Eight Unethical Negotiating Gambits You Need To Know

1. The Decoy

Watch out for people who use the Decoy gambit to lure you away from the real issue in a negotiation.

Several years ago, an association hired me to do a seminar at a prestigious hotel. To illustrate how effective being a good negotiator can be, I decided to negotiate the price of my hotel room – already discounted from $135 to $75 per night.

Using the Decoy gambit, I told the desk clerk that the association that hired me had booked my room, and I was not willing to accept a twin-sized bed. The desk clerk brought out the manager who explained that they were at capacity and had only ten rooms available – so I would have to set for a twin-sized bed.

In response, I used the Trading-Off gambit by offering to settle for a twin-sized bed and then asking the manager, “But if I do that for you, what will you do for me?” To my surprise, he offered the room to me at half price. In addition, he made a phone call and found out that they did have a queen-sized bed available. So I got a $135 queen-sized bed for just $37.50!

The Decoy I used was that they had only twin-sized beds available – but that wasn’t the real issue at all – I wanted a reduced room rate. The size of the bed took their attention away from the real issue.

2. The Red Herring

The Red Herring gambit is a different approach from the Decoy gambit.

With the Decoy, the other person raises a bogus issue to get concessions on a real issue. With the Red Herring, the other person makes a phony demand that he or she will subsequently withdraw, but only in exchange for a concession from you.

If the Red Herring distracts you, it will mislead you into thinking that it’s of major concern to the other side – when it may not be.

The classic example of the use of a Red Herring came during the Korean War armistice talks – Michael please insert a modern example/story here of no more than 3 short paragraphs.

Remember, when the other side is creating a Red Herring issue that it will try to trade off later, keep your eye on the real negotiating issues and don’t let them link it to a concession you’re reluctant to make.

3. Cherry Picking (for the buyer and the seller)

Cherry Picking is a gambit that a buyer can use against a seller with devastating effect, unless the seller is a better negotiator who knows his or her options.

If you’re thinking of buying a new piece of equipment for your company, use Cherry Picking to your advantage. Before making a decision to shop around, gather information by calling up companies, and chatting with their salespeople. You’ll find that each company has a good point in a particular area – it could be fast shipment or a low price or a good guarantee.

Now take your findings, put together the ideal piece of equipment, and go back to the one you like best. Say to them, “I’d like to buy your equipment, except I want the longer guarantee.” Or “I want the faster shipping.” By doing so, you create the type of deal and the kind of contract you want.

Thus, buyers should push for itemized contracts, whereas sellers should avoid them.

Cherry Picking is an unethical gambit because one wouldn’t do it to someone one knows and trusts, but one would do it to a stranger. In this regard, a seller can forestall Cherry Picking by building a personal relationship with the buyer.

Another way to forestall this tactic is to know more about your competition. For example, a contractor is trying to sell a remodeling job to a homeowner, but the owner says, “I want to check with a few other companies before I make a final decision.” The contractor should respond with, “Of course, I agree with you.”

The trick is to always agree with any objection up front, no matter how ridiculous it is, and then to make it work for you. “Of course, I agree with you – but let me save you some time – have you spoken with John Smith at XYZ Construction? They have cabinets with one of your desired features, but they don’t have the other feature you desire. Another option is to go to ABC Department Store where Janet Harrison will tell you about some other features.”

By the time the contractor is done telling the homeowner how much he knows about the competition, the owner is going to think that there is no need to check with a few other companies because the contractor is so knowledgeable.

To protect yourself against Cherry Picking, always consider the alternatives of the other side before making a concession. The fewer alternatives the other side has, the more power you have.

4. The Deliberate Mistake

The Deliberate Mistake is a very unethical tactic – and as with any con, it requires a victim who is equally unethical. The seller baits the hook when preparing a proposal and deliberately omits or underprices one of the elements.

For example, when quoting the price of a car, the salesperson forgets to include the cost of the GPS system. If the buyer takes the bait, he sees it as an opportunity to quickly close the deal before the salesperson spots the mistake.

However, the buyer’s eagerness makes him a sloppy negotiator, and he may end up paying more for the car than if he had pointed out the mistake. In addition, the salesperson can still “discover” the mistake before a deal is closed, and with an accusing look, can shame the buyer into paying the extra amount.

As a rule of thumb, never try to get away with anything – your greed will catch up with you. Instead, point out the mistake and say, “I assume that you’re not charging me for the GPS system because you’re trying to get me to make a decision now?”

5. The Erroneous Conclusion

An alternative to the Deliberate Mistake (hyperlink to Part 1) is the Erroneous Conclusion close. Here, the salesperson asks a question of the buyer and deliberately draws an Erroneous Conclusion. When the buyer tries to correct the salesperson, they find that they’ve made a commitment to buy.

Here are two examples of this:

1. The car salesperson asks, “If you did decide today, you wouldn’t need to take delivery today, would you?”
   The buyer responds, “Well, of course we’d want to take it today.”
2. Or the real estate salesperson asks, “You wouldn’t want the sellers to include the refrigerator, would you?”
   The buyers hadn’t thought of doing that, but the refrigerator looks better than their current one, so they reply, “Do you think they would include it?”
   The salesperson responds, “Let’s include it in our offer and see what happens.”

6. The Default

The Default gambit involves a unilateral assumption that works to the advantage of the side proposing it.

For example, the company remits a cheque to a vendor after having deducted 2.5 percent, with a note attached that reads, “All our other vendors discount for payment within 15 days, so we assume you will too.”

Or the salesperson who writes a potential buyer, “Because I’ve not heard from you on your choice of options, I will ship the deluxe model unless stated otherwise within ten days.”

The Default gambit preys on busy or lazy people – it assumes the other side will not take action and will let you get away with it. When you finally do object, the instigator can say, “But you’ve never had a problem with it in the past.”

Remember: Once you fail to respond, the law of precedent comes into play.

Much like all unethical gambits, try to call the other side out on it and insist that you expect to see a higher level of ethics from them in the future.

7. Escalation

The Escalation gambit is raising demands after both sides have reached an agreement.

Let’s say a wealthy businessman is set to sell his real estate franchise to a large corporation. The night before the signing ceremony, he starts to have second thoughts – am I getting enough money? So, the next morning, he asks for 50 percent more.

Of course, this is outrageous and unethical, but perpetrators often don’t see any harm in cutting the best deal by any means possible. All too often they get away with it because the other side swallows its pride and concedes.

However, there are responses to Escalation other than swallowing your pride or walking away, such as:

• Protect yourself with Higher Authority. Tell the other side that your Board of Directors will never renegotiate a deal once it has been made, and the board will force you to walk away. Then Position for Easy Acceptance. Tell the other side that although you cannot budge on the price, you might be able to offer something of value in another area.
• Escalate your demands in return. Tell the other side that you’re glad it wants to reopen the negotiations because your side has been having second thoughts too. Of course, you would never default on a deal, but since the ther side has chosen to negate the original proposal, your price has also gone up.

It’s better to avoid Escalation than to have to deal with it.

Avoid Escalation by using these techniques:

• Tie up all the details up front. Don’t leave anything to “we can work that out later” because unresolved issues invite Escalation.
• Build personal relationships with the other side because it makes it harder for them to be ruthless.
• Get large deposits so it’s harder for the other side to back out.
• Build win-win negotiations so the other side doesn’t want to back out.

8. Planted Information

Planted Information can be a powerful influencer. For example, a salesperson is making an impressive presentation to a Board of Directors. She feels confident that she can close the sale at her asking price of $820,000 – until she sees a note being passed around and then left open on the table.

Her curiosity causes her to move toward the table to take a peek at the note. Out of the corner of her eye, she can clearly see the note that reads, “Universal’s price is $762,000 – let’s go with them.”

The Chair of the Board asks if $820,000 is her best price because they’re obliged to go with the lowest price that meets their demands. Within minutes, the salesperson has lowered her price to $762,000.

Was the note real – or was it Planted Information? Despite it being a note scrawled on a piece of paper, the salesperson believed it to be real because she obtained the information covertly.

Knowing about Planted Information will help you diffuse this unethical tactic.

When you negotiate with only the information the other side has chosen to tell you, you are vulnerable to manipulation. When the other side may have Planted Information for you to find, you should be even more vigilant.

To conclude, remember to stick to the real issue in a negotiation. If you’re the buyer, push for itemized contracts, and if you’re the seller, try to avoid them by building a relationship with the buyer.

Remember: Point out mistakes in negotiations – don’t be greedy.