The Small BIG: Small Changes That Spark Big Influence by Steve J. Martin, Noah Goldstein, Robert Cialdini

that he or she isn’t the only one hoping to snag a bargain. All of a sudden arms become welded to people’s sides and hands are thrust deep into pockets as bidders rapidly retreat, leaving only the two highest offers in the game. At that point something really interesting happens. Without realizing it, the two remaining bidders have become locked in a new game. Instead of playing to win, they are now playing not to lose.
    It is clear to any outsider that the bidders should cut their losses before the auction spins out of control. But they rarely do. Bazerman claims to have conducted over 200 separate auctions and only on one occasion did it end before the bid reached $20. Sometimes his $20 bill sells for over $100. Once, for a record $204!
    So what’s going on? It appears that during Bazerman’s auctions two persuasive elements join forces to influence bidder behavior. The first is commitment and consistency, the idea that once someone makes even a small initial commitment they then encounter personal and interpersonal pressure to behave consistently with that commitment. It is easy to see how, at just $1, the cost of entry to Bazerman’s auction is a small enough commitment that most people are willing to make it. No surprise, then, that so many people do put their hands up. That subsequent bids are made only in small increments of a dollar further fuels a bidder’s desire for consistency. It is as if they are saying to themselves, “Well I have already bid $1, which is only a small amount, so to raise my offer by another $1 doesn’t seem that big a deal.” Of course it quickly becomes apparent that many others are in the auction, and recognizing the competition for a scarce resource (remember, only one person can successfully bid for the $20 bill), a second persuasive force comes into play: not so much the desire to win but the more potent need to avoid losing.
    And that’s essentially what happened to ABC’s Diller. On learning that competitor broadcasters also had an interest in purchasing rights for the movie, and having already invested time and resources into winning the bid, not to mention his reputation, Diller could only move in one direction. His subsequent bids continued to escalate, quickly passing the point where he knew he was throwing away his money.
    Diller’s story exemplifies a trap that many competitive negotiators fall into known as the “escalation of commitment,” a condition that is not just limited to individuals. At around the same time that Diller was conducting his negotiations, the Long Island Lighting Company was scheduled to unveil its $70 million nuclear power plant. However, due to a series of costly overruns, and even despite evidence of the plant’s economic infeasibility, it would be another decade before they pulled the plug on the project—by which time their costs had spiraled to over $6 billion!
    Recognizing that escalations in commitment can often lead to poor outcomes and a potential loss of money and resources, many will adopt strategies designed to mitigate its influence. One of the most common is to arrange for one individual to make the initial decision about whether to enter a negotiation and then assign a different individual to carry out that negotiation. For example, a company looking to procure a new computer software system might delegate the responsibility of choosing that new system to one decision maker, but once a decision has been made, delegate the next job of negotiating that purchase to a different person. The thinking here is that by separating out the decision maker and negotiator roles, any escalations in commitment and the financial pitfalls that accompany them can be dodged.
    In theory this sounds like a good strategy but it’s one that can sometimes still fail for a very simple but often overlooked reason. While a separate decision maker/negotiator strategy removes a physical connection between the two parties involved, it may not serve to