By Steve Kelman

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How to negotiate with a liar

I suspect that most of us engaged in a negotiation assume the party we are negotiating with lies during the negotiations.  I am an unusually trusting if not outright gullible person -- a colleague once said that for me April Fool's Day was every day of the year!  But even I assume that others often lie during negotiations, at least by withholding the "whole truth," and often by actually misrepresenting their situations and how much they value certain things.

As Leslie John, a young faculty member at Harvard Business School, writes in a recent short article, "Deception is…one of the intangibles that negotiators have to prepare for and take steps to prevent."

John notes that people often assume the solution is to get better at detecting deception. Many of us feel it's possible to spot a liar through subtle behavioral cues, but evidence doesn't support that belief. On average, studies have found people can correctly identify whether someone lying only 54 percent of the time -- not much better odds than a coin flip.

Instead, John recommends focusing on efforts that reduce the tendency of negotiators to lie to those with whom they are negotiating. She presents strategies -- backed up by discussions of academic research on the topics covered -- that can help you conduct conversations in a way that makes it more difficult for your counterpart to lie.

Some of her strategies (I present here those I personally found most convincing) are as follows:

One way to reduce lying is to ask specific, direct questions to the party with whom you are negotiating. Consider an individual, John suggests, who is selling his business but knows that vital equipment needs replacing -- a problem imperceptible to outsiders. It might seem unethical for him to withhold that information, but he may feel that by simply avoiding the topic, he can charge a higher price while still maintaining his integrity. "If the buyer had asked me, I would have told the truth!" the seller might say to himself.

So ask. In one study, 61 percent of negotiators came clean when asked about information that weakened their bargaining power, compared to 0 percent of those not asked. (Thirty-nine percent still lied.)

Another study indicates people are less likely to lie if a question makes a pessimistic assumption ("This business will need some new equipment soon, right?") rather than an optimistic one ("The equipment is in good order, right?"). This may be because people will be inclined to agree with whatever statement the other party makes; giving them an opportunity to agree with a negative assumption produces more truthful replies than requiring them to disagree with a positive assumption.

Not surprisingly, people lie less to those they know and trust than they do to strangers. Good negotiators no doubt know this intuitively, but how can one produce more liking and trust in a negotiation situation?  The article discusses a piece of research where randomly paired participants who worked their way through a series of questions designed to elicit mutual self-disclosure were more likely to become friends than were pairs instructed to simply make small talk.

In one study, when questions were posed in a casual tone rather than a formal one, people were more likely to divulge sensitive information.

It is a common suggestion that a good approach in negotiating is to put "contingency clauses" in an agreement. This is recommended when the parties have different estimates of how probable a certain later outcome is.

Here's a simple example from government contracting: One party may want to negotiate a higher price because of that party's view that supplies may become difficult to procure, while the other party believes such disruption is unlikely and wants a lower price. A contingency contract where the price is tied to supply changes (or, easier, changes in the world market price) allows the parties to account for these differing predictions without destroying the possibility of an agreement. 

That approach is well known, but John's point is that a contingency clause also discourages lying. Suppose, writes John, your business is negotiating acquisition of a small start-up. Your counterpart gives you sales projections that strike you as optimistic or even impossible. You could propose a contingency clause that would tie the acquisition price to the sales level achieved. That would motivate your counterpart to provide realistic sales projections, and it would protect you if she's wrong.

Lying is a fact of life in negotiating. John makes some practical suggestions for how to reduce it.

Posted by Steve Kelman on Jul 18, 2016 at 10:14 AM


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