Advantages and Disadvantages of Negotiating over the Internet

Summary of MIT Sloan Student Participants of the Carleton University Cyber-Negotiations

Compiled by Angela Liao and Nils Olaya Fonstad

April 28, 1997

As with any new technology, it's advantages can also be disadvantages. This was certainly the case for the participants in the Carleton University negotiations. Here is a summary what the MIT Sloan students found to be the advantages and disadvantages of on-line negotiating using Carleton University's negotiation environment.

Advantages

• Lack of Traditional Visual/Audio/Olfatory Cues

  "The negotiation was not affected by the physical appearance (e.g. size), the body language and the tone of the voice. This could be quite an important advantage for someone who is physically small as he or she would not be intimated by someone who is much bigger."

  "This is an advantage for internet negotiations where high emotions might block the progress of a face-to-face negotiation. Email type negotiations can greatly limit emotions from biasing the agreement."

• Anonymity

  "One unique aspect of the negotiations I participated in was the complete anonymity afforded each participant. I had no indication as to the age, gender, ethnicity, etc. of [my assigned negotiating partners]. An environment that provides complete anonymity has great advantages where knowledge about the identity of the other person would make negotiations otherwise impossible or extremely difficult, primarily because it inhibits the formulation of biases."

  Asynchronous Communication

  "One did not have to response with an offer on the spot. This gave one the time to think of a proper response."

  "The delay has a positive effect in enabling one to carefully consider the words from the other negotiator and to carefully craft the words of a response. This is particularly helpful for those that have more difficulty 'thinking on your feet'."

  "There is a positive tradeoff to the slower pace in that participants from greatly different time zones can effectively negotiate without one party having to either travel to visit the other, or having one party stay awake at an odd hour to accommodate the other party."

• Systematic Negotiation Framework

  During Preparation:
  "The negotiation package was structured in a way that forces one to be systematic in preparing for the negotiation. For example, participants had to first rate the importance of the following negotiation issues: Price, Delivery, Payment, and Return Policy. Then they had to rate the importance of each options (e.g. price points ) within each issue. Finally, they had to rate the importance of the various offer packages as a whole."

  During Negotiation:
  "The rating score attached to each offer guides one to be consistent with the preferences one made earlier ... also, the graphs showing the ratings and history of offers were also useful in guiding one in making more consistent offers according to one's preference."

  "The internet environment provided by Carleton University enables one to review the complete history of all communication and offers made in the course of the negotiation. This is particularly helpful in developing a context for the other party because you can review the trend of their offers over time to analyze what they are conceding and what they are standing firm on. Additionally, a complete written record of the negotiation prevents one of the parties from "re-writing history" and claiming that something previously was said/written that was not. The written record is also invaluable in supporting the ability to carefully analyze an offer and to prepare a counter-offer."

  Fixed Deadline:
  "A clear deadline that was set right at the beginning helps one to formulate a negotiation strategy and at the same time facilitates both parties to reach final agreement."

  Post Settlement:
  The decision support tool identified could identify a solution that was better for both teams and would offer it as an alternative to their final offer.

Disadvantages

• Lack of Traditional Visual/Audio/Olfatory Cues

"One cannot make use of or analyze body language or tone of voice to help judge better what the other party was actually trying to say. Although it didn't have a bearing on the outcome, I did not know whether I was dealing with a man or a woman in my negotiations. In fact, I didn't even know what country dhe person I was dealing widh was from. This may have benefits to some who may feel they are discriminated against. But, it also does not allow the participants to compensate for any cultural differences. For example, had I been negotiating in August and did not know I was dealing with a European, I may not know that a delay in negotiations was only caused by them going on vacation."

"It is particularly difficult to accurately convey emotions in a written format since they are often best conveyed through voice inflections and body gestures ... the lack of emotion can be a hindrance since one might not be clear how hard one is pushing on the other person. The result may be an unintentional escalation of tension and/or ill-will simply because one party was unable to read the emotions of the other party."

• Lack of Trust

  "The interpersonal dynamic with internet negotiations is completely different than face-to-face or even telephone negotiations. Not hearing or seeing the other person prevents one from building a context from which to evaluate the typed words of the communication. The principle effect of this for me was a diminished level of trust. I could not be certain that my negotiation partner was not trying to deceive me or otherwise take advantage of me."

• Asynchronous Communication

  "One cannot immediately see the reactions and responses of the other party when one made an offer. There were no spontaneous counteroffers. One had to wait after making an offer until the other party responded to the offer but one did not know when that would be."

  "There was typically a lag of at least a day waiting for my negotiation partner to respond to my communication. The delay was frustrating at times when I believed that we were close to achieving agreement."

  "Given the discontinuous nature of the internet environment, the negotiations took far longer to conclude that they would have either in a face-to-face situation or over the telephone. Each of the cases discussed above consumed over a week of elapsed time. I would guess that a telephone conversation lasting less than a half-hour could have facilitated the same negotiation process."

  Inability to distinguish between technical problems or strategic delay tactics : "You are never sure if the reason you have not heard from your counterpart was because of technical problems, the fact that they were not checking their E-mail regularly or if they had strategically chosen not to respond. In the real world, we assume people receive their phone messages and regular mail but are still somewhat suspicious of dhe reliability of electronic commerce."

• Systematic Negotiation Framework

  During Negotiation:
  "The rating score of each offer and the graphs showing the history of ratings and offers were not realistic in real life negotiation. These ratings tend to influence ones decision in making an offer."

  Fixed Deadline:
  "A fixed dateline did not give both parties the flexibility to reach a better agreement for both parties by slightly extending the dateline."

• Nontraditional Environment

  The "newness" of the negotiating nevironment requires the establishment of new norms."

  "Electronic mail is considered somewhat less formal than a written letter but more formal than a telephone conversation. This can lead to misinterpretations and misunderstandings. For example, if I try to be funny over the phone, I have instantaneous feedback as to whether the listener understood me. If I had offended them, I can quickly try to rectify the situation. A face to face discussions even better, since I can also notice body position and facial expressions. If I write a letter, the time it takes to write, print, address, postmark and mail allows me to reconsider any inappropriate language or concepts. Having words on paper (i.e. the paper trail) also leads to an air of formality. People negotiating over the Internet must understand that E-mail has the speed of the telephone without the feedback."

• Best Suited for "Simple Issues"

  "The negotiation environment used in this study clearly favors those negotiations which are fairly simple. Simple conditions are much easier to communicate through brief written messages, especially where there are significant lags between responses to clarifying questions that might arise. I would find it cumbersome to communicate a complex and/or intricate situation through an email-type mechanism where immediate question and answer could not take place."

  Final comment by one of the participants:

  "I conclude that the internet negotiation environment utilized in this study clearly favors negotiations characterized by one or more of the following factors:

  Fairly simple contexts

  Lower levels of trust/empathy required

  Speed is not paramount

  Anonymity is desired/required

  Personal biases need to be inhibited

  One party significantly less skilled than the other

  One party has difficulty being appropriately forceful

  More distributive than integrative

  It would be inappropriate to generalize these characterizations to the electronic negotiation concept in general. The Carleton environment is a single, fairly simple embodiment of this concept. Once can imagine that an environment that takes advantage of recorded and/or real-time audio and video communication over the internet would be capable of supporting negotiations of greater complexity and strategies that are much more integrative than those that I pursued in this study.

  I believe the greatest benefit from electronic negotiation will not come from simple facilitation of existing negotiations into an electronic form as was demonstrated in this study, but will come from enabling decisions to be negotiated that are now made unilaterally without negotiation. How many decisions are made today by a single person because the cost, time, and logistics prevent all of the constituencies from coming togethe to formulate a shared decision? The internet provides a low cost method of bringing people together from all over the world and thus presents a valuable opportunity to shift decision-making to be a more collaborative and participative process. The full realization of this may still be far in the future, but the Carleton internet negotiation environment provides us with a glimpse of some of the potential possibilities."