SETTLEMENT OFFERS: GAINING ACCEPTANCE THROUGH THE PSYCHOLOGY OF SOCIAL INFLUENCE

 by David Pomeroy

Social psychology looks into how individuals persuade others to accede to their requests.

Here are six methods of submitting a settlement offer to opposing counsel—each method represents a tactic based on social influence.

  1.  “Of course, we put a lot of time and energy into crafting this offer, and we've conceded at least five difference times on the amount we are willing to take. We’re asking you to concede just once from your initial offer.”
  2.  "You once told me that money was a secondary issue, that it was confidentiality that mattered most. We've agreed to give you that. Isn't your statement still true?”
  3. "I've run this offer by six other people in this firm, all of whom used to work with you before you took your present job. They all thought that the offer was one that your client should accept.”
  4. “We've been friends for a long time, so how about helping me make this one go away? Once we get it done, I’ll take you out for a beer.”
  5. “And while I don’t want to put undue pressure on you, you should probably know that we hired Justice Brown . I showed him our offer just to get his feedback, and he thought your client would be foolish not to accept.”
  6. “This offer is open for 48 hours. After that, all bets are off.”

The six principles of social influence represented by these offers are described below.

Reciprocation

This principle says that one should repay, in kind, what another person has provided—even uninvited favors and gifts leave people with a sense of indebtedness that they feel they must reciprocate. In settlement negotiations, there is a strong feeling that one should respond to a concession that his adversary makes with a concession of his own.

In a study, college students walking on campus were asked if they would be willing to accompany a group of juvenile delinquents on a day trip to the zoo. Only 17% agreed to do so. A second sample of students was first asked if they would be willing to spend two hours per week for two years as unpaid counselors to juvenile delinquents. After refusing this extreme request, these same students were asked if they would be willing to take part in the zoo day trip. In this case, 50% agreed to do so.

Reciprocation in and of itself is not a problem and is a driving force in settlement negotiations. To be avoided is reciprocating trivial concessions with meaningful ones. Therefore (as suggested in the previous blog), a negotiator may want to make an “optimistic” first offer to leave room for concessions that will be expected by the adversary. Also, it is important to resist the temption to reciprocate negligible concessions by the other side.

Returning to Question 1, it can be seen that the speaker attempts to exploit the tendency to reciprocate by drawing attention to the previous concessions. This puts pressure on the respondent to reciprocate.

Commitment and Consistency

A person feels pressure to behave consistently with a previously made commitment. This can arise in at least three situations in settlement negotiations. First, a public commitment to a position is difficult to avoid at a later time.

In another study, students were asked to estimate the length of a line, then received information that the judgment was incorrect. A group of students who has been asked to commit to their first estimate publicly by writing it down, signing it, and turning it over to the experimenter were much more reluctant to later revise their estimate that a group of students that kept these initial estimates to themselves. Experimental juries were less likely to reach a consensus if they were asked to publicly display their opinions with a show of hands rather than a secret ballot.

Second, if a negotiator can succeed in having an adversary agree to a small initial request, later cooperation becomes more likely. In a classic study, homeowners were asked if they would agree to have a large, unattractive sign reading Drive Carefully placed in their from lawns. Only 17% agreed. A second group of homeowners in the same neighborhood had been approached two weeks earler and were asked if they would post a 3 inch sign reading Be a Safe Driver. Virtually all agreed to post the small sign. When asked two weeks later, 76% of them also agreed to have the large sign installed on their from lawns.

Third, once significant time and energy have been expended in reaching a tentative agreement, negotiators are more willing to give in to last-minute requests by their adversary. In a study showing this, students enrolled in an introductory psychology class were asked if they would be willing to participate in a study “on thinking processes” at 7:00 a.m. Only 24% complied. A different group from the same class was asked if they wanted to participate in a study of thinking processes. In this case, 56% agreed, but none reneged when they were told that it started at 7:00 a.m., even when they were given a change to change their minds.

To guard against the effects of this social influence, one should guard against making public commitments. On the other hand, when adversaries have made such commitments, the lawyer can help provide the adversary with face-saving reasons to retreat trom the previous commitment.

Question 2 is an attempt to pressure the recipient to stland by previous statements and offers.

Social Proof

People view a behavior has correct in a given situation to the degree that they see others performing it. The behavior of others is perceived as “proof” that the behavior is appropriate. Canned laughter has been shown to elicit more laughter in audiences and cause them to rate material as funnier that they do in its absence. People are more likely to follow the behavior of others when the situation is unclear or ambiguous or when people are unsure of themselves. And people are more likely to follow the example of others whom they see as being similar to themselves.

Turning back to Question 3, this can be seen as an attempt to influence the recipient to accept the offer in order to conform to social proof. The former colleagues provide proof of proper behavior.

Liking

It is no secret that people want to slay yes to others they know and like. Contrary to popular belief, a positive relationship can be more effective in achieving settlement than a ruthless and intimidating approach—many argue that cooperation and honesty lead to success in bargaining. Studies of lawyers negotiating show that those who are cooperative are rated as more effective than lawyers who are not.

Question 4 is an attempt to leverage “liking” so as to influence the acceptance of the settlement offer. The more the recipient likes the offeror, the more likely it is that the offer will be accepted.

Authority

People are mnore likely to accede to the request of a perceived authority figure. Aa researcher identified himself over the phone as a hospital physician and asked hospital nurses to administer a dangerous dose of an unauthorized drug to a specific patient. 95% of the nurses attempted to comply.

Not only do titles tend to promote compliance and deference, so do uniforms and other trappings. A judge’s physically elevated status and traditional robe reinforce a courtroom hierarchy. A retired judge or sufficiently senior partner may lend an air of authority to a person or an offer.

Our Question 5 seeks to lend an air of authority to an offer with its reference to a retired judge.

Scarcity

According to psychological reactance theory, when people are proscribed from making a certain choice, they desire that choice more and work harder to obtain it. Stated another way: opportunities often seem more valuable when they are less available. This is the ubiquitous “limited time offer” in consumer advertising.

The time limit stated in Question 6 may trigger a response from the other side. They may be willing to accept the offer in reaction to the threat of its imminent disappearance.

Conclusion

The principles of social influence discussed above affect how settlement offers are received and the responses to such offers. An awareness of these influences is essential to successful settlement negotiations.

 


Download Blog in PDF Format


 

No comments (Add your own)

Add a New Comment


code
 

Comment Guidelines: No HTML is allowed. Off-topic or inappropriate comments will be edited or deleted. Thanks.