You're Robbing Yourself With Poor Haggling

In the second case, people too readily accept various claims -- "You're killing me," or "This is as far as I can go," or "My boss won't approve the deal," etc. -- much of which is strategic posturing. But as people accept this, they come to believe, "Wow, I really have squeezed every penny out of this poor guy."

Are there certain steps that people should take before they begin negotiating that will help when they are negotiating?

The key is getting any information one can about the market, recent transactions, and the partner's recent behavior -- and then being a little more ambitious than a "balanced" assessment of the facts would indicate.

Is it necessarily bad that both parties feel they did better than they really did in the negotiating? If both parties leave the transaction feeling like they won -- and are therefore satisfied with the outcome -- is that a bad result?

This is a great point. It is not necessarily bad. The fact that both parties are happy can be great for upholding the deal and for future negotiation. And it's good personally to feel confident about one's performance -- it helps us get out of bed in the morning.

Understanding our own research findings has made us "sadder but wiser" -- whenever we think we've bargained for 70% of the pie, we've probably only pocketed 50%. We do think that being sadder but wiser can encourage people to be more aggressive in the negotiation process, ask for more, and achieve better outcomes for oneself and one's firm.

What is the most important lesson that the average person should take away from this study?

I think the key take-away is that people have a choice about recognizing these effects -- and being sadder but wiser -- or ignoring them -- and being (very) satisfied with themselves.