Greed Makes You Bleed In Negotiation

VIVO IPL 14. TV Commercial featuring the former Indian captain, M. S. Dhoni. He can be seen narrating the tale of ‘Hitman’ (Rohit Sharma) winning five IPL titles. With this Dhoni, acting as a Guru, teaches his disciples that being greedy is nice if it helps in winning.

What may be good for sports may not be good for negotiation. Greed may help you win in negotiation. But the win comes at a price. It creates a divide between a moral compass and relationships. In the pursuit to win, bluffing, deception, lies, misrepresentation, and puffing becomes normal for such people. There is an interesting illustration in the book “The Real Trump Deal”. The situation goes like this:

Trump: This is the most incredible spot in the city to live. You will love it. Guaranteed. There’s no place in the world like this location on Fifth Avenue. Best location. Best city. Best building. Best address. Just look at those amazing views from your bedroom. Imagine waking up and seeing that skyline. Your friends will be totally jealous! 

Potential buyer: I would love to live here. I’m just worried about the area. Who else is going to live here? 

Trump: I’m glad you asked. In fact, just last week I took Princess Diana on a tour of a residence that takes up an entire floor of the building. She loved it! In fact, I expect to get an offer from her shortly. Wouldn’t it be incredible to share an address with Prince Charles and Princess Diana? 

Now put yourself into the shoes of the potential buyer and assume that Trump made up the Princess Diana tour and related facts solely to entice you to choose Trump Tower. You got into this trap. How would you feel about it post negotiation? Cheated? Surely yes. Now what about your future relationship with the seller? Any future negotiation with such a seller will be a deal killer from the very beginning. Subtly such sellers start bleeding.

It has been observed that in several cases greed results into an impasse.  Reaching an agreement becomes impossible and the potential benefits of the deal are destroyed. In a classroom experiment, an instructor asked a group of two students each to decide among themselves how 10 marks for the group project submitted by them should be allocated to them. They were also told that if they don’t reach an agreement then none will get marks for this component. There are 3 possible ways they could decide to distribute marks. Equality(in this case, a 50-50 split of marks), equity(a split in proportion to their respective contribution to the group project, and the greed (a split that favors you so that you may get a better grade). It was observed that out of 40 groups, 8 groups could not reach an agreement. These were the groups where participants appeared greedy and were continuously insisting on getting more marks compared to their partner and as such could not reach an agreement at the cost of getting zero for both of them. In an attempt to get every pie on the table, you may end up losing everything. 

Greed overshadows rational thinking. Consider an interesting story. After several years into being prayers, the God was pleased with the person who always wanted lots of money. The God told him that he could choose from two shells as a reward for his prayers. One of this will give him whatever he wanted and the second one will always ask him to get twice of what he asked before it was given to him. He chose the second one. 

Now when he asked the shell to give him Rs 1000. The shell asked him, “why don’t you take Rs 2000”. He said, OK give me Rs 2000. The shell once again asked him, “why don’t you take Rs 4000”. This went on till the person realized that he was foolish to ask for the second shell when the first one could give him whatever he wanted – no limits attached. 

It’s important to remember that having a mutually acceptable outcome should always supersede than having an outcome that serves your interest only. By doing so you earn the goodwill, trust, respect of your opponent. It is always easy to negotiate with a person who likes you as compared with the one who does not like you. Greed has all the ingredients to make a person dislike you.

Erich Fromm, a German Social Psychologist observed, “greed is a bottomless pit which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction”. You have been warned- greed can make you bleed in negotiation.

Prof Kamal K Jain is professor of Organizational Behaviour and Human Resource Management at IIM Raipur. He can be reached at [email protected]