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- [00:00]
Podcast Host (Ad Reader)
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- [00:31]
Max Bazerman
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- [01:02]
Podcast Host (Ad Reader)
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- [01:28]
Max Bazerman
Welcome to the New Books Network
- [01:32]
Alfred Marcus
welcome to the New Books Network. I'm Alfred Marcus, and this book is part of my series on the Cusp Between Strategy and Ethics. In this series, I talk with authors whose work sits where organizational strategy meets moral responsibility. My own recent book, Comeback, looks at how organizations recover from crises and by building legitimacy and rethinking their strategic orientation. Today's book is Negotiation the Game Has Changed by Max Baserman. Max is one of the most influential negotiation scholars of the last 40 years, if not the most influential. And in this book he argues the negotiation has entered a new era, one where context, culture, politics, technology, and cognitive bias shape outcomes as much as analytical skill. He challenges the idea that negotiation is a generic skill and shows how negotiators must adapt timeless principles to rapidly changing environments. Max, welcome to on the Cusp. You open the book by saying the game has changed. What, in your view, has changed most dramatically? You human behavior, negotiation context, or the environments in which negotiations now occur?
- [02:57]
Max Bazerman
Yeah, so first, thanks for inviting me to on the Cusp. I'm happy to be with you. And you know, I think that the context has changed dramatically, so lots of things have changed, but I think Organizing it in terms of how the context has changed is absolutely critical. The book was published in early 2025, which means that I sent it off to the publisher in 2024. So if you had asked me this question as I was sending the book off to the publisher, my answer, quite honestly, would have been different than it is today. So in 2024, I would have focused that the American economy shifted tremendously after the Great Recession in terms of how financial markets work, how lots of transactions that affect consumers happen. I would focus on the fact that by 2024, we were already interacting a great deal on the computer online, rather than meeting people face to face in person, which was kind of a dramatic shift. And I think that there's lots of issues associated with negotiating online, which perhaps we'll get to. And certainly Covid changed things at one more level in terms of moving people online and changing the way in which supply chains operated and disrupting our economic system in a variety of ways that affected lots of negotiations. So those would have been on the top of the list, and none of those would remain in the top two. Now that you're asking me this, in 2026, the two biggest contextual changes that. That I find executives obsessed by are AI in negotiation and the impact of Trump on negotiation. So AI and Trump are the two big, massive changes, perhaps bigger than the earlier contextual changes that I talked about. So everybody is thinking about how AI affects your lives. There's lots of ways in which AI affects negotiations from helping people prepare. So if you dump all of your everything you know about an upcoming negotiation into Quad and ask them for advice, you can get pretty good information from Quad in terms of developing a negotiation strategy. That I think is far better than the intuition of most executives. So I think that AI can help a lot, but we can do better than Claude. My colleague Deepak Malhotra at the Harvard
- [05:36]
Alfred Marcus
Business School
- [05:39]
Max Bazerman
has a new AI tool called Kilmer K I L N E R A I dot com. And early evidence suggests that Kilmer outperforms Klaun in terms of giving you good negotiation advice. In fact, it's kind of interesting what makes Kilmer better than Kwon or chatgpt? And the simple answer is Kilmer has the wisdom to know it needs to collect more information from you before it's ready to give you good advice. So Kilmer does a better job of collecting information from the actual negotiator, and I think that that helps him tremendously. But just thinking through those issues about how do you get good advice in The AI LLM world is kind of pretty fascinating. We also increasingly have bots doing our negotiation for us. So lots of companies now have bots in the position of negotiators. That's a fundamentally different world. So I could go on and on, but I find kind of the shifts based on AI fascinating. And I find myself relying on my smarter, younger colleagues to help me be ready to teach negotiations in the world of AI and how to think that through, because our students obviously are thinking about everything through an AI filtered lens. And then the other I mentioned Trump, and I just think it's fascinating to think about how the world has been realigned. So separating from kind of the politics of whether I like them or I don't. It's just fascinating to see other countries no longer depending on the US because they don't think that they can. It's fascinating to go to Toronto and go to the liquor store, which is owned by the. By the province of Ontario. There isn't any American wine to buy there. And quite frankly, I'm a fan of Napa Cabernet, but I can't get it when I'm in Canada because of the trade disputes that are going on. And to see Canada turning to China for its trade rather than America is kind of pretty shocking. And it's something that we couldn't have imagined when I sent this book off to the publisher just a couple of years ago. So we see kind of dramatic shifts based on both AI and, and the actions of the Trump administration. You're a professor. I'm a professor. What we see going on in universities today is sharply affected by Trump. American universities are in a weaker competitive position for recruiting the best talent. And the best talent has more hassle involved in thinking about getting the right education in the US So all these transactions have been dramatically affected by Trump.
- [08:46]
Alfred Marcus
Let's dig into some of this just a little bit. What about teaching negotiations in a world of AI? How does that change?
- [08:53]
Max Bazerman
Yeah, I have a colleague, Amit Goldenberg, who is an AI expert. And just to be clear, I don't consider myself an AI expert at all. So I learned from Deepak and I learned from Amit. And so I'm following Amit's model on a lot of how to teach negotiations. But early in my course, I teach a case called Hamilton, a simulation called Hamilton, where a buyer and seller negotiate with each other. The simulation was written by Deepak, but what Amit has done is he's created a structure which I plan on following, where students do negotiate face to face the case of Hamilton. But before they do that, they're also prompted to write instructions to a bot who's going to negotiate on their behalf. And after they negotiate face to face, he then runs a behind the scenes tournament where there's a round robin tournament of all the bots negotiating against each other. And now all of a sudden you can see how well bots perform in comparison to humans. You can see how the instructions that are given to a bot dramatically affect their performance, which I think is absolutely fascinating. So what's the role of humans in an AI era? Well, one of the roles is that the AI bot has to get its instructions from somebody on what it's trying to accomplish. And Amit shows kind of these dramatic effects based on the nature of how you write the bot. So I think that that's kind of a fascinating dimension to think about. So just comparing humans to bots, thinking about the ingredients that make for a, a good instruction is kind of amazing. This past December, I sent a book proposal to a number of publishers. And within three weeks one of the publishers, an academic publisher who is not the publisher of the book moving forward, sent me eight reviews. And my spouse said there's no way he got eight human reviews in three weeks. He later claimed that he did, and I don't mean to dispute it, but that led me to go on to Both Quad and ChatGPT and I gave them my proposal that I had sent to the publisher and I asked for a review on of the proposal. But I reworded it in a variety of different ways. And it was stunning how different the AI generated reviews were based on fairly subtle changes in the instructions that I got to it. So I think one fascinating human issue is how we interact with AI agents moving forward.
- [12:15]
Alfred Marcus
That's very consistent with my own experience. The art now is the art of the prompt and the prompt is learning how to prompt correctly is very critical. What I'm sort of afraid of is that if we go to Agenic AI and agenic AI, we'll just let it work on its own without that interaction. Because in the end it's a tool and it can be a very helpful tool. I also had an incident where we sent a paper into get reviewed and the review that came back and we have pre reviewed it on AI the paper and the review that came back was almost identical to our pre review.
- [13:00]
Max Bazerman
Raising questions on who that reviewer was.
- [13:02]
Alfred Marcus
Right, exactly. So what about in the real world? How do you think AI is changing the way people. You said sometimes people, some of the negotiations are just between AI systems at this point in time. How's it changing things in the real world?
- [13:22]
Max Bazerman
I think it's changing lots of things. So I think for important negotiations, more and more people are going to be getting advice from AI as part of their normal preparation processes. That's probably for the good. I do a moderate amount of expert witness work and in fact that's the topic of the book that I'm writing that will be published in 2027. And I kind of focus on what's wrong with the American expert witness system. But putting that aside for a minute, in the process of learning about the expert witness system, one of the things that's kind of fascinating is that experts are using AI to prepare their expert reports. The opposing attorneys are thinking about that and demanding as part of discovery, what are all the prompts that you put into AI and what information did you get. So we can easily imagine sort of AI being used in lots of discovery processes to understand the other side in a wide variety of ways. There's a, there's a movie that, that I watched either. I think it was either Netflix or Hulu. I'm. I'm not sure the platform, but it's called Mercy. And Mercy was about an AI judge deciding whether or not somebody committed murder or not. And if. And it starts with the probability that the person is guilty at 97% and, and the defendant needs to get that probability below a certain level in the next hour and a half or a sonic blast will put them to death immediately. And we see AI in the role of judges. Now. I wasn't wild about the movie, but it was fascinating. The theme was fascinating, but certainly I can imagine AI having a dramatic influence on the courtroom. I personally think that we should not, we should be moving away from a partisan expert witness system to using single joint experts or court appointed experts. And once we had the expert task in the hands of a neutral, then I think AI could help the judicial system become more objective. Left in the hands of partisans, the plaintiff and the defendant, or the government and the defendant. I think that AI weaponizes the partisanship in ways that are quite frankly a bit scary.
- [16:10]
Alfred Marcus
Right. Otherwise anybody can buy the expert they want or they can buy the AI answer that they want.
- [16:18]
Max Bazerman
Hey, the AI enhanced expert.
- [16:20]
Alfred Marcus
Exactly.
- [16:21]
Max Bazerman
Yeah. So, yeah, so I think that. So I think it's a fascinating example. AI in the hands of partisan, biased people, I think is dangerous. AI in the hands of neutrals, I think would be a tremendous advantage.
- [16:35]
Alfred Marcus
And the way we get accountability or transparency in the world of AI is to understand the prompts that people have been using, but it's hard to keep those records. I guess AI has all those records if somebody. Your whole series of prompts are kept on AI. So it's actually not that hard. But to report it all, you can
- [16:59]
Max Bazerman
start to see the layers of complexity that are going to be coming our way in disputing hindcats as a result of AI.
- [17:10]
Alfred Marcus
I think that's an issue. AI may add complexity to our lives that are already very complex. I think that the digital world often frustrates me because I think instead of taking away bureaucracy, it adds bureaucracy and complicated bureaucracy. But let's go on to a question that just occurred to me. Do you think that the US And Iran today are currently using AI in their negotiations with each other? And do you think that may be influencing the outcomes that we're seeing, which are. Have not been great outcomes, at least at this point? I mean, it's probably an intractable problem. So. Yeah.
- [17:50]
Max Bazerman
So I have no inside information on Iran. I have no inside information on the US Deliberations and even less on Iran. It's hard to go from less than zero. But I think that that might be the case here. But I can't imagine that the State Department, the Defense Department don't. Is not using AI as part of their strategy development. But I, I honestly have no information on the specifics.
- [18:17]
Alfred Marcus
Yeah, I mean, that the interim agreement was so weak and so poorly conceived that if that's a result of AI.
- [18:27]
Max Bazerman
No. In negotiations, we often say the deal isn't done until the whole deal is done. So whenever we. This notion of a tentative deal is peculiar to lots of negotiation experts. And then when you add the hyperbole to say, we have a great deal done, it's a wonderful deal. We negotiated very effectively. When you don't even have the deal done, that creates another layer of problems.
- [19:01]
Alfred Marcus
Yeah. I mean, I had a friend who, I didn't like the terms of that agreement, and I had a friend said, don't worry, it'll collapse within a week. He was more or less right. What about Trump as a negotiator in general? He's written about it. I wonder if his. I think I went to add a copy of his book.
- [19:23]
Max Bazerman
Yeah. So when Trump University existed, I received contact from Roger Shank, who was at the time the chief intellectual officer of Trump University, to recruit me to create a course on negotiation. And I'm so happy today that I said, no, thank you, for a variety of reasons, but I kind of Feel like I sort of dodged a bullet on that one. But before we answer Trump, imagine you asked a question about any sort of tough negotiator who uses very aggressive tactics. And my first reaction is very tough negotiators occasionally get a good deal, which they brag about at cocktail party conversations. They tell you what a great price I got on car company, et cetera. What they don't tell you is when you engage in tough tactics, you blow lots of other negotiations. They also don't tell you that tough negotiators tend to not be very good at creating value or finding mutual gain by making trades across issues, which is probably the most important skill that we teach executives in negotiation classes today. So I think Trump is kind of an extreme version of tough negotiator on lots of fronts. And then he retells the story. And thus we have the phrase Tatko or Trump always chickens out for when his tough strategies don't work, when okay, and he reaches an impasse or he makes a concession months later, which he claims to not be a concession. But I think that the biggest problem with Trump's negotiation has to do with the destruction of relationships that the US had sort of pre Trump, sort of. Again, we can go. I mentioned Canada earlier, but instead of Canada, we can mention so many countries, but the notion that Canadians no longer want to visit the US that they won't buy American wine, that they're focused on their developing trading relationships with China instead of America, this is kind of shocking. And yet we see this playing out in lots of countries around the globe who either don't like the terms of Trump or don't like the unpredictability of Trump. I think Trump sees his unpredictability as a positive feature. I think it's a distinctly negative feature when you go beyond negotiating the specific deal and think about the long term relationship. So I would say many of the core principles that would be consensus principles across leading experts on the topic of negotiation are consistently violated by Trump on a really regular basis. And unfortunately, I think that the costs of these negotiation failures are going to go well beyond the end of his presidency.
- [22:36]
Alfred Marcus
Unfortunately, I would call it bullying, not negotiating. Would that be an appropriate phrase?
- [22:44]
Max Bazerman
Well, I think bullying is accurate, but I wouldn't say it's not negotiating. I think we're negotiating anytime two or more people are jointly making decisions and don't have identical preferences. So I think he is negotiating and Bolling is one of his tactics that gets some concessions and some short term benefits at enormous costs to the relationship enormous cost to society and eliminates the possibility to create value, which, again, I think is so central to what a good negotiator should be all about.
- [23:27]
Alfred Marcus
Major theme of your work is that negotiators aren't fully rational. And you talk about the biases they anchor too strongly, they fail to take other sides. Perspectives miss opportunities for value creation. So could you elaborate on these cognitive mistakes and the ones that are most persistent? Yeah.
- [23:47]
Max Bazerman
So thanks for the question. So I think that one of my most central contributions to the negotiation literature has been to identify what are the systematic and predictable mistakes that negotiators make, often without knowing that they're making these mistakes. And it's certainly rooted in what we used to call behavioral decision theory, now is more commonly called behavioral economics. But in the work of Kahneman and Tversky and Thaler and Sunstein and others, and within that, we could create a long laundry list. You created a good short list. We can make that much longer. And I would distinguish, as we move toward negotiation between individual level biases versus competitive biases. So by individual level biases, I mean all the things that Kahneman and Tversky and others described at the human cognitive level. And I've done lots of work applying those things to negotiation. But I've also done work talking about biases that Kahneman and Tversky never mentioned, not because they weren't smart enough, but they were thinking about the individual, not about the dyadic negotiation between people or between multiple, many people. And I think if we think about negotiations, there are two fundamental biases that are more important than all the rest. And so this is my cocktail party conversation, when people tell me what do I need to know to negotiate more effectively. And by the way, our host is going to be talking in three minutes, so you got to make it quick. And my quick answer is, we are biased to insufficiently think about the decisions of other parties. So good negotiators do a tremendous job of thinking about the decisions of others. The opponent negotiator or the opponent negotiators, the political dynamics going on within the other side. So thinking about the other side and the failure to do so. The failure of perspective taking, I think, is one of the two most critical mistakes that we make. And the second on my top two list, which we've already alluded to in this conversation, is what I call a mythical fixed pile. The negotiators assume the pie is fixed. And if you go buy a car and you're going to get a car, and you're going to pay money. The pie is fixed. The more you pay, the better off the car dealer is, the worse off you are. But as soon as the negotiation has more than one dimension to it, so that you care not only about the price of the house, but what 400 kilo is included, the timing, is there going to be seller financing, when the closing date will be, Then all of a sudden we can make trades across issues. And the most important skill I provide to executives one day, take the Changing the game executive program at the Harvard Business School, is to create value and to develop multiple strategies on how we can go beyond the fixed pie and create value so that the pie that we're negotiating is larger. So rather than you getting five and me getting five, I'd be really happy if I can get seven while you get seven as well. So how do we create a bigger pie so both parties do better as a result? And again, the most central idea there is that when we're negotiating more than one issue, we can make trades across issues. So you get more of what you care more about. Oh, I get more of what I care more about.
- [27:30]
Alfred Marcus
That's very similar to what I teach in strategy, because I think a fundamental principle strategy is know yourself and know the enemy, and it comes from military strategy. And it's very similar, this idea of knowing your opponent really well and understanding their perspective. And.
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Max Bazerman
Yeah, but in going to your question, I would say. And the, the, the, the mistake is if people don't do it. So we don't think enough about the enemy.
- [27:59]
Alfred Marcus
Yeah, I mean, I think that's even true in business that people tend to think about their own. We're very self centered in all of our contexts.
- [28:08]
Max Bazerman
And there's no good reason to believe that the Trump administration thought sufficiently about the Strait of Hormuz before we started the Iran war.
- [28:20]
Alfred Marcus
Yeah, I mean, I heard an account recently that he got lots and lots of warning. Everybody gave him warning, but he had this instinct that it would be simple and easy and that make. I mean, I just did a podcast with a colleague of mine who was from Iran and he talked a lot about the history and traditions and the culture of Iran. And I think here in the west we don't really understand that at all. And it was totally even the simple thing of the war they had with Iraq, which lasted 11 years, involved up to a million casualties. And it just shows something about character that I think we were not really taking into account sufficiently. But the other thing that you just mentioned is about expanding the pie, which is Something when I taught ethics, I talked about a lot. I mean, a lot of situations in ethics are tragic, and somebody has to lose to some extent, but you have to have the imagination to overcome that and to see beyond it and to see at least how everybody can be at least a little bit better than they otherwise would be. So that's very consistent. You argue that negotiators often misread the other side's behavior as cultural when the real issue is economic power or alternatives. How can negotiators distinguish between genuine cultural differences and strategic differences rooted in power or incentives?
- [29:56]
Podcast Host (Ad Reader)
Yeah.
- [29:57]
Max Bazerman
So let me address the first part of your question, which wasn't a question where you kind of sort of summarize my view that we often misinterpret culture. Something is cultural when it's essentially economic power. Like me, you're old enough to remember when Americans were obsessed with the economic. With the economic strength of Japan, right?
- [30:27]
Alfred Marcus
I remember that well.
- [30:29]
Max Bazerman
Yeah. And people wanted to know, how do you negotiate with the Japanese? As if there was something about their style that was critical. And if you simply understood their style, you would be better prepared. And there are undoubtedly lots of differences about their culture. But an important part was at that time, they had economic strength. And if we think about China today, it's important to recognize that they have economic strength at a level that we would not have imagined 30 years ago. I'm not arguing that the cultural differences are unimportant, just the opposite. The book talks about culture and talks about it being important. But I do think that we often assume, particularly when we're in a weaker economic position or a weakened economic position, that on the other side has a strengthened position. We often want to assume that there's something about how they do it, rather than looking at the core economic dimensions that are affecting that behavior. Now, you ended your question with a question, and you said, how do we distinguish that? Well, I think we want to do our homework. I think we want to do a careful analysis of the actual situation in terms of what does the economic power look like in the negotiation world. We talk about knowing your best alternative to a negotiated agreement, which gives you some information about your reservation value. And we want to think about what can they do if we don't do a deal with them. So I think it would have been useful for Trump to imagine Canada's Batna of reducing their visits to the US dramatically turning their trading patterns to China. That would have been a good idea before coming up with bowling moves. And that's, you know, imposing very Very high tariffs on Canada. So, so I think we, we need to think about the other side. We need to think about their culture. We need to think about what is, what is, how, how economically powerful are they. And it's absolutely a good idea to also have someone on your team who understands their culture so that you could understand things that happen at the negotiation table that truly are cultural. But I don't think we lose the fact that humans tend to attribute to culture things that can be understood using basic economics.
- [33:14]
Alfred Marcus
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- [33:27]
Max Bazerman
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- [33:30]
Alfred Marcus
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- [33:36]
Podcast Host (Ad Reader)
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- [33:44]
Alfred Marcus
You know, I, personally, I'm very disturbed by the sudden break between the US and China. And our, our standard way of looking at China is kind of as an enemy or a potential enemy. And, and let's imagine we're in a post Trump era. If we were going to try to achieve some kind of reconciliation, is it possible? And how would, from a negotiations perspective, how might you approach it?
- [34:16]
Max Bazerman
Yeah, so it's an unfortunate problem that's going to be confronting some president in 2029. And I think it's very different whether it's Rubio or Vance versus a Democrat sort of working on that reconciliation. Quite frankly, I think Vance and Rubio would have a harder time because they've said so many things supportive of Trump over during the current administration. So for a minute, let's assume it's a very different president. Whether it's a Republican that I'm not thinking of or it's a Democrat and they want to restore relations, I think that they can move in the right direction in lots of different ways. But I think we may be confined to four year agreements rather than agreements that we assume are going to last forever. So quite frankly, America had relations with Canada, with the European Union that seemed like forever relationship. And now all of a sudden people are realizing that they made assumptions about America that ended up not being accurate. Now lots of Americans made assumptions about America that ended up not being accurate as well. But these parties as they're negotiating with us, I think are going to have more hesitancy and I think we're going to need to prove our reliability over time. And that's going to become tougher and tougher as time goes on.
- [35:55]
Alfred Marcus
And from a strategic point, we're going to have less power economically and politically. So there'll be less reason for them to take us as seriously as they once did.
- [36:07]
Max Bazerman
I think that that's exactly right. Many people would argue that China was already rising before Trump to a significant degree and, and on some dimensions may have been on the path to overcoming America in terms of economic strength, but I think we've had a step function down. So all of a sudden we're not as much of a leader on many fronts, but we're also a less reliable partner for a lot of these countries. And predictability is absolutely critical to long term relationships and that's been fundamentally affected by recent decisions by the current administration.
- [36:55]
Alfred Marcus
There's so many reasons to believe that retreat and isolation, which the UK has gone through is not advantageous to your situation at all.
- [37:05]
Max Bazerman
I completely agree. So Brexit was an awful decision for lots of people, but most specifically for
- [37:14]
Alfred Marcus
the uk and our withdrawal from the world is hurting us a great deal. We could go on about issues of immigration, trade. You talked about the universities, but what about you offer a toolkit for contextualizing negotiation. And we've talked about some of these factors like culture, economics, politics, relationships, communication modes, counterpart behavior. You want to elaborate on this? Which of these contextual dimensions do you think negotiations most often underestimate and maybe talk about all of them, maybe holistically.
- [37:51]
Max Bazerman
Yeah, so I was going to start doing that. So I would say these dimensions which you just listed are all important and they're interconnected in so many ways. So politics and relations and our communications affect the economic environment in which we're negotiating. And we could just go on and on about the interactions between these various contextual features. And they're all discussed in my book Negotiation the Game Has Changed. So I don't mean to diminish any of them, but consistent with the earlier part of our conversation, I think that many negotiators tend to want to attribute objective changes in the economic conditions in which the negotiation is happening to some of these other factors. I think that the economic conditions end up being the dimension that we most commonly underestimate, that ends up being very, very important. So when we think that we can overcome economics based on relationships, we often find well, the relationship wasn't strong enough to overcome the vast economic issues that we were confronting. For me, the economic conditions remain the dimension that we most commonly underestimate. Sure, Company A has a good relationship with their key suppliers. Company B and B basically assumes that our strong relationship will guarantee that I'll remain the supplier to company A for a very long period of time. And in comes the new chief procurement officer who decides to put the supply out for competitive bids. And A finds that C not only is offering a better price than B, but a dramatically better price than B. And B, who thought that the relationship was going to maintain the consistency of the negotiation relationship, finds that A is moving to C and it wasn't even close. So while A also valued the relationship. But they evaluated the economics to a significant degree as well. And be underestimated that as they got ready for the competitive bidding situation, they
- [40:35]
Alfred Marcus
put too much emphasis on the relationship as opposed to the economic drivers of the situation.
- [40:42]
Max Bazerman
Yeah, it's kind of like your friend puts their condo up for sale and you assume that they'll sell it to you. But if someone else offers a significant
- [40:52]
Alfred Marcus
chunk of my life away from you. Yeah, easily. But what do you think about the literature on competition? As I'm throwing this as a kind of from the side, it's something I've been trying to work with. But what's your views of that literature? Because it's kind of. I think it deals with both sides of this competition and cooperation, and it seems very relevant to negotiation.
- [41:19]
Max Bazerman
Absolutely. So first of all, so just to clarify for listeners, Co Opetitions, a book by Adam Brandenburger and Barry Nelboth of NYU and Yiddle, respectively, Adam wrote the book when he was at the Harvard Business School. Adam and Barry are two remarkably bright people. And in their book, which was published a while back, I don't remember the year. But what they highlight is that two firms can be competing on some dimension, cooperating on so many other dimensions. So my industry, like yours, is academia. And the subcategory is something called a business school. And in terms of competing to recruit executive education students who pay substantial fees to take executive programs, who are very competitive with other fine business schools. And there isn't much cooperation yet on other dimensions, we're remarkably cooperative. We're the only industry I can think of where one institution trains the employees of a competitor. So in our world, we train PhD students, and most business schools, we train PhD students where we explicitly want them to go work for one of our main competitors. And the better the competitor the more successful we think we are. So we're competing on for executive education revenue while at the same time cooperating on the personnel front at a degree that's kind of quite remarkable. So I think Brandenburger and Neil Buff do a great job of clarifying this idea that we can simultaneously cooperate and compete with the same firm, but often on different dimensions and across different problems.
- [43:21]
Alfred Marcus
In academics, I think we all rely on the professional associations to give us all legitimacy, and that's a cooperative endeavor. It's.
- [43:31]
Max Bazerman
I think you're right, but I would note that if we think about engineering firms, they also have associations, but those associations don't create the cooperativeness that I just described on the doctrine training front.
- [43:47]
Alfred Marcus
Interesting. We talked about Trump and his style. Are there some. Who do you admire as a negotiator and why? Have you ever thought about that? You can even think historically, I guess people talk about figures like Lincoln, I don't know, Roosevelt and so on, or even contemporary figures. Some of the styles that you think that they exhibited that you think are admirable. Yeah.
- [44:22]
Max Bazerman
So I think Lincoln did a remarkable job negotiating the end of the Civil War and the end of slavery. And so I've watched most of the movies that are available to all of us on Lincoln. I think George Washington was involved in amazing negotiations to keep funding alive for the Revolutionary War and making a bunch of strategic decisions in a very competitive environment and sort of the history of the Revolutionary War. It's just so easy to imagine how Washington could have lost at so many points in time. So I think presidencies are kind of very nice example. We can also think about Jimmy Carter and sort of in his role in negotiating the Israel Egypt agreement in the 1970s, where in simple form, how do we resolve the Sinai? And basically the Egyptians got legal ownership over the land, while Israelis got military control in a variety of ways. So rather than thinking that piece of land is fixed, it was divided into two issues, one ownership and one military control, so both sides could get what they cared more about. So that was kind of. Certainly kind of a brilliant agreement that occurred in a way that was quite intriguing. There are other kind of things that look like great negotiations. Ambassador Brahimi created the original Afghani accords that didn't hold. So at the time it looked like he did a fine job, but they didn't necessarily hold the way we would have hoped. So I think we can look across lots of different domains, lots of different dimensions, and see people who created value by thinking about the perspective of the other side, not Assuming the pie is fixed and coming up with creative agreements.
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- [46:56]
Max Bazerman
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- [47:08]
Alfred Marcus
1-800-contacts. Again, it requires understanding the other side, the underside's perspective, granting some legitimacy and respect to those perspectives and trying to build value with the other side rather than coming away with a win in a fixed pie situation. I have on my desk here a book by Klein and Thompson called Abundance. There's been a lot of discussion recently. There was that other book, I think is by a guy named Dan Wong about how the United States is a. A society dominated by lawyers as opposed to a society that's dominated by engineers. Every problem in China is an engineering problem. You just build something in the United States. We negotiate it forever because we have all these laws and regulations. What's your view on that? Do you think that we're bogged down in an administrative state that's overly cumbersome? And I mean, personally, I definitely think we need that. Regulation is needed, but it seems that everything is administratively burdened. Every step one takes, there are obstacles.
- [48:26]
Max Bazerman
Yeah. So first of all, I did read Abundance, and I did not read the second book that you just mentioned, but I'll kind of jump to your question. Sort of in pre Trump times, kind of. My political fantasy would be that we could take a break from partisanship to simply come up with a variety of changes to the way lots of agencies in government work so that we could come up with smarter regulation. So, like you, I'm not anti regulation. I think regulation plays an important role. But I wouldn't deny that there's lots of pretty dumb regulation out there. So rather than focusing on cost. Exactly. But rather than thinking, should we have more or less regulation and Republicans want less regulation, Democrats want more regulation. I'm a big fan of smarter regulation, and there's lots of ways that I think our agencies could move in a smarter direction. And none of that is being pursued in the current administration as Trump has making such an attack to weaken regulation. And the other side is trying to defend regulation as much as possible. So there's no current Focus on how do we get rid of the red tape yet come up with brighter ways to regulate the world.
- [49:55]
Alfred Marcus
Streamline. We need good regulation, especially in the area of AI. I think AI is how we're going to do that.
- [50:02]
Max Bazerman
AI, environment, antitrust in so many dimensions. It would be just very easy for less partisan experts to come up with wise changes that wouldn't dramatically move the needle on. Is there more or less regulation, but would simply make the regulation smarter.
- [50:24]
Alfred Marcus
Yeah. Madison was brilliant in creating checks and balances and now we're stuck with checks and balances. It's timey. Our ability to move forward often, but
- [50:35]
Max Bazerman
I want to cut some bounds to remain.
- [50:38]
Alfred Marcus
Yeah, yeah. I would not be against those. Another part of your book is about ethics. It's a recurring theme in your work. Misinformation, polarization, digital manipulation. What is? I think you've already told us a little bit about what negotiating ethically means. Maybe you can elaborate on that. How do negotiators avoid sliding into ethically questionable taxes? I mean, just, you know, I think it's commonly accepted that negotiations. You don't tell your opponent or the other side exactly where you're coming from. And you may use deception a little bit, or you could expect it from both sides to some degree. It seems like negotiation itself seems ethically fraught to a certain extent whenever you engage in it.
- [51:40]
Max Bazerman
Okay, well, we can start off with a simple punchline. Don't lie in negotiation. It too often comes back to haunt you down the road. So the short term benefit has long term costs, so that's easy. But that you could find lots of places before anybody wrote about negotiation. Here's a common story. In teaching negotiations to my MBA students in class, person A says, B lied to me in negotiation. And B becomes infuriated and says, I never told you a love. Now, I've had this episode happen so many times, I kind of know what happened. A said something that deceived B, but never told a factually untrue statement, right? Yeah, exactly. Or it could have even been accidental. But the point is, when B is deceived, they could conclude that A lied to them or I wasn't smart enough. And we tend to go with you lied to me. The point here is that A can be perceived as a liar without saying anything that was actually untrue. And what this highlights is the criticality of thinking about the perspective of the other side. And can you potentially get a slightly better price through deception? I think that that's quite possible. But if you're dealing with Important negotiations that are going to last over time have multiple dimensions to them beyond price. The value that's destroyed by unethical tactics is, I think, far larger than the minor benefits that we get in terms of a better price through our dissection. So when I think about ethics and negotiation, I think of the world of utilitarian philosophy, Bentham and Mill, Peter Singer, of how do we create the greatest good for all of us combined? How do we create the most utility possible? And I'm kind of happy in life aiming to be more utilitarian in the sense that the philosophers meant it, of creating more value. And the more deceptive I am, the more confused my opponent, the lower my ability to create value in life. And part of what I want to do as a professor, as a negotiator, is to have a reputation of, you're better off if you interact with me, you're better off if you take my courses, you're better off if you negotiate with me. And that reputation, I think creates far more value overall, but also to me over the long run than the short term benefits of deception. So I think about value creation. And value creation means I'm not trying to confuse the other side and I'm going to get long term benefit out of the fact that I become a very trustworthy opponent over time.
- [54:48]
Alfred Marcus
This all assumes that the transactions are not one time basis transactions. And it also assumes that you're building a system of ongoing relationships. What about the excuse that I think I would always hear in teaching ethics as well, the other guy's totally unscrupulous. So why the more unscrupulous the other
- [55:17]
Max Bazerman
side is, the more I'm going to develop alternatives and pursue other options. But your point's well taken. In a one shot price only negotiation, being deceptive might have an impact. So if you're at the car dealer and they've offered you the price of 28,000 and you only offer 27,000 and you make the statement in a convincing manner unless you concede now I'm heading to another dealership, when in fact 28,000 is already acceptable to you. You're just trying for more and you're going to concede? No, I would call that a lie. On the other hand, might it be effective? It might. I just don't recommend it. Okay, So I can say other things that are less deceptive that are just as effective. So if you want the bill done today, I think you might want to reconsider my $27,000 price. And you should know I have Other options now. So I've now conveyed the exact same information and I haven't told you a lot. Okay. I've led you to imagine that I in fact have these options, which I do have. Okay? So I think people so often lie because they're not prepared. They haven't thought about what they will do in particular situations, and they resort to lying. The other thing is, I find people will tell a lie when they don't even know which lie to tell. Okay? So they made some issue seem important that isn't. And they distract the other side. The other side sort of gives you what you want in terms of the timing of when the deal will close. But they become more resistant on price because they feel that they just made a big concession to you, which you implied you needed when you didn't need it. And now I'm tougher on other issues. So the harms of the section, I continue to believe are larger than the benefits. That doesn't mean that there can't be benefits in one shot. I'll never see you again.
- [57:32]
Alfred Marcus
Price negotiations about this problem of the unscrupulous opponent. So you've emphasized again and again that we should try to understand the perspective of the other. What if our understanding leads to the conclusion that the other is untrustworthy, will never think about my benefit is basically out to demolish and destroy me. Yeah.
- [58:03]
Max Bazerman
So, three answers. One, do your homework better before you ever get there. So you're not trusting them as a source of information. You're getting your information independently. Second, develop alternatives. The worse they are, the more reason you have to develop alternatives that you can go to instead of them. Okay. And hopefully the person you're talking about isn't your spouse, in which they. Developing alternatives is more complicated. But it sounds to me like you're talking about a supplier or a customer. And my reaction is that there are other suppliers and customers and you want to. The more unscrupulous they are, the more you want to pursue those. And the third thing I would say is rather than relying on them, find out what's important to them by making multiple offers simultaneously. So rather than trying to figure out how important is the delivery time to them, how important is the warranty period to them, come up with multiple bundles. And when you make them an offer, make them three offers so you're not depending on them telling you on any one dimension how important it is where they may well be deceptive, but rather you're letting their actions speak to convey what's important to them based on which bundle they choose to pursue moving forward.
- [59:30]
Alfred Marcus
Do these recommendations work in global affairs as well? Because you might be restricted. You don't think you're. Sometimes you're restricted with negotiating with one party like the United States. Right now. Let's not negotiate with Iran. There's not really an alternative, I think,
- [59:48]
Max Bazerman
but there is an option of where our oil comes from. Not our oil, but where the world's oil comes from. So, yeah, there are certainly issues of times when we can't replace our current opponent, but that, again, means do our homework on our own rather than rely on them as a source of information.
- [60:15]
Alfred Marcus
I do think in the long term, that's going to happen with Iran, that the Strait of Hormuz is just a temporary obstacle. I mean, temporary might be five years, but in five years, the world's going to find lots of ways to get around it. It's going to become irrelevant. We'll build pipelines, and we won't be dependent as much on fossil fuels. The price will just drive us in that direction. So that this asset that they're holding, clinging to so desperately is not going to get them where they want to be. In any case, that's probably a matter of honor, their sense of honor right now, which I think is another whole issue. A lot of negotiations today involve multiple parties, like coalitions, alliance regulators. What about these multiparty dynamics? Do people misunderstand them? I guess that's what I think. Every negotiation actually sort of moves in that direction in one way or another.
- [61:10]
Max Bazerman
Yeah. So, first of all, I think we should generally map the parties. Who are the parties involved in the negotiations? Not only who are we connected to, but who are the core opponents connected to? And that gives us a better sense of their options. So we clearly see the European Union looking inwards towards each other in response to the difficulties of dealing with America. If we map the parties as they did pre Trump, the link between Canada and China was so weak, but now we see that that link has strengthened dramatically as a result of Trump weakening the relationships between the U.S. and Canada in a variety of ways. So we want to think about the other side. We want to think about what coalitions are forming. If you've ever been to a department meeting where you were hoping for a no vote and there was quickly a yes vote, and you wondered, how did that ever happen? And how did it happen so quickly with so little discussion, the answer was that there was a coalition who formed outside of the formal meeting and had an agreement before you even were thinking about it. We don't do a good enough job of thinking about other parties and how are they preparing for the multi party negotiations. So we want to think about the role of coalitions, we want to think about the voting rules, we want to think about what does it take to get a deal done in this multiparty environment? What does it mean if we get 80% of the votes on board but 20% are not agreeing, does that mean that we cannot vote them in the UN or does it mean that, well, if America and China aren't on board, an environmental agreement has limited teeth in terms of improving the world moving forward. So we want to think about all of these dimensions that are typically not needed in two party negotiations, but become shockingly relevant in multi party negotiations.
- [63:22]
Alfred Marcus
Negotiations are really part of a complex system and you have to understand the complex systems and there's unintended consequences from that arise from the relationship between just two of the parties in all these cases. So we should be coming to an end. But if you were advising a CEO or board today, what is the single most important negotiation capability organizations need to develop to succeed in this complex context rich environment? I think that we're going to repeat the whole discussion, but I think that
- [64:02]
Max Bazerman
that's right, but I'll try to keep it simple in the interest of time. Following utilitarian philosophers. We want to have a mindset of creating more value and we want to create new and better products and make the world better. We want to develop relationships with our stakeholders, with our customers, with our communities, with our shareholders, with our employees, our customers, our suppliers that value the utility of all the parties that are affected by our action. And when we create an environment in which we're known to create value and to make the world a better place, more people want to interact with us and we can be a more successful corporation as a result.
- [64:53]
Alfred Marcus
And that's not just a matter of articulating those principles, but it's also showing them in your behavior so that they're trusted, the parties are trusted, that they really believe in that. Because that can be an ideology. You say I'm just into this for everybody's betterment, but can hide your own seeking of individual self interest?
- [65:23]
Max Bazerman
Absolutely, yeah. So if I only got two words that say create value.
- [65:28]
Alfred Marcus
Create value. Okay. All right. This has been a great discussion. Once again, the book is Negotiation the Game has Changed by Max Baserman. It's a powerful reminder that negotiation is not just a set of tactics. It's a way of thinking and must adapt to culture, politics, technology and the realities of human behavior. For listeners interested in this topic, I highly recommend this book. For listeners interested in how organizations rebuild legitimacy and navigate complex stakeholder environments, I'll mention my own book again, Come Back, which explores how firms recover from crises by aligning strategy and ethics. Max, this was wonderful and I really appreciate it, and you've contributed so much to this world of negotiations. Thank you for joining me. And thanks to all of you for listening to on the Cusp Between Strategy and Ethics.
- [66:28]
Max Bazerman
Thank you for listening to this episode of the New Books Network. We are an academic podcast network with the mission of public education.
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Max Bazerman
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Max Bazerman
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