I have been thinking a lot recently about self-interest. In a workshop I give on leadership I begin by describing life as a conflict between self-interest and morality. When you take responsibility for other people that dichotomy expands to include a third part " mission", which leads to the concept of leadership.
In an HBS research paper "Naivete and Cynicism in Negotiations and Other Competitive Contexts" the authors discuss the role of self-interest in negotiation in terms of naivete and cynicism. Their concepts are captured in the summary below.
"Naïveté is more than a glut of trust. More broadly, naïve behavior refers to a failure to make the best decision, due to a lack of consideration of other people's strategic and behavioral perspectives. We are likely to make naïve decisions when we don't think through the likely future decisions of other parties. A cynic, on the other hand, may avoid a business transaction due to an assumption that the seller's self-interested motives will be harmful to him or her-even if logic shows that the deal would likely benefit both parties. When people withhold from trusting others, they usually lack opportunities to learn whether their trust would have reaped rewards. But when they offer their trust and are subsequently burned, they learn hard lessons about trust. This unbalanced feedback breeds cynicism."
I have seen many times in negotiation where an excessive concern about the other party's self-interest has clouded judgement and stalled negotiation. What needs to be remembered is the economic definition of an exchange, an exchange being the transfer of a good or service in return for consideration (e.g. cash). As defined, an exchange only takes place when both parties believe that they are receiving appropriate value--the better deal. Therefore, every exchange (or negotiation) is based on self-interest.
Negotiation is simplified by just looking after your own self-interest and letting the other side worry about their self-interest. The skill, of course, is in achieving "value", where the self-interest of the two parties are mutually compatible and the transaction closes.
Image: Diogenes of Sinope, founder of the philosophical school of cynicism. Credit.
