Fair Enough: Part 2

Why tell anyone they're offering you too good a deal?

Lessons from the fairness survey results¹

This is a follow-up to a case I laid out in my article Tuesday, Fair Enough?. If you missed that and have a few minutes, I encourage you to go back and skim the story. But if you’re in a rush, here it is a nutshell.

The elderly owner of a vacation cabin has put it up for sale. You’d love to buy it. The owner is asking $210,000. You’d gladly pay $275,000 as you know it’s easily worth that much.

Take a moment to think about the pros and cons of each of those options. Which of them comes closest to how you’d respond:

A. Quickly accept the asking number ($210,000).

B. Counteroffer with a somewhat lower figure, knowing that you can always agree to the $210,000 if necessary.

C. Inform the owner that you want to buy the cabin, but you believe they’ve undervalued it.

I asked readers to submit their choice in a short poll. First of all, many thanks to those of you who responded! I’ll keep it open for another week in case others want to add their choices and comments.

There’s already enough data to see that the responses here are consistent with what more than 1,500 MBA students and executive program participants have submitted over the years. In this survey and all the others I’ve done, opinion is sharply divided. Whatever option you choose, most people chose something else.

Here are the results as of this morning:

None of  the options got a majority of the votes. With this survey, somewhat more people chose informing the owner than in prior surveys I’ve done; and, correspondingly, fewer picked the counteroffer option, but the differences aren’t significant.

Likewise, the short comments made in this survey square with what I typically hear in class discussions, though students get to explain their choices in greater depth. From all of that, I’ve learned that people have very different ways of thinking about fairness.

For those who would tell the owner that asking price is too low, it comes down to a visceral feeling.² Taking an advantage of an elderly person just seems wrong. When I press a little, they don’t come up with a specific number that’s fair. Rather they speak of a range of fair numbers. They’d rather be at the lower end, but here the asking price is just too low.

Those who would counteroffer come at this issue very differently. Their starting point is conceptual. It’s how they view negotiation. For them, buyers and sellers have the responsibility of knowing what something is worth. “Seller beware,” some people say. For them, it’s a logical corollary of the caveat emptor principle. Others note that this owner chose to save money by not hiring an expert broker. In their eyes, if there’s any blame, it falls on her shoulders.³

Finally, there are those who would snap up the offer—rather than either inform the owner or counteroffer. That used to strike me as fence-straddling, trying to have it both ways. Listening more closely, though, I came to see the reasoning, though I don’t necessarily agree with it.

“If the seller is happy,” these people say, “then I’m happy.” After all, it was the owner who put the low number on the table. If the other party undervalues what they are selling, then that wasn’t caused by anything that the buyer did. By contrast, for these people actively pushing for a lower price shift some responsibility for the result on their shoulders. For them, it’s the difference between sins of commission and sins of omission.

Mulling all this, I come away with three thoughts.

One. Issues of fairness arise in many negotiations. We have to anticipate them in advance, rather than make decisions on the fly.

Two. Part of that preparation is stepping back and reflecting on our basis for making moral decisions. Is it emotional, conceptual, or something else?

Three. Odds are good that whomever we’re negotiating with may have different standards than we do, either lower or higher.

There’s a lot more to consider, of course. If you said you’d inform the elderly owner, would you do the same it were an affluent young man? Of you counteroffered here, how would you feel if someone else took similar advantage of one of your grandparents?

Some people regard negotiation as a micro market where there are going to be winners and losers. Others assert that when we negotiate, we enact our values. Are we isolated economic agents, they ask, or members of a larger community? Maybe it doesn’t have to be one or the other. Even if we have responsibilities for others, we also have the right to advance our own interests.

“If we are not for ourselves,” asked Hillel the Elder, a Jewish religious leader of the first century, “who will be?” But then he added, “If we are only for ourselves, who are we?”

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Housekeeping

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1. Photo credit to Hugo Aiken on Unsplash.

2. For a terrific book on the emotional basis of many of our moral judgments, see Jonathan Haidt’s, The Righteous Mind.

3. Incidentally, in the exercise I never identify the gender of the owner. Almost everyone assumes, it’s a woman. I’m curious why that’s the common assumption.