Strange Ways We Sabotage Deals – pt 1

by Tim Francis on March 15, 2012

A humiliated woman sells her husband’s Porsche for $1 just before their divorce – just so he won’t get his 50% of the car.

She screws herself out of $25,000 in the process, but “Hey – at least that f***** a***** doesn’t get his $25K!!!”

Ridiculous Yet Real

It seems ridiculous from a distance, but in the heat of the moment we humans make some pretty irrational, mind-boggling choices.

Yet it’s real to us and – as justification machines – we find 1,001 ways to convince ourselves and others it was a good idea.

And I’m not just ragging on women here.  Men are the same.  Consider the guy who racks up $50,000 in legal fees to sue an ex-business partner over $10,000 that suddenly went missing.  Makes no sense.

(UGH, why do I feel sick to my stomach?)

A Fascinating Study

Don’t know where it was done, but it goes like this:

Our Peculiar View of “Fairness”

Two people – strangers to each other – were offered a total of $20, at a specific split chosen by researchers.  Both had to agree to the split, or else both walked away with nothing.

At 50-50, both parties always said YES and walked away happy with $10 each.

At 60-40, the same thing happened – the 40% person would say: “hey, this is still $8 more than I had before, so I don’t care the other guy is getting $12”.

But Then It All Goes To Hell

At 70-30 things got dicey.

The 30% person started saying “hey that’s not fair,” and – even though they would be $6 richer than before, they were more pissed about the $14 the other person got, and started blocking the deal.  When that happened, both people left with nothing.

I know it makes no logical sense – they should both be happy for having free money, right?  But that’s not how humans work.

(And don’t even ask about 80-20…. that level was basically blocked every single time by the 20% recipient.)

“Should Be World” vs. “As-Is World”

It’s about understanding the “Should Be World” vs. the “As-Is World”.

In short….

1. The “Should Be” World:

Both people should say YES to any deal, 100% of the time, where they are getting something, even if it’s split 1-99.

2. The “As-Is” World:

But it doesn’t work that way.

In the $20 study (above), people are strangely bent that – for equal levels of contribution (in this case nothing) – they would rather YOU lose 70% than gain 30% for themselves.

Why Does This Happen?

Wrong Question.  That’s a rabbit hole that has already sucked up more university PhD time and money than you and I could muster in a lifetime.

Instead it’s a matter of knowing that it DOES happen, then using it to your advantage.

Humans are tricky little beings – accept it and dodge deftly.

Onwards and Upwards,

Tim

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