Bounded Awareness in Negotiation - Negotiation for Lawyers

NEGOTIATION FOR LAWYERS

FINAL ESSAY

The relevance of bounded awareness for the negotiation process

Introduction

It is generally assumed that the negotiation process and the resulting agreement are a product of a rational thinking process that includes the consideration of all relevant issues. Yet our rationality and skills are limited and flawed in different ways. Research has shown that the outcomes of negotiation processes could be far better than they actually are, since parties constantly fail to reach a deal when possible. Likewise, when achieved, the negotiated settlement is in many cases mediocre.^[1] These failures lead to inefficiencies that ‘reduce society’s available resources, productivity, and creative opportunities’^[2], and also increase society’s conflicts. The importance of developing some skills in order to improve our negotiated outcomes, supported by many available negotiation books and articles,^[3] also suggests that when making decisions people are more unwire and unreasonable than normally acknowledged.

Accordingly, the way individuals make decision has been largely studied. ‘Negotiation is a decision making process in which two or more parties make decisions to solve interests. The outcome is the product of these decisions‘^[4]. Therefore, these studies which have identified many barriers that negatively affect performance when making decisions, fully apply to negotiation. Prejudices, communication problems or principal agent tensions are some of them. The Stanford Centre on Conflict and Negotiation classified these obstacles into psychological, strategic, institutional and relational barriers.^[5] Psychological barriers^[6] are those existing naturally in persons and that prevents them to recognize or see the advantages that would permit them to reach an agreement that meets their interests. Bounded awareness^[7] can be classified in this category along with judgmental overconfidence, loss aversion, unconscious assumptions, biases and justice seeking, among others.^[8]

One of the aims of this essay is to explain why bounded awareness is relevant, how it influences the negotiated outcomes and give some advice in order to diminish bounded awareness’s impact as much as possible. However, and strangely enough, acknowledge the existence of this phenomenon seems not to solve the problem. This fact supports the argument that complete avoidance of bounded awareness is not only difficult but apparently cannot been accomplished at all.

Bounded awareness

Humans are considered to naturally use certain simplifying methods to make decisions solve problems and learn^[9]. One of these methods is the constant an unconscious screening and filtering of the information provided by the environment. This feature is absolutely essential. There is so much data available that failing to pick out what to acknowledge and what to ignore would paralyze individuals and transform simply daily actions in a nightmare^[10]. In other words, people can only manage certain quantity of information and as a result, this automatic discriminating process is necessary.