REFINING OUR THINKING ABOUT THINKING: BATTLING THE SWAY OF COGNITIVE BIASES IN NEGOTIATION1 Abstract: Over a half of century of research and experimental testing confirm that, when making complex decisions, humans engage in predictable and irrational errors in thinking. Known as cognitive illusions or cognitive biases,2 normal errors manifest because we leap to conclusions with scant evidence to justify those conclusions, fill in gaps with assumptions and create fanciful narratives that corroborate the story we wish to tell rather than the story the facts articulate. These inaccuracies in thinking and judgment can cause fundamental error in how we advise clients, plan and, negotiate with opposing counsel. Numerous negotiation, mediation and client interviewing books and articles describe these cognitive illusions. Some recognize a few “de-biasing techniques” that counsel may employ, but those strategies are often minimally described and scattered amongst the literature. This article briefly describes some cognitive biases that particularly impact negotiations (Part 1) and amalgamates practical strategies that can challenge these biases (Part 2). By seeing these various strategies together, readers may be encouraged to combine and practice these methods to help recalibrate our automatic, normal psychological responses, moving toward more effective decision-making. Ultimately, the goal is to inspire further curiosity into a fascinating subject; the beautiful complexity that is human thought. 1Laura A. Frase, currently an Assistant Professor of Law and Director of Advocacy Competitions at UNT Dallas College of Law, has over 36 years’ experience in defense litigation. Prior to entering academia, Ms. Frase represented and counseled clients in managing their national litigation strategy, often serving as Negotiation/Settlement Counsel, resolving thousands of matters which generated significant cost savings. Ms. Frase earned her law degree from St. Mary’s School of Law in 1985. In 2013, she earned a Master’s Degree in Dispute Resolution and Conflict Management from Southern Methodist University. Ms. Frase currently teaches Negotiation, Client Interviewing and Counseling, and Dispute Resolution. She is also a trained Mediator, is recognized as a Top Woman Lawyer in Texas and AV Peer Preeminent rated. 2 The author approaches this discussion as separate from cultural or implicit biases, which can be a cause of or result in cognitive biases. 1 TABLE OF CONTENTS PART ONE – BIASES THAT IMPACT NEGOTIATION ...................................................... 5 What is Important to Me Must Be Important to You: Egocentric Bias ................................... 6 I Am Always Right: Overconfidence Bias ................................................................................. 8 Grander than All Others: Above-Average Effect .................................................................... 10 Bad Behavior Speaks Volumes: Fundamental Attribution Error .......................................... 12 The Messenger Matters: Reactive Devaluation ...................................................................... 14 Looking Through Rose Colored Glasses: Confirmation Bias ................................................ 16 “Draggin the Line”: Anchoring Effect ................................................................................... 19 Words Matter: Loss Aversion and Framing ............................................................................ 25 I Like Where I Am: Status Quo Bias ....................................................................................... 29 Mine is Worth More because it’s Mine: Endowment Effect .................................................. 31 Losing More to Recuperate Losses: Sunk Cost Fallacy. ........................................................ 34 A Caveat: Blind Spot Bias. ....................................................................................................... 36 PART TWO: DE-BIASING TACTICS .................................................................................... 37 Self-Directed De-Biasing Techniques ..................................................................................... 39 Self-Awareness, Self-Assessment and Humility ................................................................................ 39 Think Slowly, Pause and “Go to the Balcony” ................................................................................. 40 Set a Trip Wire ................................................................................................................................... 42 Become Comfortable with Conflicting Information and Perceptions.............................................. 42 Engage in Sincere Curiosity .............................................................................................................. 43 Embrace Randomness, Surprise and Lack of Control ..................................................................... 44 Prepare to Be Wrong .......................................................................................................................... 45 Separate the Message from the Messenger ....................................................................................... 46 Consider the Opposite ........................................................................................................................ 47 Take Perspective ................................................................................................................................. 49 Reframe the Narrative........................................................................................................................ 50 Simplify Choices ................................................................................................................................. 51 Replace the Anchor ............................................................................................................................ 53 Seek Mediation or Conflict Management Training .......................................................................... 54 W.A.R.P. ............................................................................................................................................. 55 Systemic De-biasing Techniques ............................................................................................. 55 2 Hire Expert Negotiator/Settlement Counsel ..................................................................................... 55 Develop System/Structure that Promotes Quantitative Assessment of Decisions ............................ 56 Red Team Strategies ........................................................................................................................... 57 Mock Negotiations ............................................................................................................................. 58 CONCLUSION ................................................................................................................................ 59 Traditionally, we believe that we make rational and logical decisions. We “absorb information, process it, and come up with an optimal answer or solution.”3 Yet, the fact that we err is undisputed. Psychological obstacles, or Cognitive Illusions/Biases, are some of the causes of our thinking errors. When we make decisions without all of the facts, particularly while evaluating complex information or in an uncertain environment, some biases encourage us to use emotions, instinct and intuition to fill in gaps within the information rather than apply critical analysis.4 Other biases suggest or “prime” us with information that is either not relevant or points us in the wrong analytical direction. Some manipulate how we react to others. When we apply “causal thinking inappropriately to situations that require statistical reasoning”5 we miss details, overweigh the importance of facts that support our client’s story and allow our emotions to drive our thinking. These internal “yes men” can impede our objective assessments of facts and cause 6 us to neglect “the reality that is outside of ourselves.” 3 DAVID EAGLEMAN THE BRAIN: THE STORY OF YOU, 135 (2015). 4 Jeremy Lack, François Bogacz, The Neurophysiology of ADR and Process Design: A New Approach to Conflict Prevention and Resolution? 14 CARDOZO J. CONFLICT RESOL. 33, 41 (2012) (human brain instinctively assesses new information through emotions first and within a few milliseconds, before the brain can logically assess the information). 5 DANIEL KAHNEMAN, THINKING FAST AND SLOW, 77 (2011). Daniel Kahneman received the 2002 Noble Prize in Economics for his pioneering work on his study of heuristics and their impact on decision-making. See Daniel Kahneman - Prize Lecture: “Maps of Bounded Rationality". NOBELPRIZE.ORG. Nobel Media AB 2014. Web. 20 Oct 2017. http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2002/kahneman-lecture.html 6 Robert Adler, Flawed Thinking: Addressing Decision Biases In Negotiation, 20 OHIO ST. J. ON DISP. RESOL. 683, 713 (2005). 3 Lawyers work in two fundamental arenas: deal-making and dispute resolution. “To state the obvious, the legal world is fraught with uncertainty.”7 Decades of scientific studies have established that Cognitive Illusions or Cognitive Biases impact decision-making.8 Lawyers are not immune. We are trained to start from a position of doubt and even distrust.9 “[L]awyers are valued, in part, for the accuracy and objectivity of the