The F Word

Weekly I/O#19

Be careful with the F word in negotiation: Fair.

Online Course: MasterClass | Chris Voss Teaches the Art of Negotiation

Fairness comes up in nearly every single negotiation. A classic example is a game called Ultimatum Game, which is played in probably every undergrad’s Econ 101 course.

The rule is as follows (from Wikipedia): "One player, the proposer, is endowed with a sum of money. The proposer is tasked with splitting it with another player, the responder. Once the proposer communicates his decision, the responder may accept it or reject it. If the responder accepts, the money is split per the proposal; if the responder rejects, both players receive nothing."

It's clear that, per deal, gaining some amount of money is better than gaining nothing. However, the important thing in the game is that the responders may reject the proposal just because they think they're treated unfairly, even though they would still receive a good amount of money.

People will walk away from a good deal if they feel like they’ve been treated unfairly. On the other hand, people will accept a deal just because they feel the process is fair regardless of the fact that the offer is bad or suboptimal.

At the beginning of the negotiation, we can say something like "It's my intention to treat you fairly. If at any point in time I've been unfair, let me know. We'll go back and address it and fix it." It's better to be proactive addressing the F word than waiting until the other side explodes on you for feeling treated unfairly.

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