Consensual Dispute Resolution

Ethics and Disclosure of Information in a Negotiation

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Introduction

A negotiation aiming at an equivalent “win-win” gain to both parties may be idealistic and naïve. Rather, a realistic degree of satisfaction wherein both parties are in a mutually agreeable positioning to fulfill their needs whilst satisfying the obligations of the opposing party is ideal. This may not be equally benefiting for both parties but one which benefits both to differing extents.

Trust between the parties is necessary for a successful win-win negotiation. Trust induces credibility in the secondary party to reveal relevant information and execute their obligations. The reputation of the party is key in such relationships as it catalyzes the process in trust-building.

Micro-Ethics and the Ethics Gap

Micro-ethics of negotiation[1] refers to the behavioral tendencies of parties within the negotiation room. Such ethics could include the extent of disclosure of information and strategies employed whilst concealing or misrepresenting information.

Often in furtherance of micro-ethics, negotiating parties engage in Ethical fading[2]. This refers to the depreciation of pervading ethical norms when subject to decision making processes. Such trend permits participants to the negotiation to deviate from their otherwise moral compasses and make decisions they otherwise would not.  Such a deviation incorporates a cavity in one’s ethical positioning. This is known as the Ethics Gap.

A reasonable person usually instinctively works to maximize his/her payoff, rather than working towards eliminating the ethics gap altogether. An attempt should be made to diminish this gap. This can be achieved by synchronizing professional and personal values.  However, this is based on the assumption that one’s personal values are relatively scrupulous. [3]

Steps to approach Negotiations w.r.t. Disclosure

Firstly, a clichéd approach which may lead to a successful outcome is one of behaving according to how one would like to be treated. Alternatively, viewing the negotiation table from the opposing parties perspective could promote a more successful mutual solution based on increased altruism, objective reasoning and empathy. This strategy could be successful when the relationship is cordial, however, in relationships characterized by discord it may be perceived as a targeted tactic by the opposing party.

Secondly, parties should draw a hierarchy of issues that necessitate addressal whilst simultaneously clarifying their individual interests. At this stage, a superficial attempt to understand the positioning of both parties is recommended without reliance on controversial information.

Categorizing and compartmentalizing issues can be beneficial. This allows parties to first address issues which they are relatively comfortable addressing. The contentious issues involving the party’s vulnerabilities can be addressed at a later time when a foundation of trust is established between the parties.

This stage can be followed with parties entering and signing an agreement which ensures information disclosed within such meeting is confidential and free of criticism. Tackling such hurdles would allow parties to efficaciously reach a settlement without fear of abuse of information disclosed.

Thirdly, trust between parties to the negotiation is necessary for transparent disclosure of information and interests. Without access to such information, reaching a value-creating settlement is exceedingly difficult. One such approach of building trust is to disclose confidential information on oneself. This should be a calculated risk the party is voluntarily taking whilst being aware of the potentiality of its misuse. [4]

Nourishing a relationship with the counterpart is instrumental in creating a long term relationship characterized by mutual trust, legitimacy and credibility. In such relationships, there is an increased likelihood to disclose sensitive information as the apprehension of its misuse is minuscule. Bargaining with the counterpart with honesty and good faith is recommended.

Fourthly, privileged information which has the potentiality of exposing the party’s absolute vulnerabilities should be addressed tactfully. A trade-off exists with such information being optimally utilized to conclude a successful settlement or being misused by the opposing party.

Maximizing research on the counterpart puts the party on a higher positioning. This can be advantageous in the information exchange stage. A trick question can be posed to the other party to gauge the inclination to answer honestly and their commitment to the negotiation process.

Lastly, if a party relies on the misrepresentation of facts to amplify one’s positioning, such strategy should be tactfully employed where evidence on the matter is not easily available or which cannot be easily fact-checked. If such strategy backfires, it would erode the previously established trust and adversely affect the relationship shared between the negotiating parties.

Optimum Solution: Analyzing the Prisoner’s Dilemma

The Prisoner’s Dilemma is a concept in game theory which analyses the cooperation between self-serving individuals and its subsequent payoffs. Such a model showcases that individuals are usually motivated to feed into self-benefitting outcomes largely resulting in a paradoxical weaker situation

 

  Party 2

 

Reveals Conceals
 

Party 1

Reveals

 

7, 7 0, 10
Conceals

 

10, 0 5, 5

 

In the table above, suppose the parties to the negotiation are Party 1 and Party 2. If Party 1 conceals information but Party 2 reveals information, then Party 1 will have a payoff of 10 and Party 2 will have a payoff of 0. This is because Party 1 would be aware of Party 2’s vulnerabilities, subsequently catering its demands and reaching an optimal solution without disclosing any information pertaining to themselves. Similarly, if Party 2 conceals information but Party 1 reveals information, then Party 2 will have a payoff of 10 and Party 1 will have a payoff of 0.

This strategy to conceal is enticing as both parties individually achieve the highest possible payoff. However, such outcome would not lead to a mutually beneficial outcome. Given the rational humanistic tendency to engage in ethical fading, both parties in their attempt to maximize their individual payoffs would opt to conceal key information necessary to facilitate a “win-win” solution.

If both parties chose to conceal, the individual payoffs falls to a level of 5 each which is considerably lower than the initial 10. A fall in payoffs is expected as now no party is divulging information which further erodes the negotiation process.

The solution to this paradox is both parties revealing information as this leads to a payoff of 7 each. This is optimal as the utility of both parties is considerably higher than earlier. This instills confidence in the counterpart parties. Such confidence hones the relationship shared and induces the parties to be more transparent in subsequent negotiations. This could potentially prevent confrontations and conflicts, leading to efficient and creative redressal of issues through mutual understanding and reliance.

Conclusion

Ultimately, the success of a negotiation roots down to the ethical gap and extent of ethical fading a negotiator possesses and engages in. There is no straitjacket formula pertaining to the ethics and disclosure of information. There are optimal and recommended trajectories but a negotiator usually plays according to their individual conscience thresholds and payoff preferences.

References:

[1] Carrie Menkel-Meadow, Ethics, Morality and Professional Responsibility in Negotiation, in Dispute Resolution Ethics (Phyllis Bernard & Bryant Garth eds., 2002)

[2]Why Ethical People Become Unethical Negotiators, https://www.forbes.com/sites/hbsworkingknowledge/2018/07/31/why-ethical-people-become-unethical-negotiators/#587c6c4f3442

[3] Practical Ethics: Four Paths to Greater Virtue, By Frank Bucaro, CSP, CPAE

[4]https://www.watershedassociates.com/negotiationblog/unilateral-disclosure-negotiations-foolish-or-enlightened

This article has been submitted by Ananya Kuthiala, final year student the 3-Year LL.B. Programme of Jindal Global Law School.

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