Negotiation: Benefits And Costs Of Information Sharing

One of the most discussed problems in negotiation research is the benefits and costs of information sharing. In fear of being exploited from sharing sensitive information, most negotiators choose to play their details close to the vest. On the other hand, in many studies, sharing information about preferences and priorities is suggested to improve the joint outcome of the discussion (Walton & McKersie, 1965; Pruitt & Carnevale, 1993; Thompson, 2015). Even with hundreds of researches being conducted, the answer to the question when to reveal superior details, and which kind of data can be exchanged is seldom clear-cut. In most discussions, wise negotiator would need to assess the type of negotiations, information, bargaining styles of other parties, and the time-sensitivity of the data shared in order to make the right decision of sharing superior information.

Potential difficulties that comes with the fact that sharing information might confer considerable bargaining advantages to the other parties deter negotiators from sharing these details (Kelley 1966, Thompson 1991). Especially with primarily distributive issues – where the gain of one parties mean the loss of the other, some information such as BATNA and reservation prices, if being revealed, can provide the counterparts with a competitive advantage. This could be a serious problem if the other party exhibit opportunistic behavior: the information receiver, after acquiring data from the counterpart, do not reciprocate and provide their own preferences (Gouldner, 1960). For example, in the “Energetics meets Generex” case, were Energetics’ representatives reveal their reservation point of 450 million, they would be at a serious disadvantage since Generex can utilize that information to push the purchasing price to that level. In Kelley’s view (1966), this reluctance to data exchange leads to two dilemmas. Firstly, considering that negotiation is, at least, a two-way process, negotiators has the incentive to not believe other party’s claim, however at the same time, he/she must rely on the information exchanged to construct bargaining offers accordingly. This idea represents the “dilemma of trust”. Secondly, the need for negotiators to be both clear and deceptive is referred as the “dilemma of honesty and openness”. These predicaments perfectly illustrate the complex nature of information sharing in negotiation.

In real life, few interactions are purely competitive and fixed-sum (Rapoport & Mowshowitz, 1966; Thompson, 2015). Indeed, people, according to Thompson (2015), are usually put under the “fixed-pie” perception, while most negotiations is comprised of a mixture of motive, and naturally involve the possibility of joint-outcomes. For this type of “integrative negotiation”, it is imperative that both parties inquire and acknowledge others’ interests and priorities in order to figure out where the real value is. This was confirmed in many researches that found the correlation between mutual information exchange and the value of joint outcome (Siegel & Fouraker, 1960; Walton and McKersie, 1965, Daniels, 1967; Pruitt & Lewis, 1975; Thompson, 1991; Marsden, 2007). In addition, inquiring about needs and interests can prevent the other party from straight up lying as in the case of directly prying into BATNA or reservation point may cause over-exaggeration, and dishonesty (Thompson, 2015). The mere act of preparing and asking assertive questions that prompt the counter party to elaborate on his needs usually leads to more openness and positive attribution (Chen, Minson, and Tormala, 2010). In other words, the negotiator can construct a better expression of himself/herself by displaying attentiveness and concern for others’ circumstances. This was demonstrated in the case of Texoil and gas station owners where both parties started out the discussion process with the main aim of price determination. However, as both representatives began exploring other’s interests and motivation, it is evident that there are many untouched aspects that promise further gains for both sides. Also with effective communication and the open mindset approach, the heavy atmosphere of the negotiation was lifted up after the conversation was steered towards the owners’ dream of travelling the world. The counterpart was willing make concession more after the short conversation as she might have felt the genuine interests and valuation of her opinions.

Communication strategies to encourage integrative information exchange in negotiation can be classified into three main types: explicit, implicit, and heuristic trial and error (Pruitt, 1981). Explicit information sharing happens when bargainers exchange specific information about interests (motives concerns Fisher et al., 2011) and priorities (assessment of options under consideration, Walton & McKersie, 1965). Regarding implicit communication strategy, negotiators disperse directional information about their desire and repugnance, evaluate alternatives carefully, and in other ways such as using non-verbal cues to indirectly convey information about their position and interests (Schulz & Pruitt, 1978; Kimmel et al., 1980). Last but not least, negotiators who used heuristic and trial method started the negotiation by offers multi-issues package that are equivalent in value and converge with their aspirations (Pruitt, 1981). In this type of communication strategy, a concession is made when no proposals of that same tier is mutually agreed. An example of heuristic trial and error negotiating style is demonstrated in the first negotiation in the class where two parties – the candidate and employers – discussed terms and conditions of the employment contracts. Within the discussed issues, there are multiple facets that can be explored: some are strictly distributive issues such as salary and bonus, while some might be integrative or common interests such as work location, insurance package, job division…. By making multiple offers and looking for the counter offers, one can figure out where the value truly lies, and reconfigure the initial proposition to maximize the joint gain of both parties.

In all, the dilemma of sharing information could generate a wide-range of consequence and outcome, both negatively and positively. This paradox is analogous to the classic prisoner dilemma: both parties are aspired to achieve the joint outcome, but each are reluctant to reveal their information in fear of being exploited by others and lose individual gain (Murnighan et al, 1999). Hence, it is advised that information sharing should be enabled when negotiators have evaluated thoroughly the nature of the discussion, other party’s bargaining and communicating style, as well as the sensitivity of the data concerned.