Negotiation Tactics:How to Use Psychology to Your Advantage

When it comes to business negotiations, what kind of negotiator are you? Do you look for ways to coax the other party to submit to your demands? Do you confidently make an offer that the other party just can’t refuse? Perhaps you are the peacemaker, always looking for a solution that benefits everyone. Regardless of which type of negotiator you tend to be, wouldn’t it be nice if you could simply convince your counterpart to do what you ask simply with the wave of your hand? While this type of magic might not be possible, there are psychological tools that can be used during negotiations. Here are some effective negotiating techniques that are backed by psychological research. 

Diminishing Marginal Losses & Gains

Research shows that people tend to be happier with smaller gains rather than a single gain of the same size.


Example: Imagine you are walking down the street and you find a $20 bill. Now, imagine you are walking down the street and find a $10 bill and the very next day it happens again! Most people would be happier with the latter. In other words, people prefer to receive payments in installments as opposed to one lump sum. On the other hand, most people would rather lose $20 at once than lose $10 a day for two days in a row. This demonstrates that people would rather lose money in one lump sum. 


This same theory applies to negotiation. Your opponent is more likely to accept an offer that includes several small gains rather than a single gain of the same amount. Conversely, your opponent would rather accept a single loss rather than an offer that includes multiple losses of the same value. 

Loss Aversion

Studies have shown that people are more motivated to avoid losses than to achieve gains. In other words, your offer is more likely to be accepted if you frame it in a way that demonstrates what your opponent stands to lose if they reject your offer rather than in terms of what they will gain if they accept your offer. 


Example: An car salesman tries to sell you an electric vehicle by telling you how much money you will save if you make the switch. Now, the next salesman tries to sell you the same car by telling you how much more money you will spend on gas every year by not switching to an electric vehicle. While both are giving the same information, most people are more likely to be swayed by the second offer. 


In terms of a negotiation, your offer is more likely to be accepted if you state it in terms of what your opponent stands to lose rather than telling them what they have to gain.

Disclose Some Personal Information

Self-disclosure is a process in which a person reveals something about themselves to another. People may reveal something personal about their lives in an effort to develop a closer bond with the other person. 


Example: When you sit down at the negotiating table, you begin making small talk and share personal information about your family in an effort to find common ground with your counterpart. 


Self-disclosure is a great way to build rapport and connect with others on a more intimate level. This in turn affects the way in which they communicate with you. It could make them less aggressive and more agreeable toward finding a solution. 

Give Your Counterpart a Surprise Gift

There is a psychology term known as the reciprocity norm that says people feel inclined to return a favor when a favor has been done for them.  


Example: You show up to the next business meeting with coffee and pastries for the group. This simple gesture would make the other party more likely to compromise during the negotiation in an effort to reciprocate your kind gesture. You could also offer to give something, such as a discount or expedited shipping services, to your counterpart and use cooperative language such as, “That’s what partners are for.” 


Giving a gift or something of value can motivate the other person to reciprocate during a negotiation.