Ethics in Negotiation

1
Ethics in Negotiation

• An act has no ethical quality whatever unless it
  be chosen out of several, all equally possible.
• William James, 1890

Module 3, Week 4
2
Two Views of Honorable Acts

• Deontological Perspective
• An act is judged according to its own merits
• Plato rule of law in Republic
• Immanuel Kant, Foundations of the Metaphysics of
  Morals
• Teleological Perspective
• An act is judged according to outcome
• Plato the noble lie
• Machiavelli, The Prince
• John Stuart Mill, Utilitarianism

3
Popular Ethical Principles

• Golden Rule
• Do unto others that you would have them do unto
  you.
• Universalism
• People are not to be used as a means to an end.
• Utilitarianism
• Do the greatest good for the greatest number of
  people
• Distributive Justice
• Everyone is better off because of this act

4
Golden Rule

• Ethical behavior as a function of personal values
• Confucius (551-478 BC)
• Do not do to others what you do not want done to
  yourself
• Judeo-Christian Variation
• Criterion Test of reversibility
• Would you be willing to change places with the
  person(s) affected by your actions?

5
Universalism

• Kants practical imperative
• Moral criteria for behavior or act
• It must respect the inherent worth and dignity of
  those involved. People should not be used as
  means to end
• It must be universally applicable to all human
  beings facing similar situations. No special
  treatments
• It must be consistent with all other universal
  moral principles

6
Utilitarianism

• Jeremy Bentham and John Stuart Mill
• Criteria for behavior or act
• Must consider all people likely to be affected by
  a set of alternatives
• Maximize total good produced
• The alternative yielding the greatest amount of
  good for the greatest number of people is the
  best alternative
• Consequences determine correctness

7
Distributive Justice

• John Rawls (1921-2002)
• Criteria for acts or behavior
• Veil of Ignorance
• Decisions should be made with the assumption that
  the decision maker could be the random recipient
  of the consequences.
• Principle of Equal Liberty
• Each person has an equal right to the most
  extensive liberties compatible with similar
  liberties for all.
• Difference Principle
• Social and economic inequalities should be
  arranged so that they are both
• to the greatest benefit of the least advantaged
  persons
• attached to offices and positions open to all
  under conditions of equality of opportunity.

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Three Schools of Bargaining Ethics

• The Its a Game Poker School
• Rules are defined by law, the only ethics
  involved
• Deception (like a bluff) is part of the game
• The Do the right thing even if it hurts
  Idealist School
• Promote candidness and honesty even at the
  expense of strategic advantage
• Bargaining is an aspect of social life, not
  isolated
• The What goes around comes around Pragmatist
  School
• Concern for future negative effects on
  relationships
• Strategic advantage not always sacrificed for
  honesty

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10 Popular Negotiation Tactics

• Lies
• Puffery
• Deceptive negotiations
• Weakening the Counterpart
• Strengthening ones own position

• Nondisclosure
• Information exploitation
• Change of mind
• Distraction
• Maximization

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Puffery

• Exaggerating the value of something
• Cost
• Condition
• Worth
• Often a degree of truth anchors puffery
• Bluffing to gain a concession from a counterpart
  is another common form
• Posturing before and during negotiations may
  contain elements of puffery

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Lies

• Outright statement made by the negotiator that
  contradicts personal knowledge
• Kant argued that no lie is justifiable
• Lies tend to be more acceptable in the context of
  negotiations
• Caveat emptor
• Practical consideration is the consequence of
  lying

12
Deceptive Negotiations

• False promises/Empty threats
• Excessive initial demands
• Careless statements of fact
• Bogey/Throwaway Items

13
Weakening the Counterpart

• Psychological, Social, and Economical
  manipulation of the counterparts position
• Direct attacks
• Lowering self-esteem
• Guilt
• Embarassment
• Exposure
• Disclosure of harmful (to the counterpart)
  information
• Indirect attacks
• Closing off alternatives
• Undermining support or alliances

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Strengthening Ones Own Position

• Distributive justice states that inequalities are
  permitted as long as all parties have the
  opportunity to pursue them
• Survival of the Fittest attitude tends to prevail
  in negotiation
• Acceptable in win-lose distributive bargaining
• Not usually appropriate in integrative bargaining

15
Nondisclosure

• If failure to disclose the truth would harm the
  counterpart, it would be unethical according to
  most ethic principles
• Personal information harmful to own case should
  be withheld, especially in distributive
  bargaining
• Urgency to transact should not be revealed
• Correcting misinformation of counterpart depends
  on counterpart role
• Knowledgeable seller has no inherent right to
  full disclosure of information
• Misinformed Buyer does have right to correct
  information

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Exploiting Information

• Evidentiary Rules/Guidelines
• Pertinence to negotiation
• Means of acquisition
• Legal and/or ethical
• Illegal and/or unethical
• Availability of information
• Insider trading prohibitions
• Access ability of counterpart

17
Change of Mind

• Contract Law
• Right to a remedy
• Promissory estoppel
• Clear and definite promise
• Detrimental reliance
• Tort Law
• Legal defense provision
• Equitable estoppel
• Court will not grant judgment to a party who has
  not acted fairly
• He who seeks equity, must do equity

18
Distraction

• Tactic can be form of subterfuge or a legitimate
  action
• Using tactic to mask own weakness is acceptable
• Using tactic to injure counterpart is not
  considered acceptable
• The four popular ethical principles as criteria
  provide the best guidance with this tactic

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Maximization

• Clash of values
• Concern for well-being of counterpart v. relative
  well being of principal
• In zero-sum distributive bargaining, one party
  wins at the expense of another
• Creating value may provide an ethical resolution
  in some cases
• Global optimal solutions
• Pareto optimal solutions

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Costs of Unethical Negotiation

• Rigidity in future negotiations
• Damaged relationship with the counterpart
• Sullied reputation

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Mutual Gains Bargaining Principled Negotiations
Revisited

• Separate the people from the problem
• Focus on interests, not positions
• Invent options for mutual gain
• Insist on objective criteria