Cognitive Bias Management in Business

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Table of Contents

Introduction
Personal Cognitive Biases
Conclusion
Reference

Introduction

At its core, any business negotiation relies heavily on effective communication. The participants of the communication acts have to possess several traits that would allow an effective negotiation to take place. For example, when striking a deal, one must have comprehensive knowledge of the deal, a well-structured preference system, and be able to compute an optimal solution. The existence of cognitive biases and incorrect conclusions based on issues with trust or perception create disruptions in effective communication and must be explored and combated by those who want to improve their negotiation skills.

Personal Cognitive Biases

Personal cognitive biases that I have experienced are the winners curse and escalation of commitment. The winners curse refers to a negotiators feeling of discomfort when met with an unexpectedly favorable outcome (Lewicki et al., 2020). I believe this feeling of uneasiness comes from my tendency to overthink and overanalyze communication prospects. The worst-case scenario in negotiation is being deceived and cheated, so I put a lot of effort into preparing myself to stand my ground to not be swindled. When a satisfactory outcome presents itself without a battle, naturally, I feel conflicted. On the one hand, I feel happy having achieved what I intended; on the other, I feel that I might have missed crucial information and understated my value.

In a negotiation situation, I can focus on managing this bias by telling myself that I have done my research and there is no reason to be worried. I need to allow myself to be in the moment of the expected achievement rather than wondering about hypotheticals. Another way to combat this bias is to seek others evaluation beforehand, which allows the creation of a more substantial support base for negotiation.

Escalation of commitment means committing to a course of action even though it is proving or has proven to be ineffective. The commitment that has been made becomes unyielding, partially due to errors in judgment and perception (Lewicki et al., 2020). A personal example that I can provide for this is when I continued devising a plan when it was clear that I needed to start anew. In my opinion, this determination comes from my lack of desire to give up a project that has taken me a lot of effort. I find it highly frustrating to realize that all the calculations and work have been done in vain. Therefore, I would rather try to find other ways to fix a project rather than face reality.

To be able to manage this bias during negotiation, I can create a habit of reality-checks for myself. This would allow me to become accustomed to taking a pause and reconsidering my irrational behavior and how it affects the project and others. Another person can also be given charge of those reality checks, and perhaps it would be better to have a different perspective shining a light on this type of situation.

Conclusion

In conclusion, cognitive biases have a solid potential to disrupt communication and negatively affect negotiations. Two personal biases that I have experienced in communication are the winners curse and the escalation of commitment. The winners curse comes from a tendency to overanalyze, and escalation of commitment has roots in a lack of want to give up the achieved progress. These biases can be combated by seeking others help and through personal measures, such as creating reality-check habits and ensuring myself validity of my research.

Reference

Lewicki, R. J., Barry, B., Saunders, D. M. (2020). Essentials of Negotiation. McGraw-Hill Education.

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Cognitive Bias Management in Business

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