Reactive Devaluation: Your Money is No Good Here

Reactive devaluation occurs in a negotiation when a party receiving an offer doesn’t trust the party making an offer and they evaluate the offer through the lens of distrust. In this post you will learn what reactive devaluation is, how to avoid doing it and what to do if you are faced with it.

What is Reactive Devaluation?

Reactive devaluation is when someone discounts the value of an offer because they don’t like the person giving them the offer. They are reacting to the person making the offer not to the objective value of the offer.

Why is Reactive Devaluation Bad?

The basic rule in negotiation is to make good deals, create and claim as much value as you can. Reactive devaluation skews perception of value and causes the rejection of deals that should be accepted. It is the deal making version of an ad hominem attack.

Where did Reactive Devaluation come from?

I normally don’t do much history in this blog, but I think this bit of history perfectly demonstrates the concept. In a study by Ross and Stillinger in the 1980s, They asked participants about a nuclear disarmament program. Participants were told that the program was conceived of by President Regan, an unnamed American policy analyst, or President Gorbachev. The results were stunning:

90% of the (American) participants Approved of the plan when they thought that President Reagan had proposed that. When they were told an unnamed American policy analyst proposed the plan 80% of the participants were supportive. However when the participants were told that President Gorbachev was the author of the plan only 44% of the participants supported it. Considering the proposed plans were identical, it is obvious that a form of cognitive bias was at play. That bias is reactive devaluation. In reactive devaluation parties react to the offerer by devaluing their offer.

How to Avoid Reactive Devaluation

You have taken the first step in avoiding acting on reactive devaluation. By being aware of the concept you are able to see it, label it and defuse reactive devaluation. The bad news is that you can avoid reactive devaluation completely. Reactive devaluation is automatic. By taking a rational approach to evaluation you can overcome your original tendency to devalue offers from untrusted parties.

During a mediation where a party rejected an offer that objectively met her goals, I determined the trouble was that the party was devaluing the offer because of discord with the offeror. I asked the party if she would reject the offer if her best friend had made it. She agreed it was a good offer on its face. In the end, she agreed to the offer with safe guards to ensure the plan would be followed.

How to Respond to Reactive Devaluation

When reacting to reactive devaluation you need to consider that your offer is being viewed not on its merits but as YOUR offer. The goal for responding to your other’s reactive devaluation is to get them to consider your offer. That means building trust or taking trust and the equation. This technique works best if you are trying to make an offer that has value for them. If you are using power to force them, the fact that your other is devaluing your offer may be irrelevant.

Steps to respond to reactive devaluation

Double Check Your Offer

Ask questions about their needs

Consider Multiple Simultaneous Equivalent Offers

Involve a Mediator

Double Check Your Offer

Since part of the goal of responding to reactive devaluation is build trust you should start with double checking your offer. Does your offer consider their needs? Is it packaged in a way to put their needs first and your needs second? When you are double checking your offer you are looking from your other’s point of view to ensure the offer, if made from a neutral party, would be a good one.

Ask Questions About Their Needs

Being curious about your others needs can be helpful for dealing with reactive devaluation. Rather than making your offer directly, invite your other to construct their offer by asking questions that help them arrive at your offer as an ask. These questions can be increasingly leading to arrive at your offer. However, they should be asked in good faith and answers should be used to modify your offer.

Consider Multiple Simultaneous Equivalent Offers

Research tells us that multiple theoretical options are more likely to be viewed against each other and less likely to be attached to the offeror. By using Multiple Simultaneous Equivalent Offers your other is likely to view the offers in light of their relative value to each other. By allowing them to pick one, you can make endowment bias compete with reactive devaluation.

Involve a Mediator

Mediators can help with reactive devaluation. The first and most obvious way a mediator can help is by being the person carrying the offer. The other will receive the offer from the mediator in a shuttle mediation; they will be less likely to connect the offer to the offeror and therefore less likely to engage in reactive devaluation. Mediators can also help by reframing the offer and by reality testing the offeree to insure their resistance in driven by logical concerns. Hiring a mediator to help can occur after negotiations have reached an impasse, but if you suspect or know there is a high level of distrust, suggesting mediation prior to the negotiation may be useful. At Wakely Mediation we mediation for work, employment and labour related disputes. This includes helping parties deal with low trust relationships and responding to and avoiding reactive devaluation. Contact us for more information on how mediation can help.