COGNITIVE BIAS
DEFINITION
In the last few decades, the negotiation process has become part of many business organizations. Cognitive bias is referred to as methodical error patterns that deviate from rational and normal thinking and this affects the judgment and the decisions that they make.
Sierra, E. (2017). Cognitive Biases in Business Negotiations for Entrepreneurs. Journal of Business Research, 69(10), 4304-4312.
SUMMARY
Sierra (2017) investigated the role of cognitive biases during a business negotiation at the workplace. The study was conducted in a qualitative empirical manner. Interviews were conducted on eight entrepreneurs who had been selected through their entrepreneur experience. An abductive approach was done where the analysis was guided by a theoretical framework. The study revealed that cognitive biases were a common behavior during a business negotiation. There was also an emphasis on how it affected individuals involved in the negotiation. Common biases that were prevalent included overconfidence, anchoring, and framing bias appeared to be the important tools for a negotiation process. The study also revealed that there was a lack of awareness of the prevalent cognitive biases. Entrepreneurs were found to have a high vulnerability to cognitive biases after the empirical and theoretical findings were out. In all stages of negotiation, the entrepreneurs were affected by cognitive bias. In conclusion, Sierra (2017) found out that entrepreneurs had exhibited a long-term deliberate viewpoint extending past single negotiation, this implied that biases affect the negotiation process throughout time.
Ellena Sierra is a graduate student who completed her Masters’ thesis in 2017 at the University of Lincoln. She has authored only one paper associated with negotiation.
ANALYSIS
This paper is in line with our weekly readings about negotiations that occur. Cognitive bias is common in the different organizations this has led to irrational decisions and also weak judgments. As the brain tries to simplify information it leads to cognitive biasness this is in agreement with the article that found entrepreneurs to be vulnerable to this problem. With the existence of technology entrepreneurs tasked to have numerous negotiations as they deal with modern managerial problems. Most individuals are unconscious of how the brain works in making such kinds of decisions or judgments and this has led them also not aware of the cognitive biasness. The bias is related to the working of the memory in terms of remembering items one tends to be biased in different ways thus biased decision making. Another biasness culminates from paying attention where individuals are selective on what they pay attention to, this is in agreement with our weekly readings which we emphasized on the decision-making process.
The study found out that that cognitive biasness played a significant role to the entrepreneurs in terms of how they reason and thin and also as a special tool in the negotiation process (Sierra, 2017). Some of the cognitive biasness that were common to the entrepreneurs included framing and reframing, overconfidence, and Anchoring. Framing and reframing appeared to be the most mastered technique that entrepreneurs use during a negotiation. Since many entrepreneurs give a story about their business or innovation they tend to frame and reframe. The entrepreneur has different principles of giving stories this includes how they narrate a story, the different formats, and in different words. The stories are aimed at making the other party to make decisions in a hurry. Entrepreneurs tend to appear confident even in things that they are not sure of. Overconfidence- the entrepreneur understands the story behind his success and this displays a high level of biasness. These are some of the cognitive bias examples. In our reading negotiation is an important tool for solving problems as well as coming to a resolution. However, a cognitive bias is a common issue occurring during negotiation there is a need for individuals to be aware of the cognitive bias to deal with them at an early stage of negotiation.
Reference
Sierra, E. (2017). Cognitive Biases in Business Negotiations for Entrepreneurs. Journal of Business Research, 69(10), 4304-4312.