1
Chapter 5
Ethics in Negotiation
Overview
In this chapter, we explore the question of whether there are, or should be, accepted ethical
standards for behavior in negotiations. This topic has received increased attention from
researchers in recent years. It is our view that fundamental questions of ethical conduct arise in
every negotiation. The effective negotiator must recognize when the questions are relevant and
what factors must be considered to answer them. We want to be clear that it is not our intention
to advocate a specific ethical position for all negotiators or for the conduct of all negotiations.
Many treatises on business ethics take a strongly prescriptive or normative position, advocating
what a person should or should not do. Instead, our aim in this chapter is to describe the ethical
issues that arise in negotiations. We identify the major ethical dimensions raised in negotiations,
describe how people tend to think about these ethical choices, and provide a framework for
making informed ethical decisions. Along the way, we will highlight research that has yielded
worthwhile findings in this area.
Learning Objectives
1. A sampling of ethical quandaries.
2. What do we mean by ethics and why do they matter in negotiation?
3. What questions of ethical conduct arise in negotiation?
4. Why use deceptive tactics? Motives and consequences.
5. How can negotiators deal with the other party’s use of deception?
I. A Sampling of Ethical Quandaries
A. People in and out of organizations are routinely confronted with important decisions
about the strategies they will use to achieve important objectives, particularly when a
variety of influence tactics are open to them. These decisions frequently carry ethical
implications.
B. The major ethical questions that arise in negotiation can be worked out through
consideration of these questions:
1. What are ethics and why do they apply to negotiation?
2. What questions of ethical conduct are likely to arise in negotiation?
3. What motivates unethical behavior, and what are the consequences?
4. How can negotiators deal with the other party’s use of deception?
II. What Do We mean by “Ethics” and Why Do They Matter in Negotiation?
2
A. Ethics defined.
1. Ethics are broadly applied social standards for what is right or wrong in a particular
situation, or a process for setting those standards.
2. Ethics grow out of particular philosophies, which purport to (a) define the nature of
the world in which we live, and (b) prescribe rules for living together.
3. There are four standards for evaluating strategies and tactics in business and
negotiation:
a) Choose a course of action on the basis of results I expect to achieve.
b) Choose a course of action on the basis of my duty to uphold appropriate rules and
principles.
c) Choose a course of action on the basis of the norms, values, and strategy of my
organization or community.
d) Choose a course of action on the basis of my personal convictions.
4. There are four different approaches to ethical reasoning: End-result ethics, duty
ethics, social contract ethics, personalistic ethics. These are discussed further below.
B. Applying ethical reasoning to negotiation.
1. The four approaches to ethical reasoning (above) are the basis for the in-depth
treatment of ethics in the upcoming chapter discussions.
C. Ethics versus prudence versus practicality versus legality.
1. Discussion of business ethics frequently confuse the following terms:
a) Ethical – defined as what is appropriate as determined by some standard of moral
conduct.
b) Prudent – wise, based on trying to understand the efficacy of the tactic and the
consequences it might have on the relationship with the other.
c) Practical – what a negotiator can actually make happen in a given situation.
d) Legal – what the law defines as acceptable practice.
D. La Rue Hosmer (2003) developed a model of the process of analyzing a moral problem.
The first step is developing a complete understanding of the moral problem at hand. With
the problem fully defined, the path to a convincing solution travels through the three
modes of analysis:
1. A determination of economic outcomes of potential courses of action.
2. A consideration of legal requirements that bear on the situation.
3
3. An assessment of the ethical obligations to other involved parties regarding what is
“‘right’ and ‘just’ and ‘fair’” (ethical reasoning).
III. What Questions of Ethical Conduct Arise in Negotiation?
A. Ethically ambiguous tactics: It’s (mostly) all about the truth.
1. Ethically ambiguous – tactics that may or may not be improper, depending on an
individual’s ethical reasoning and circumstances.
2. Focuses on what negotiators say or what they will do than on what they actually do.
3. Arriving at a clear, precise, effective negotiated agreement depends on the
willingness of the parties to share accurate information about their own preferences,
priorities, and interests.
4. Deception in negotiation can rise to the level of legally actionable fraud.
B. Identifying ethically ambiguous tactics and attitudes toward their use.
1. What ethically ambiguous tactics are there?
a) The six categories of tactics—traditional competitive bargaining, emotional
manipulation, misrepresentation, misrepresentation to opponent’s networks,
inappropriate information collection, and bluffing—are generally seen as
potentially inappropriate and unethical in negotiation. The first two are likely to
be used and, while mildly inappropriate, are nevertheless seen as appropriate and
effective. The other four are generally seen as inappropriate and unethical in
negotiation.
2. Does tolerance for ethically ambiguous tactics lead to their actual use?
a) A study by Volkema (2001) addressed this issue, and five conclusions were
drawn.
3. Is it all right to use ethically ambiguous tactics?
a) The studies summarized here indicate that there are tacitly agreed-on rules of the
game in negotiation. In these rules, some minor forms of untruths—
misrepresentation of one’s true position to the other party, bluffs, and emotional
manipulations—may be seen as ethically acceptable and within the rules.
b) Outright deception and falsification are generally seen as outside the rules.
C. Deception by omission versus commission.
1. O’Connor and Carnevale (1997) found two forms of deception in misrepresenting the
common-value issue:
4
a) misrepresentation by omission (failing to disclose information that would benefit
the other); and
b) misrepresentation by commission (actually lying about the common-value issue).
D. The decision to use ethically ambiguous tactics: A model.
1. The selection and use of a given tactic is likely to be influenced by the negotiator’s
own motivations and his or her perception/judgment of the tactic’s appropriateness.
2. Once the tactic is employed, the negotiator will assess consequences on three
standards:
a) Whether the tactic worked;
b) How the negotiator feels about him or herself after using the tactic;
c) How the individual may be judged by the other party or by neutral observers.
IV. Why Use Deceptive Tactics? Motives and Consequences
A. The power motive.
1. In the exchange of facts, arguments, and logic, it is assumed that the information is
accurate and truthful. Any inaccurate and untruthful statements (i.e., lies) introduced
into this social exchange manipulate information in favor of the introducer. Through
the tactics such as bluffing, falsification, misrepresentation, deception, and selective
disclosure, the liar gains advantage.
B. Other motives to behave unethically.
1. In a study on tactics, Lewicki and Spencer (1991) asked negotiators about their
predisposition to use marginally ethical tactics.
2. The authors predicted that (a.) when motivated to be competitive, and when expecting
the other to be competitive, the negotiator would see the marginally ethical tactics as
appropriate and (b.) when both parties were competitively motivated, they would
exhibit the greatest tendency, to employ marginally ethical tactics. (c.) The results
revealed that differences in the negotiators’ own motivational orientation –
cooperative versus competitive – did not cause differences in their view of the
appropriateness of using the tactics, but the negotiators’ perception of the other’s
expected motivation did! In other words, negotiators were significantly more likely
to see the marginally ethical tactics as appropriate if they anticipated that the other
would be competitive versus cooperative.
C. The consequences of unethical conduct.
1. A negotiator who employs an unethical tactic will experience positive or negative
consequences.
5
2. The consequences are based on whether the tactic is effective; how the other person,
constituencies, and audiences evaluate the tactic; and how the negotiator evaluates the
tactic.
a) Effectiveness.
(1) Consequences will occur depending on whether the tactics worked or not –
that is, whether the negotiator got what he or she wanted as a result of using
tactics.
b) Reactions of others.
(1) A second set of consequences may come from the judgments and evaluations
of that negotiator – from the opponent, from constituencies, or from audiences
that can observe the tactic.
c) Reactions of self.
(1) A third set of consequences may result depending on how the negotiator
evaluates his or her own use of the tactic – whether using the tactic creates
any discomfort, personal stress, or even guilt – or, in contrast, whether the
actor sees no problem in using the tactic again and even begins to consider
how to use it more effectively.
D. Explanations and justifications.
1. There is an increasing stream of research on those who employ unethical tactics and
the explanations and justifications they use to rationalize them.
2. Rationalizations have been adapted from Bok (1978) and her excellent treatise on
lying:
a) The tactic was unavoidable.
b) The tactic was harmless.
c) The tactic will help to avoid negative consequences.
d) The tactic will produce good consequences, or the tactic is altruistically
motivated.
e) “They had it coming,” or “They deserve it,” or “I’m just getting my due.”
f) “They were going to do it anyway, so I will do it first.”
g) “He started it.”
h) The tactic is fair or appropriate to the situation.
V. How Can Negotiators Deal with the Other Party’s Use of Deception?
A. If you think the other party is using deceptive tactics, in general you can do the
following:
1. Ask probing questions.
2. Phrase questions in different ways.
6
3. Force the other party to lie or back off.
4. Test the other party.
5. “Call” the tactic.
6. Ignore the tactic.
7. Discuss what you see and offer to help the other party change to more honest
behaviors.
8. Respond in kind.
Summary
In this chapter, we have discussed factors that negotiators consider when they decide whether
particular tactics are deceptive and unethical. We approached the study of ethically ambiguous
tactics from a decision-making framework, examining the ethical overtones of the choices that
negotiators make.
We began by drawing on a set of hypothetical scenarios to show how ethical questions are
inherent in the process of negotiation, and then presented four fundamental approaches to ethical
reasoning that might be used to make decisions about what is ethically appropriate. We
proposed that a negotiator’s decision to use ethically ambiguous (or flatly unethical) tactics
typically grows out of a desire to increase one’s negotiating power by manipulating the
landscape of (presumably accurate) information in the negotiation. We discussed the different
forms that ethically ambiguous tactics take, and we analyzed the motives for and consequences
of engaging in unethical negotiation behavior. Finally, we addressed how negotiators can
respond to another party that may be using tactics of deception or subterfuge.
In closing, we suggest that negotiators who are considering the use of deceptive tactics ask
themselves the following questions: 1) will they really enhance my power and help me achieve
my objective?; 2) how will the use of these tactics affect the quality of my relationship with the
other party in the future?; 3) how will the use of these tactics affect my personal and professional
reputation as a negotiator?
Negotiators frequently overlook the fact that, although unethical or expedient tactics may get
them what they want in the short run, these same tactics typically lead to tarnished reputations
and diminished effectiveness in the long run.