Nudge theory in negotiations

Research: An offer’s chance of success is heavily influenced by how you frame it.

by Adam Gale

Anyone who has ever taken part in a negotiation will know that it is not a precise science, if a science at all. Human beings are not coldly rational and self-interested, at least in a uniformly predictable way. Even if we were, we’re not omniscient - and with imperfect information come imperfect decisions.

Enter behavioural economics, which attempts to reconcile our many biases and irrationalities with the homo economicus of the textbooks. 

Of particular interest, when it comes to negotiation tactics, is Richard Thaler and Cass Sunstein’s ‘nudge theory’, which suggests ways of making a proposal more agreeable by exploiting the other side’s unconscious thought processes.

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