Essentials of Negotiation Part 01: Fundamentals of Negotiation Chapter 05: Ethics in Negotiation © McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Because learning changes everything.® A Sampling of Ethical Quandaries You are selling your e-bike to raise money for an upcoming trip overseas. Is it ethical to say you have another offer, when there is no other offer? To gain inside knowledge of a competitor’s business, you have a consultant call and ask about problems or threats in the company. Is this an ethical way to learn about the competitor’s company? When selling your laptop, you decide not to tell buyers the computer crashes without warning. Is this ethical? Would you be likely to do this? You buy a new pair of shoes on sale (no returns) but you make a scene in the store and the manager refunds your money. Is this ethical? Would you be likely to do this? © McGraw-Hill Education ‹#› Ethics Defined Ethics are broadly applied social standards for what is right or wrong in a particular situation, or a process for setting those standards. Differ from morals, which are individual and personal beliefs. Choose a course of action on the basis of results, duty, community norms, or personal convictions. End-result ethics – the rightness of an action is determined by evaluating the pros and cons of its consequences. Duty ethics – the rightness of an action is determined by an obligation to adhere to principles, laws, and social standards that define what is right and wrong and where the line is. Social contract ethics – the rightness of an action is based on the customs and norms of a particular community. Personalistic ethics – the rightness of the action is based on one’s own conscience and moral standards. © McGraw-Hill Education ‹#› Applying Ethical Reasoning to Negotiation Using the situation from the start of the chapter involving selling an e-bike and the statement to a prospective buyer about the existance of another potential buyer. If you believe in end-result ethics, then you might do whatever is necessary to get the best possible outcome (including lie). If you believe in duty ethics, you might perceive an obligation never to engage in subterfuge and might reject a tactic that involves an outright lie. In social contract ethics, you base your tactics on appropriate conduct in your community; if others would use deception in a situation like this, you will too. In personalistic ethics, your conscience decides if your need for cash for your upcoming trip justifies using deceptive or dishonest tactics. © McGraw-Hill Education ‹#› Ethics v. Prudence v. Practicality v. Legality Ethical. Appropriate as determined by some standard of moral conduct. Prudent. Wise, based on trying to understand the efficiency of the tactic and the consequences it m ...

1. Essentials of Negotiation
Part 01: Fundamentals of Negotiation
Chapter 05: Ethics in Negotiation
© McGraw-Hill Education. All rights reserved. Authorized only
for instructor use in the classroom.
No reproduction or further distribution permitted without the
prior written consent of McGraw-Hill Education.
Because learning changes everything.®
A Sampling of Ethical Quandaries
You are selling your e-bike to raise money for an upcoming trip
overseas.
Is it ethical to say you have another offer, when there is no
other offer?
To gain inside knowledge of a competitor’s business, you have
a consultant call and ask about problems or threats in the
company.
Is this an ethical way to learn about the competitor’s company?
When selling your laptop, you decide not to tell buyers the
computer crashes without warning.
Is this ethical? Would you be likely to do this?
You buy a new pair of shoes on sale (no returns) but you make a
scene in the store and the manager refunds your money.
Is this ethical? Would you be likely to do this?

2. © McGraw-Hill Education
‹#›
Ethics Defined
Ethics are broadly applied social standards for what is right or
wrong in a particular situation, or a process for setting those
standards.
Differ from morals, which are individual and personal beliefs.
Choose a course of action on the basis of results, duty,
community norms, or personal convictions.
End-result ethics – the rightness of an action is determined by
evaluating the pros and cons of its consequences.
Duty ethics – the rightness of an action is determined by an
obligation to adhere to principles, laws, and social standards
that define what is right and wrong and where the line is.
Social contract ethics – the rightness of an action is based on
the customs and norms of a particular community.
Personalistic ethics – the rightness of the action is based on
one’s own conscience and moral standards.
© McGraw-Hill Education
‹#›
Applying Ethical Reasoning to Negotiation
Using the situation from the start of the chapter involvi ng
selling an e-bike and the statement to a prospective buyer about
the existance of another potential buyer.
If you believe in end-result ethics, then you might do whatever
is necessary to get the best possible outcome (including lie).
If you believe in duty ethics, you might perceive an obligation
never to engage in subterfuge and might reject a tactic that
involves an outright lie.

3. In social contract ethics, you base your tactics on appropriate
conduct in your community; if others would use deception in a
situation like this, you will too.
In personalistic ethics, your conscience decides if your need for
cash for your upcoming trip justifies using deceptive or
dishonest tactics.
© McGraw-Hill Education
‹#›
Ethics v. Prudence v. Practicality v. Legality
Ethical.
Appropriate as determined by some standard of moral conduct.
Prudent.
Wise, based on trying to understand the efficiency of the tactic

4. and the consequences it might have on the relationship with the
other.
Practical.
What a negotiator can actually make happen in a given
situation.
Legal.
What the law defines as acceptable practice.
© McGraw-Hill Education
‹#›
Figure 5.1: Analytical Process for the Resolution of Moral
Problems
This model presents a helpful way to think about what it means
to comprehend and analyze an ethical dilemma.
Access the text alternative for this image.
Source: La Rue T. Hosmer, The Ethics of Management, 4th ed.
(New York: McGraw-Hill/Irwin, 2003).
© McGraw-Hill Education
‹#›
Ethical Conduct in Negotiation
Why do some negotiators use unethical tactics?
The first answer – immoral – may be too simplistic.
People regard other people’s unsavory behavior as due to
personality and attribute their own behavior to factors in the
social environment.
A negotiator might consider an opponent’s use of an ethically
questionable tactic as unprincipled.

5. In contrast, if the negotiator uses the same tactic themselves,
they tend to say they have a good reason for deviating from
principles, this one time.
The following section discusses negotiation tactics that bring
issues of ethicality into play.
© McGraw-Hill Education
‹#›
Ethically Ambiguous Tactics and Truth
Ethically ambiguous tactics may or may not be improper,
depending on an individual’s ethical reasoning and
circumstances.
Questions about truth telling are clear, but not the answers.
How do you define truth? How do you define deviations from
the truth?
Effective agreements depend on sharing accurate information
but negotiators want to disclose little about their positions.
The dilemma of trust is that a negotiator who believes
everything the other says can be manipulated by dishonesty.
The dilemma of honesty is that a negotiator who tells the other
party all their requirements will never do better than their
walkaway point.
© McGraw-Hill Education
‹#›
Table 5.2: Categories of Marginally Ethical Negotiating

6. TacticsCategoryExampleTraditional competitive bargainingNot
disclosing your walkaway; making an inflated opening
offerEmotional manipulationFaki ng anger, fear, disappointment;
faking elation, satisfactionMisrepresentation Distorting
information or negotiation events in describing them to
othersMisrepresentation to opponent’s networksCorrupting your
opponent’s reputation with their peersInappropria te information
gatheringBribery, infiltration, spying, etc.Bluffing Insincere
threats or promises
Sources: Adapted from Robert J. Robinson, Roy J. Lewicki, and
Eileen M. Donahue, “Extending and Testing a Five Factor
Model of Ethical and Unethical Bargaining Tactics: The SINS
Scale,” Journal of Organizational Behavior 21 (2000), pp. 649–
64; and Ingrid S. Fulmer, Bruce Barry, and D. Adam Long,
“Lying and Smiling: Informational and Emotional Deception in
negotiation,” Journal of Business Ethics 88 (2009), pp. 691–
709.
© McGraw-Hill Education
‹#›
Is It Acceptable to Use Ethically Ambiguous Tactics?
There are tacitly agreed-on rules of the game in negotiation.
Some minor forms of untruths may be seen as ethically
acceptable and within the rules.
In contrast, outright deception is generally seen as outside the
rules.
The authors offer some caution.
Statements are based on large groups of people and do not
indicate or predict any individual negotiator’s use of such
tactics.
Observations are based on what people said they would do,
rather than what they actually did.
By reporting the results, the authors do not endorse the use of
marginally ethical tactics.

7. This is a Western view of negotiation, not true for other
cultures – “let the buyer beware” at all times.
© McGraw-Hill Education
‹#›
Deception by Omission versus Commission
The use of deceptive tactics can be active or passive.
For example, misrepresenting your interest on a common-value
issue in order to obtain a future concession from the other party.
Negotiators use two forms of deception in misrepresenting the
common-value issue:
Misrepresentation by omission – failing to disclose information
that would benefit the other party.
Misrepresentation by commission – actually lying about the
issue.
A student role-play study involving the sale of a car with a
defective transmission revealed the following insight.
Students could lie by omission or commission.
Far more students were willing to lie by omission.
© McGraw-Hill Education
‹#›
Figure 5.2: A Simple Model of Deception in Negotiation
Access the text alternative for this image.

8. © McGraw-Hill Education
‹#›
Motives for Using Deceptive Tactics
Negotiators use ethically ambiguous tactics to increase their
power.
Whoever has better information “wins” the negotiation.
This view assumes that the information is accurate and truthful.
Questioning the other’s truthfulness may insult them and
investigating their truthfulness consumes time and energy.
If deception is a way to gain power, then are negotiators i n a
position of weakness more likely to be tempted to engage in
deception?
A negotiator’s motivation affects their tendency to use
deception.
They may use it to achieve their goals.
They may use it to avoid being exploited.
Individual differences of personality or culture affect its use.
Negotiators rationalize deception in anticipation of the other’s
conduct.
© McGraw-Hill Education
‹#›
Consequences of Unethical Conduct
Effectiveness.
Deceptive tactics are effective in certain circumstances.
Consequences occur whether the tactic worked or not.
Reactions of others.
“Targets” are typically angry and now mistrust you.
They may seek revenge.
For serious and personal deception, the relationship suffers.

9. Damage to your reputation can be difficult to repair.
Reactions of self.
When the other party suffers, a negotiator may feel discomfort.
Negotiators who have no problem using deceptive tactics may
use them again and ponder how to use them more effectively.
© McGraw-Hill Education
‹#›
Explanations and Justifications
Here are some typical examples.
The tactic was unavoidable – so the negotiator is not
responsible.
The tactic was harmless – according to the deceptive party.
The tactic will help to avoid negative consequences – for who?
The tactic will produce good consequences, or altruistically
motivated.
“They had it coming,” or “They deserve it,” or “I’m getting my
due.”
They were going to do it anyway, so I will do it first –
anticipation.
“He started it” – anticipation in the past tense.
The tactic is fair or appropriate to the situation – ethical
relativism.
Explanations allow the negotiator to convince others –
particularly the victim – that conduct is acceptable.
They also help rationalize the behavior to themselves.
© McGraw-Hill Education

10. ‹#›
Dealing with the Other’s Use of Deception
Ask probing questions to reveal a great deal of information.
Rephrase questions to uncover answers which skirt the truth.
Force the other party to lie to your face or back off.
Test the other party by asking a question you already know the
answer to, and note the response.
“Call” the tactic, and indicate your displeasure.
Ignore the tactic for a relatively minor aspect.
Discuss and help the other party shift to more honest behavior.
Responding in kind will escalate the conflict.
© McGraw-Hill Education
‹#›
End of Main Content
© McGraw-Hill Education. All rights reserved. Authorized only
for instructor use in the classroom.
No reproduction or further distribution permitted without the
prior written consent of McGraw-Hill Education.
Because learning changes everything.®
www.mheducation.com
Accessibility Content: Text Alternatives for Images

11. © McGraw-Hill Education
‹#›
Figure 5.1: Analytical Process for the Resolution of Moral
Problems – Text Alternative
The first step is developing a complete understanding of the
moral problem at hand.
This means grasping the various subjective moral standards in
play among involved parties, including individual values and
beliefs as well as social norms.
It also means recognizing the mix of potential harms, benefits,
and rights that are involved in the situation.
With the problem fully defined, the path to a convincing
solutions travels through the three modes of analysis shown on
the right side of the figure.
A determination of economic outcomes of potential courses of
action.
A consideration of legal requirements that bear on the situation.
An assessment of the ethical obligations to other involved
parties regarding what is “right” and “just” and “fair.”
The result from this process is to propose a convincing moral
solution.
Return to slide containing original image.
© McGraw-Hill Education
‹#›
Figure 5.2: A Simple Model of Deception in Negotiation – Text
Alternative
This flowchart model describes a rational calculation process in
which the negotiator selects a tactic, uses the tactic, evaluates
the consequences, and attempts to manage the consequences (if
the tactic is detected) through explanations and justifications.
The model puts a negotiator in an influence situation and
identifies possible influence tactics that could be effective,

12. some of which might be deceptive, inappropriate, or marginally
ethical.
Once identified, the negotiator may decide to use one or more
tactics – the selection and use are likely influenced by the
negotiator’s own motivations and their judgment of the tactic’s
appropriateness.
Once the tactic is employed, the negotiator will assess
consequences on three standards: whether the tactic worked and
produced the desired result; how the negotiator feels about
themselves after using the tactic; and how the individual may be
judged by the other party or by neutral observers.
Negative or positive conclusions on any of these three standards
may lead the negotiator to try to explain or justify use of the
tactic, and they will eventually affect a decision to employ
similar tactics in the future.
Return to slide containing original image.
© McGraw-Hill Education
‹#›
Essentials of Negotiation
Part 03: Negotiation Relationships
Chapter 09: Relationships in Negotiation
© McGraw-Hill Education. All rights reserved. Authorized only
for instructor use in the classroom.
No reproduction or further distribution permitted without the
prior written consent of McGraw-Hill Education.
Because learning changes everything.®

13. Challenging How Relationships in Negotiation Have Been
Studied
Negotiation is studied in two ways.
Live field situations.
Simulated negotiations.
Simulated negotiations dominated research for 50 years.
It is easier to conduct.
Controlled conditions.
Ease of data collection.
Problems with this approach.
Conclusions for complex negotiations come from simple
simulations.
Parties have no existing relationship.
Yet, relationships change negotiation dynamics.
Negotiating in relationships takes place over time.
Negotiation is a way to learn and increase interdependence.
Resolution of simple issues has implications for the future.
Issues within relationships can be emotionally hot.
Negotiating within relationships may never end.
The other person may be the focal problem.
Relationship preservation is the goal in some negotiations.
2
© McGraw-Hill Education
Negotiations in Communal Sharing Relationships
Parties in a communal-sharing relationship are more cooperative
and empathetic.
Relational identity theory holds that defined group members
who use negotiation techniques focusing on issues are likely to
fail.
It is unclear whether parties in close relationships produce

14. better solutions than other negotiators do.
A long-term study of conflict resolution in marriages provides
insights.
Successful couples stay positive and say “yes” often.
They embrace conflict as a way to work through differences.
Good relationships know not only how to fight, but also how to
repair a relationship after a fight.
Successful couples stress what they like, value, appreciate, and
respect about the other.
3
© McGraw-Hill Education
Key Elements in Managing Negotiations within Relationships
A study of work relationships identified eight key dimensions.
Trust, support, affect (emotion), loyalty, accountability,
instrumentality, respect, and flexibility.
Some dimensions are critical at the beginning of a relationship.
While others are critical as a relationship matures.
Trust was the most common and important dimension.
Reputations play important roles in shaping relationship
development.
Justice was also an important relationship component.
4
© McGraw-Hill Education
Reputation
There are several important aspects of reputation.
Reputations are perceived and highly subjective in nature.

15. It is what others actually think of us that counts.
An individual can have a number of different, even conflicting,
reputations.
It is commonly a single, consistent image.
Reputations are shaped by past behavior.
Reputation is influenced by personal characteristics and
accomplishments.
Reputations develop over time; once developed, they are hard to
change.
Other's reputations can shape emotional states as well as their
expectations.
Negative reputations are difficult to “repair.”
5
© McGraw-Hill Education
Trust
One definition of trust is an individual’s belief in and
willingness to act on the words, actions, and decisions of
another.
Three things contribute to the level of trust one negotiator has
for another.
The negotiator’s chronic disposition toward trust—individual
differences in personality that make some people more trusting
than others.
Situation factors—such as the opportunity for the parties to
communicate with each other adequately.
And the history of the relationship between the parties.
6

16. © McGraw-Hill Education
Recent Research on Trust and Negotiation: Individual and
Situational Antecedents of Trust in Negotiation
Individual antecedents of trust in negotiation.
People generally start with high levels of trust even without
data about the situation or the other party.
Individual motives shape expectations of trust.
Personality differences shape expectations.
Emotions contribute to trust or distrust.
Situational antecedents of trust in negotiation.
The nature of the negotiation process shapes trust expectations.
Face-to-face negotiation encourages greater trust development
than online negotiation.
Negotiators who are representing others’ interests tend to be
less trusting and less trustworthy than if they are representing
their own interests.
7
© McGraw-Hill Education
Recent Research on Trust and Negotiation: Negotiation
Processes and Outcomes of Trust
Trust and negotiation processes.
The focus on different things is amplified by the type of
negotiations the parties expect.
Trust increases “positive” turning points around common
interests and decreases “negative” turning points that might
deadlock a negotiation around polarization of issues or negative
emotions.
Outcomes of trust.
Trust cues cooperative behavior.
Trust enhances the sharing of information, and greater

17. information sharing generally leads to better negotiation
outcomes.
Parties who trust tend to communicate by using questions and
answers in order to share information and understand the other’s
perspective.
Parties who trust less tend to argue for and justify their own
preferences and listen less to the other—hence, they are less
likely to understand the other’s perspective and more likely to
“force” their view on the other party.
8
© McGraw-Hill Education
Building Trust at the Negotiation Table
Learn what you can about your counterpart.
Reputational information can be helpful.
Get to know the person before you formally negotiate.
Whether you have dealt with the other before, or not.
Proceed with caution on the other’s trustworthiness.
Use safeguards to protect you against errors in judgment.
Win the other’s trust.
Make the other understand the “cost” of a major concession
from you and don’t underestimate the value of a concession on
their part.
Listen to and acknowledge the other’s concerns.
Acknowledging emotion may be one of the most important parts
of effective listening as a vehicle for building trust.
9
© McGraw-Hill Education

18. Trust Repair
Three major strategies that a trust violator can use to repair
trust.
Verbally address intent with apologies, explanations, and
accounts.
Apologies should include: an expression of regret, an
explanation, an acknowledgement of responsibility, a
declaration of repentance, an offer to repair the impact, and a
request for forgiveness.
Reparations – payment of compensation to the victims for the
consequences suffered from the violator.
The amount of money offered is less critical than the offer
itself.
Structural solutions – make the effort to create rules,
regulations, and procedures to minimize the likelihood of
violation in the future.
Rules and procedures can be strengthened by also creating fines
and penalties for rule violation.
10
© McGraw-Hill Education
Justice
Justice can take several forms.
Distributive justice is about the distribution of outcomes.
Procedural justice is about the process of determining outcomes.
Concerns about procedural fairness arise most when negotiators
are judging the behavior of third parties.
Interactional justice is about how parties treat each other in
one-to-one relationships.
People have strong expectations about their treatment and when
those standards are violated, parties feel unfairly treated.

19. Systemic justice is about how organizations appear to treat
groups of individuals and the norms that develop for how they
should be treated.
When groups are discriminated against or disenfranchised, they
may think the system is biased.
11
© McGraw-Hill Education
Research Conclusions on Justice and Fairness
Involvement in the process of shaping negotiation strategy
increases commitment to that strategy and willingness to pursue
it.
Procedural justice appears to impact the way negotiators
approach the negotiation process.
Negotiators encouraged to think about fairness were more
cooperative in distributive negotiations.
Parties who receive offers they perceive as unfair may reject
them out of hand, even though the amount offered may be better
than their BATNA.
Establishment of some objective standard of fairness has a
positive impact on negotiations and satisfaction with the
outcome.
Judgments of fairness are subject to cognitive biases.
Egocentric biases vary across cultures.
12
© McGraw-Hill Education
Relationships among Reputation, Trust and Justice

20. Reputations, trust, and justice all interact in shaping
expectations of the other’s behavior.
When one party feels the other acted fairly in the past or will
act fairly in the future, they are more likely to trust the other.
Conversely, when parties are unfairly treated, they often
become angry and retaliate against either the injustice itself or
those who are seen as causing it.
Trust, justice, and reputation are all central to relationship
negotiations and feed each other.
13
© McGraw-Hill Education
Repairing a Relationship
Talk through the following questions to help identify problems
and improve a relationship.
What might be causing any present misunderstanding, and what
can I do to understand it better?
What might be causing a lack of trust, and what can I do to
begin to repair trust that might have been broken?
What might be causing one or both of us to feel coerced, and
what can I do to put the focus on persuasion rather than
coercion?
What might be causing one or both of us to feel disrespected,
and what can I do to demonstrate acceptance and respect?
What might be causing one or both of us to get upset, and what
can I do to balance emotion and reason?
14
© McGraw-Hill Education

21. End of Main Content
© McGraw-Hill Education. All rights reserved. Authorized only
for instructor use in the classroom.
No reproduction or further distribution permitted without the
prior written consent of McGraw-Hill Education.
Because learning changes everything.®
www.mheducation.com