CHAPTER 1

Introduction to Rational Thinking in Negotiation

Everyone negotiates.

While many people think of negotiation as something that takes place only between a buyer and a seller or a union and management, in its various forms, negotiation is used every day to resolve differences and allocate resources. It occurs between all sorts of people -- colleagues, spouses, children, neighbors, strangers, corporate entities, even nations negotiate. Some negotiations are face-to-face; others take place over time through sequential decisions between competitors. In business, millions of negotiations happen every day, often within the same company.

Think of all the times you negotiate. What could be more central to business than negotiation? And what could be more central to successful negotiation than casting off your illusions about it and, henceforth, negotiating rationally and effectively? This book will teach you how to do just that.

Negotiating rationally means making the best decisions to maximize your interests. However, we are not concerned with "getting to yes." Our work shows that in many cases, no agreement at all is better than "getting to yes." What we've learned from thousands of executives will help you decide when it's smart to reach an agreement and when it is not.

Negotiating rationally means knowing how to reach the best agreement, not just any agreement. What we've learned will help you avoid decisions that leave both you and those you negotiate with worse off.

All executives have pervasive decision-making biases that blind them to opportunities and prevent them from getting as much as they can out of a negotiation. They include the following:

1. Irrationally escalating y