How to Negotiate with a Liar
Protect yourself by focusing on what you can control.
Posted Sep 09, 2015
Everyone negotiates, but few have been trained in the art and practice of negotiation. Lying during negotiations is a manipulative tactic practiced by High Machs and Low Machs alike. If you read books, articles, and blogs on negotiation, you’ll encounter much good advice along with a wealth of contradictory information and misinformed opinion. Among the worst advice is that written by questionably qualified people passing themselves off as experts.
Much of this faux wisdom focuses on how to spot liars at the bargaining table. Study after study has shown that, regardless of the techniques used, our ability to spot liars by looking for “tells” is only slightly better than chance. There are two sure-fire ways to spot a liar: Either know the answer before you pose the question or get lucky.
For example, a liar may unconsciously nod yes while saying no (or vice versa). He or she may place an object, such as a water bottle, on the table between him/herself and you. These tells can signal lying – or they can signify nothing. Both truthful and untruthful people can commit these nervous acts, while a practiced liar may not signal deception in a way you can notice. Only if someone persists in emitting tells can you conclude with high probability that he or she is lying. If you focus on spotting tells during negotiations, you will be distracted from the business at hand. Effective negotiation requires that you focus on what you can control, not what you can’t.
When you negotiate with someone who wants to maintain an ongoing relationship with you (and vice versa), both sides have an incentive to build and maintain trust. Each party knows that lies, if detected, will jeopardize the relationship. On the other hand, a one-time negotiation does not carry this built-in disincentive against deception. Neither does a zero-sum negotiation, where every dollar gained by one side represents a net loss to the other. A used car purchase, for example, may be a one-time negotiation and a zero-sum negotiation. In negotiations we should expect to encounter lies and prepare accordingly. If the other side doesn’t lie, that’s great. If they do, you can protect yourself.
Forewarned is forearmed – People assume that negotiation begins when you initiate discussions with your counterparty. That’s a mistake. A better strategy is to begin your negotiation with research and planning before you start to bargain. The more you know beforehand, the better prepared you will be to ferret out liars by asking questions whose answers you already know. What is their reputation? What’s important to them in this negotiation? What is their bargaining range? Are you negotiating on a level playing field, or does one of you have more leverage than the other?
Set your priorities – Set your bargaining range before you begin. Specifically, decide on your minimum (if you are the seller), your maximum (if you are the buyer), and your target price (what you think is fair). Also have in mind your best alternative to a negotiated agreement (BATNA) in case negotiations fail. This is your back-up plan in case you and your counterparty can’t reach an agreement. If you’re trying to buy a home, your BATNA might be to move on to another property and maybe even another real estate agent. Above all, focus on the business at hand – moving forward, step by step, in your negotiations – not on reaching an agreement. Better no agreement at all than one that doesn’t satisfy your objectives.
Focus on what you can control – You can’t control whether the other person is lying, or anything else about their behavior during the negotiation. You can control your own behavior and decisions. If you don’t trust your counterparty, reconsider whether you should do business with them. A good strategy is to announce up front that you are prepared to put all of your verbal commitments in writing and would like the same commitment from the other side. If they balk, you walk. Making this a requirement at the outset will put the other side on notice that you won’t tolerate worthless promises.
Frames and Anchors – Would you rather have a sofa made of luxurious bonded leather or one made of left-over leather scraps? They are the same thing. The framing of an idea can influence the outcome of a negotiation. Once I was filling out a form at a car dealership that included this question: “What will you do if you do not purchase a car today?” I answered, “What will YOU do if I do not purchase one today?” In negotiations, you must be prepared to frame the issues in ways that are significant to your counterparty – and to be wary of framing ploys the other side may direct toward you. That’s why it’s important to understand their needs and to have some idea of their bargaining range.
Conventional wisdom says that the first person to mention a number in negotiations is at a disadvantage. Research suggests that this is wrong. The first number mentioned serves as an anchor, so that the final negotiated price seems like a good deal in comparison. That’s why new cars have sticker prices, real estate has listing prices, and some products have a manufacturer’s suggested retail price. Those are fictitious prices. The only relevant prices are the fair market value and the actual sales price (which may be the same or different). If the final sales price is negotiable, then the asking price is only an anchor.
Quid Pro Quo – When one side has greater knowledge or leverage than the other, the negotiator with more power may attempt to bamboozle the other side into making a concession without expecting anything in return. Car salespeople do this. After the third trip to “check with the sales manager” they may say, “We can get this done, but we need a little help. Another $600.00 and you can drive it home today.” Ingratiation, guilt, deception, and the implied threat of “no deal” are all tactics one may encounter in negotiations of this type. A good response to this ploy is to announce that you’re not in a position to make any concessions without receiving a reasonable concession in return. You might, for example, counter with an offer to pay $500.00 more (not $600.00), but only if you get free oil changes for the first year and a set of floor mats – and then negotiate from there.
One final tactic you can use when dealing with actual or potential liars is to ask, before finalizing the deal, whether there is any important information your counterparty has not disclosed. Ideally you should get this in writing or have an unbiased person as a witness. If neither of those is possible, write down your question and the answer you received. Do this immediately after the negotiation, then sign and date it. Mail it to yourself, and keep the unopened letter as evidence in case you later discover find that you were deceived. It may be just the evidence you need in case of fraud.