We are not particularly fond of losing. Everyone loves a success and it is important for us all to be on the winning side. As a matter of fact, it is essential for individuals to be on the winning side that research demonstrates that on average we have a pretty a fascinating approach to handling the potential risks.
In an area of study known as Prospect Theory, Kahneman and Tversky investigated the apparent anomalies and contradictions in individual behaviour. They discovered that research subjects when offered an option introduced in one way might display risk-averse behaviour but when given essentially the same option formulated in a different way the same research subjects might display risk seeking methods.
An important result of the study done by Kahneman and Tversky is that they found that people's behaviour towards risks related to potential gains are often very unlike their attitudes towards risks associated with probable losses.
For instance, when subjects are given an option between getting $1000 with confidence or having a 50% chance of getting $2500, they may well select the certain $1000 rather than the uncertain chance of getting $2500 even though the mathematical expectation of the uncertain option is $2500. This is a completely sensible attitude that is described as risk aversion.
But Kahneman and Tversky also found that the same individuals when confronted with a specific loss of $1000 versus a 50% chance of no loss or a definite loss of $2500 do frequently choose the risky alternative. This is called risk seeking behaviour.
Exactly what this means for you in terms of your business negotiation or negotiation training is that it is recommended that you explain to your counterparts what they stand to lose when they do not move in the direction that you are recommending. It is always a good idea to notify your counterparts the things they stand to acquire by moving in your direction but the strength of your reason will be improved if you could add to the benefits the particular things that they are going to lose out on if they do not move in your direction.
This kind of loss framing is strongest if it is coupled with the Scarcity principle of influence which states that we assign much more value to those things that are less obtainable. We should therefore concentrate on those things that are uniquely associated with our own suggestions and in addition to pointing out the advantages associated with moving in our direction we should also point out the particular, unique things that our counterpart might stand to forfeit if they don't move in our direction.
Making use of negotiation skills such as loss framing to your benefit is a sure way that you can use the concept of losing to support you to win.
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