Understanding and Improving Managers’ Influence Strategies: Can Managers Leverage Loss Aversion As An Influence Tool?

Authors:

Abstract: To succeed, negotiators must be good at strategically influencing others. A major influence strategy emphasized by leading negotiation books is leveraging others’ loss aversion. Scholars have assumed that individuals can strategically leverage others’ loss aversion in an “optimal” and “sophisticated” way. We challenge this assumption. Across 11 experiments with 5,137 managers, we show that managers’ strategic decisions about how to leverage loss aversion to influence others are directionally worse than random chance — a performance level evaluated as “suboptimal” by managers themselves, and much worse than managers themselves predicted. We show that 6 interventions from the individual decision-making literature (e.g., “perspective-taking,” “consider-the-opposite”) all fail to improve (relatively more complex) influence strategy decisions. We develop a 7th new intervention – forcing managers to choose optimal influence strategies in practice rounds – which *does* successfully improve influence strategies. Our findings provide practical advice to negotiators by revealing which interventions do (or don’t) improve influence strategies.

Track: DEC

Keywords: strategic decision making; influence strategies; negotiation; loss aversion; managerial decision-making; decision biases