About Me 0072: Help Making Money

One of the biggest reasons we enjoy the weekend is more time with family and friends. We can make our weekends (and weeks) even better by spending more time being social:

This paper exploits the richness and large sample size of the Gallup/Healthways US daily poll to illustrate significant differences in the dynamics of two key measures of subjective well-being: emotions and life evaluations. We find that there is no day-of-week effect for life evaluations, represented here by the Cantril Ladder, but significantly more happiness, enjoyment, and laughter, and significantly less worry, sadness, and anger on weekends (including public holidays) than on weekdays. We then find strong evidence of the importance of the social context, both at work and at home, in explaining the size and likely determinants of the weekend effects for emotions. Weekend effects are twice as large for full-time paid workers as for the rest of the population, and are much smaller for those whose work supervisor is considered a partner rather than a boss and who report trustable and open work environments. A large portion of the weekend effects is explained by differences in the amount of time spent with friends or family between weekends and weekdays (7.1 vs. 5.4 hours). The extra daily social time of 1.7 hours in weekends raises average happiness by about 2%.

Source: "Weekends and Subjective Well-Being" from NBER Working Paper No. 17180

For more on happiness check out Gretchen Rubin's The Happiness Project or Harvard professor Daniel Gilbert's Stumbling on Happiness.

You should follow me on Facebook here or on Twitter. You'll find content there I don't post anywhere else. You can also subscribe via email or RSS. Check out the blog's most popular posts of all time.

Can ancient Chinese philosophical advice help us find happiness today?

At what annual salary does money stop making us happier?

At what ages are we happiest?

Does having more TV channels increase the happiness of heavy TV watchers?

How to make yourself happier in just a few seconds

What makes us happiest: work, love or leisure?

Can thinking quickly make you happy?

Do happy people love their jobs or do good jobs make people happy?

Permalink

| Leave a comment »

Read more posts on Barking Up The Wrong Tree »

In one scene of the movie, Wall Street: Money Never Sleeps, big time capitalists, Bretton James and Louis Zabel, are negotiating a stock bailout for Zabel’s firm, Keller Zabel Investments. In doing so, they reveal two powerful negotiating techniques that can help you secure the best deal.

James offers Zabel a measly $2 per share. “Under these conditions”, starts off James, “… [James and co] are prepared to risk $2 a share”.

“2 bucks?”, questions Zabel, breaking out in a nervous laughter shocked by the ridiculously low offer. “You're out of your mind. The stock was trading at 79 a month ago. Our building alone is worth more than 2 bucks a share. My board will never accept this. There is no way I'm going to sell for 2 bucks a share.”

The government representative steps in to back up James, telling Zabel that the government could never justify a high price for his firm and that he has no other option. If he doesn’t sell then he faces bankruptcy.

But Zabel remains unmoved. “I'll take my chances in bankruptcy court before I sell to that barracuda” angrily responds Zabel.

A blanket of silence falls over the room. It looks like the deal is off. Neither party is willing to pay the price the other is wanting.

The Defining Moment

Realising that the negotiation has reached stalemate, James decides to do something completely unexpected. While he really wants to buy Zabel’s firm and knows he is getting a great deal, he decides to walk away.

“Then we have nothing more to talk about” says James as he gets up out of his chair and turns to walk away.

But just as James reaches the door, Zabel calls out "6". It’s a counter offer.

“3 and that's it” responds James.

“5”

“3”

“Alright, we'll call it an even 4. So we don't look so god damn pathetic.”

James pauses for a moment, looks at his colleague for confirmation, who nods back at him in agreement, before taking a step forward. “3, and not a dime more,” says James and locks in the deal.

There are two key negotiation techniques used in the scene above.

Negotiation Technique 1: Use Anchoring and Adjustment

James started at $2 and Zabel started at $6. In what is called Anchoring and Adjustment (see Those Clever People at Wikipedia and a little phenomenon called anchoring) initial values, regardless of how extreme, have a strong affect on final values. In this case, James used a $2 anchor, not because he thought he would get it for such a low price but because he knew it would get Zabel to start thinking low values. To counter that effect, Zabel used a $6 counter anchor to get James to start thinking higher values.

If you are selling, start by asking a high price. If you are buying, start with a low price. The technique will subtly but strongly influence the figure the other party has in their mind, therefore allowing you to get the best price.

Despite the effectiveness of the technique, however, many people will not feel comfortable asking for an excessively high or low figure because they don't want to appear unreasonable. That is, they don’t want to risk the Zabellian response, ‘are you out of your mind?’

For those people, negotiation technique two provides for a more comfortable approach.

Negotiation Technique 2: Walk Away

Who wins in a negotiation? The one who is willing to walk away.

Guess what? Be willing to walk away. Even if you are willing to pay the asking price, pretend like you can walk away. This technique is especially useful for people who don’t see themselves as hard line negotiators.

Why? Because you do not have to haggle, you do not have to offer unreasonable figures, and you do not have to have a big mouth to use this technique. All it requires is that you risk not making the purchase on that very day, which, for most purchases worth negotiating for, is worth risking for.

Here’s How You Do It:

Next time you are negotiating with a business supplier, nicely tell the person:

“Thanks for your help but the price you’re offering is beyond my budget” (or whatever reason you want to give).

“But I’ll tell you what I’ll do. I’ll leave you my name and number and if you can do me a better deal, then give me a call and we can take it from there."

Now if that is the best price the salesperson can do then you probably will not get a phone call, in which case you can just go back the next day or so and buy the product. But if they can do you a better deal then they will call you. After all, you have already proved to them that you are not willing to pay their asking price.

What is more, 9 times out of 10 you will not even have to come back. If the salesperson is able to do a better deal, they will usually offer it to you on the spot. It will probably be along the lines of, “alright let me try asking my manager again and see if we can do you a better deal”.

Having been on both sides of the negotiation table (as a salesperson and as a buyer), I have seen this technique work over and over for all deals great and small. It is not only one of the most powerful negotiation techniques, but also one of the easiest and comfortable to use, which makes it all the more useful in securing yourself the best deal.

surface encounters reviews url

Friday, July 29, 2011

Help Making Money

The Defining Moment

Negotiation Technique 1: Use Anchoring and Adjustment

Negotiation Technique 2: Walk Away

No comments:

Post a Comment