Here is the full transcript of Russell Korobkin’s talk titled “Why Being A Jerk Makes You A Bad Negotiator” at TEDxUCLA conference.
In this talk, Professor Russell Korobkin emphasizes the importance of empathy in negotiation. He illustrates this with a story about a failed negotiation for a horseback ride in Petra, where a professor named Steve Lubet failed to secure a lower price due to his lack of understanding of the guides’ perspectives. Korobkin argues that successful negotiators focus more on the needs and desires of the other party than on their own. He cites the example of rock star Bono, who successfully negotiated debt relief by appealing to the different values of President Clinton and conservative Republicans.
Another example provided is Ivar Kreuger, who built a successful construction company by offering guaranteed timely completion, addressing customer needs. Korobkin also discusses the ultimatum game, demonstrating that fairness and empathy lead to better outcomes in negotiations. Overall, he asserts that empathy, or understanding the other party’s needs, is crucial for effective negotiation, contrasting this approach with the less successful, self-centered tactics of those who are ‘jerks’ in negotiations.
Listen to the audio version here:
TRANSCRIPT:
The Art of Negotiation
I’m going to tell you a story about a failed negotiation, actually several failed negotiations. A professor named Steve Lubet visited the ancient Jordanian city of Petra. In order to get there, you have to travel more than a mile through a narrow gorge carved into the side of steep mountains. When Steve visited, you could purchase a round-trip horseback ride trip through the gorge for a fixed price at the entrance.
Or alternatively, you could walk through the gorge into Petra, and then when you were finished, you could either walk back out or you could negotiate with individual horse guides for a one-way return trip. Steve knew that the most usual price paid for that one-way trip out was four Jordanian dinars, or a little more than half of the price of the round-trip ticket that you could purchase at the entrance. But he assumed that if he waited until the end of the day when the city was closing down, and there weren’t as many people around, he could find a guide without a customer who would be willing to give him that one-way trip for three dinars or maybe even less. And he negotiated with a number of different guides, but he had no takers, and he never reached a negotiated agreement.
Understanding Empathy in Negotiation
Now as a professor who writes and teaches about negotiation, people often ask me for advice on how to drive a harder bargain. “How do I get that horse guide to give me the one-way trip for three dinars, or two, or maybe even one?” Now in much this way, most negotiators focus the lion’s share of their attention on what they want out of the negotiation. What’s in it for them? What do they need? What do they want? But my research and my life experience has taught me that the very best negotiators adopt almost the opposite approach.
You see, when we negotiate, we seek the assistance of another person in helping us to achieve one of our important goals. In the complex modern world we live in, we almost always need the assistance of other people. So negotiation becomes a daily necessity. And the best way to convince another person to help us achieve our goals is to focus our attention on helping that other person achieve some of their goals. The key ingredient to making this happen is empathy, really putting yourselves in the shoes of the other person, really forcing yourself to see the world from their perspective.
Now this is true whether you’re negotiating with a horse guide in Petra or whether you’re negotiating a much more common kind of part of our daily lives, such as where you’re going to go for dinner on Saturday night with your spouse. Empathetic negotiators, regardless of the context, are always asking themselves questions like, “What does that horse guide really want out of this negotiation?”
Or, “What type of activity would really make my spouse happy on a Saturday night out?” The paradox of negotiation is that getting the best result for yourself requires focusing like a laser on the needs of the other person.
Empathetic negotiators practice what I call radical empathy. First, they frame their proposals in a way that emphasizes how an agreement would serve the other party’s needs rather than their own. Second, they’re always looking for and finding ways to give the other party additional benefits that are valuable to the other party and have only a modest cost to them to provide. And third, they always make proposals that consider the psychological and emotional needs that we all have to feel like we’re being respected and treated fairly.
Bono’s Negotiation Triumph
In the year 2000, the rock star Bono from the band U2 was leading an effort to convince Western governments to forgive a large amount of sovereign debt owed to them by some of the poorest nations in Africa. Bono in the United States had to persuade both President Bill Clinton, a Democrat, and also conservative Republican leaders of Congress to give up a large amount of money from the United States Treasury for the benefit of people who live half a world away and are not their constituents. “How did he do this?” Well, with Clinton, he emphasized that large scale debt relief would really burnish his reputation as a great humanitarian.
With the conservative Republicans, he stressed the biblical imperative of religious Christians to help the poor. The key to pulling off a very successful and unlikely negotiation was that Bono emphasized not what was in it for the African nations for whom he was advocating, but how it would satisfy the needs and desires of the other negotiators at the bargaining table.
Radical empathy enabled Bono to present his proposal in a way that was far more attractive than it otherwise would have been. In the year 1908, a man named Ivar Kreuger established a construction company in London called Kreuger & Toll.
Kreuger’s Innovative Approach
Now at the time, construction contracts didn’t usually come with any promise about when the project would be completed. The building would be finished whenever the building was finished. Now this created planning problems for customers, but most builders just didn’t much care. It just wasn’t what was done.
But Kreuger focused his attention on what was most important to his potential customers and he started offering contracts that provide a guarantee of timely completion so that any delays would actually cost Kreuger & Toll a fair amount of money. By doing this, he built one of the largest construction firms in Europe and also one that was quite profitable. How was this possible? The key here is understanding that when you give the other party what’s very valuable to them in the negotiation, they will often be willing to give you back enough to more than compensate for the cost.
So in this particular example, Kreuger learned that with careful project management and the diversification of unavoidable risks over a large number of projects, he could control the exposure that he was taking on by guaranteeing timely completion of the project. And his customers were willing to pay more in increased or higher prices than the cost that were borne by Kreuger. Radical empathy enabled Ivar Kreuger to become the preferred builder in Europe at the beginning of World War I. Economists have published hundreds of academic papers describing variations on a relatively simple bargaining experiment called the ultimatum game.
The Ultimatum Game and Empathy
Here’s how it works. There are two players who don’t know each other. The experimenter gives player one a fixed sum of money, it’s often $10, and player one must propose a division of that amount of money between herself and player two. Player two then either accepts the proposed division, in which case the money is divided up in just that way, or player two rejects the division, in which case neither player gets to keep any money and the game is over.
Now, economists predict that player two will accept any amount of money offered because something is better than nothing. And consequently, player one will offer the smallest increment of money that’s allowed under the rules of the game to player two, so say 25 cents. But very few people actually play the game this way, that’s what makes it interesting. Player twos will often reject offers that are less than usually about half of the amount of money at stake, and most player twos will reject an offer that’s less than about 20% of the total amount of money at stake.
And importantly, this is true even when the game is played in poor countries where the amount of money that’s at stake is really quite significant to the players. The reason is that the players care not only about money, they also care about fair treatment. An empathetic player one should understand this and take that into account when deciding how much money to offer player two. Are player ones in the game empathetic?
The Importance of Fairness in Negotiation
Well, some are, some aren’t. Some offer 25 cents and most of them end up with nothing. Offers of 30 or 40% or even up to 50% are more common in the game. Steve Lubet failed to achieve a negotiated agreement in Petra because of a lack of empathy. Sure, three dinars are obviously more than zero, but the guides that he negotiated with were not willing to accept an offer that they thought was unfair or indicated disrespect.
Now radical empathy not only helps negotiators reach agreement when otherwise they might not, it also helps by inspiring the best possible performance on the part of the other party. Steve might have been able to find a guide willing to give him that horseback ride for three dinars if he had negotiated with enough Jordanian guides, but I would be really worried if I were him that he would get a particularly bumpy ride and might even be forced to disembark in a puddle of mud at the end.
When I hired a contractor to do renovation work on my house, I wanted to pay a relatively low price, but I didn’t want it to be so low that the contractor thought it was grossly unfair even if he would have accepted it because I didn’t want him to cut corners on the job.
Applying Radical Empathy in Everyday Life
Now radical empathy is the route to negotiation greatness, not just in commercial or political negotiations or negotiations with vendors in foreign countries, but in the more mundane type of negotiations that make up our personal life on a daily basis. My daughter is 18 years old now and going to college, so I don’t have this issue anymore, but it wasn’t very long ago that bedtime required a daily negotiation.
Now if you’re a parent, you know that the click of that light switch at the end of a tiring day is nirvana, and I can assure you you’re more likely to get there if you practice radical empathy. First thing to ask yourself, is there a way to propose an earlier bedtime in a way that would resonate as a benefit to my child?
Now if you have a very young child, the fact that a good night’s sleep is going to result in her feeling better tomorrow is probably not going to be very persuasive, but maybe you will get somewhere if you point out that if she just closes her eyes now, when she opens them it will be time for a yummy breakfast. If that doesn’t work, then ask yourself what can you offer that would be of important benefit to her at a relatively modest cost to you? So in my case, it was always three songs and then lights out. Always her choice of songs, of course.
Finally, any proposal you make is going to have to be perceived as fair from her perspective. So if the grandparents are visiting or it’s a special occasion for some other reason, you’re probably going to have to offer a little later bedtime, both in order to obtain her agreement and also to reduce the risk that she’s going to be up and running down the hall in 15 minutes. Good luck in all of your negotiations, both large and small. And remember that in order to get, you need to focus your attention on what it is that you’re giving.