Overconfidence About Future Failure or Success: Limiting Strategic Miscalculation in Business Negotiations

▤ Summary

This tendency applies to competitive situations, including negotiation. You might know that a company has cheated you out of some money, but unless you have strong evidence, you probably won’t pursue the case – even if the other side would have difficulty mounting a defense. In a union-management negotiation, for instance, if the union’s strike fund is flush, the union may be more motivated to hold out for its demands than if reserves are low. Even a strong union could not expect a quick, favorable settlement to contract negotiations with a company that has a huge stock of surplus inventory and substantial cash reserves. Consequently, when both sides feel their case is strong, protracted and painful battles of will are likely.

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