July 9, 2011

Mindfulness meditation has been shown to improve cognitive thinking and reduce anxiety through increased self-awareness. Recent evidence suggests that reducing anxiety in business negotiations may also increase profit.

According to a group of studies conducted at the Wharton School at the University of Pennsylvania, “compared to negotiators experiencing neutral feelings, negotiators who feel anxious expect lower outcomes, make lower first offers, respond more quickly to offers, exit bargaining situations earlier, and ultimately obtain worse outcomes.”

The first study involved 136 participants with an average age of approximately 20 years old. Each participant was randomly assigned as a buyer or seller and then, using computer instant messaging with a counterpart, negotiated a three-issue cell phone shipment that included price, warranty and a service period.

Anxious negotiators were consistently outperformed by their neutral counterparts, earning 3% to 6.8% less profit. In addition, the anxious negotiators’ first offer was on average 12.5% lower and short-term expectations 16.4% lower than neutral participants. Long-term goals, however, remained roughly equivalent indicating that the diminished expectations were only temporary.

In the second study, participants included 159 students who again were on average 20 years old. Each was then placed in front of a computer screen and told that they would be negotiating with another participant, but they were in fact negotiating with a computer program. Again, anxious negotiators’ first offers were on average 7.5% lower than neutral negotiators.

The study suggests that anxiety temporarily reduces belief in oneself and makes the point that strengthening the belief that you can negotiate successfully will offset these temporary effects, The research also highlights the powerful effect of positive feedback on self-belief, and suggests negotiation courses, simulations, or simply making negotiations routine and less anxiety provoking.

The report also states that, “another possible prescription for curtailing the influence of anxiety is to heighten self-awareness of anxiety.”

Study: Brooks A.W., Schweitzer M., “Can Nervous Nelly Negotiate? How anxiety causes negotiators to make low first offers, exit early and earn less profit.” Organizational Behavior and Human Decision Processes, 2011, 115, 1, pp. 43-54.

Dave Gorczynski is president of SPARK, a non-profit organization that has provided free energy work sessions and workshops across New York City since 2002. He writes a regular column about energy work and meditation for the Compact News in New York City's Chinatown. E-mail him at dave@sparkenergy.org.