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Ethics in Negotiations: Maybe, maybe not

It was with a lot of interest that I read the example cited by Richard Shell in his book “Bargaining for Advantage”, recommended reading for the RC Negotiations course. Shell quotes the example of Stifford, a man who finds a globe that he really likes in a store, for 500 dollars. When he states that he finds the price too high, the salesman offers him a “neighborhood discount” of fifty bucks. Stifford claims to have seen something similar in a catalog for $325. After a few face-saving missions back and forth Stifford gets the globe for $325. Shell wishes that Stifford had not had to lie to get his deal. I agree with Shell that in an ideal world that would have been a nice solution. However I wonder if one was to look at the ethical standpoint from an inverse situation, was the shopkeeper ethical in trying to peddle a globe for $500 when he was easily willing to let it go for $325? Were his so-called “neighborhood discount”, “manager’s good mood” and “slightly nicked” arguments to reduce the price ethical?

I agree with Shell that the test boils down to whether one is able to be comfortable in laying down details of one’s behavior in front of others and opening it up to public opinion. However I do not believe that Stifford had to publish an article on his behavior to pass Shell’s test with flying colors. His own conscience could have served the same objective.

In a perfect world there would be little hard-negotiation: there would be perfect sharing of information, and all parties would equitably divide the created value amongst themselves. Shell brings out an interesting distinction between lying and bluffing. Lying is unethical, bluffing is acceptable, he feels. My query would be, how does one distinguish beyween the two? A possibility could be the assumption that lying is something uttered specifically with the intent of deceiving someone to get the upper hand, while bluffing is “being economical with the truth”, something that simple due diligence should be able to clear.

I also differ from Shell on his explanation of the reasons why a seller can be accused of fraud if he pretends to have an alternate (higher) offer in order to push through his terms. Shell suspects that it is because the buyer is the “little person” in the deal – the small business, the small consumer, being unfairly pressured by the professionals. I can understand this happening when the BATNA of the buyer is psychologically significantly higher (in Shell’s example it was of getting evicted from his shop). However then I am surprised that the buyer of a house was also able to successfully sue when the seller claimed to have an alternate buyer at the asking price. In this situation the buyer can and should refuse, and decide to look elsewhere.

Ethics in negotiations are open to their own level of interpretation. I was indeed surprised to note that in our own ethics poll there was an option which read “Ethical but only if the other party is perceived to be a hard bargainer”. Unless it was put there intentionally I can only conclude that we have accepted that ethics can be changed depending on the opposition that we face at the negotiating table! Is there a more sure shot way out this grey area? Maybe, maybe not.

March 12, 2001
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