtains, and then exploits, their position of power, negotiations are no longer about win/win, and in this case competition becomes a means of exploitation. Rule #1 in effective negotiations: Never put yourself in a position where you HAVE TO have the deal.

6. No pain for us, no gain for them

Special interest, nongovernmental organizations (NGOs) are founded, and form coalitions, with the well meaning mission of ‘representing the disenfranchised.’ However a main problem NGOs unfortunately overlook boil back down to win/lose relationships, whereby in protecting one specific disenfranchised’s rights and goals, they are inadvertently preventing other, perhaps greater disenfranchised groups from improving their status in life. (Recall the Pareto efficiency.) As the book explains in regard to a global economy of developed and under-developped countries, “The goals of protecting American jobs and creating new restrictions usually conflict with the preferences of poor countries that are eager to become active participants in the world market… If governments were to take full advantage of wise tradeoffs, rich and poor alike would be better off in the long run.”

The problem seems to boil down to an ‘us versus them’ mentality, forgetting that we are all sharing the same limited resources on our slowly dying planet Earth, and that while being poor in a developped nation such as the United States is undoubtedly difficult, it is not nearly as difficult as being poor in an under-developped nation.

While some negotiated deals will cause some groups of people to lose their jobs, those deals can also bring about “greater long-term benefits to all of humanity, including the creation of jobs for workers around the world and the eventual promise of improved technology and a cleaner environment,” provided you acknowledge global warming exists.

To the betterment of all of humanity, “those who are better off must learn how to accept small financial sacrifices and take an interest in poverty and voice their concerns on behalf of the poor.”