Negotiating with a Liar

SARAH GREEN CARMICHAEL: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Sarah Green Carmichael. Today I’m here in studio with Harvard Business School Associate Professor Leslie K. John. She is the author of a new HBR article, “How to Negotiate with a Liar,” and it has been one of the most popular articles on our site this whole summer. So, Leslie thank you for joining us today.

LESLIE JOHN: Thanks for having me.

SARAH GREEN CARMICHAEL: So, this article has really struck a chord with our readership. I’m thinking partly this is because many people often suspect they’re being lied to in negotiations. Maybe some of them are also doing some concealing of information themselves. So, how common is lying, actually?

LESLIE JOHN: Lying is, unfortunately, quite prevalent in everyday life. But not all lying– I mean that sounds much worse than I think it actually is, because there’s lots of lying or what I would call white lies. So, do I look good in this dress? Yeah, you look great, honey. But lying is actually quite prevalent. The type of lying that we’re particularly worried about in negotiation is when one party has a very privileged piece of information and has a motive to deceive, distort, lie about that piece of information. And so, the counterpart is really trying to get truthful information from that person, because if you’re able to get truthful information out of your counterpart, it puts you in a better bargaining position. Simply put, information is power in negotiations.

SARAH GREEN CARMICHAEL: So, I was interested to see in the article that right in the beginning you dispense with the idea that you can detect a lie. So many people, I think, put so much energy into trying to figure out when they’re being lied to. And you’re just like don’t bother, move on. Why?

LESLIE JOHN: It’s a intuitively compelling idea that we can spot a liar, but it turns out that the science doesn’t really back up that proposition. When you look at the science of whether people can actually detect lying in others beyond chance, the evidence is very, very weak. At best, we can detect in certain very constrained situations we can detect a little bit better than chance, but even then it’s not clinically meaningful, as in it may be statistically significant but practically that’s not very useful. And that’s kind of the best case scenario with lie detection. That’s why my general recommendation is cut your losses. Don’t try to detect lying, but there’s a lot of promise in preventing people from lying to you in the first place.

SARAH GREEN CARMICHAEL: Well, then let’s get into some of the techniques people can use to do that. One of the first and most straightforward that you talk about is disclosure. And interestingly, I think this is a bit intuitive, but I’m not really sure why it works. When you are disclosing something about yourself, it seems to motivate other people to disclose things about themselves. We know this through our conversations in everyday life. Why would that work in a high stakes negotiation? What’s the mechanism for that?

LESLIE JOHN: There are several reasons for this mechanism. One is that when we disclose information to others it kind of has a disarming effect. So, when we tell someone information about ourselves, it prompts them to reciprocate. There’s a very natural human urge to reciprocate disclosure. So, when someone is disclosing to you, your instinct is to disclose back. And that process of reciprocal self-disclosure fosters trust. And when you trust someone, almost by definition you’re less likely to lie to them, and in turn you’re less likely to be lied to.

Now, of course, in reality this is easier said than done. If you’re in a really stressful, high stakes negotiation, the kind of common approach people have to that is to be very guarded coming in. And I’m certainly not saying that you should just go and put all your cards on the table, because there are certain situations where you really do want to hold your cards close to your chest. But it doesn’t mean that you should necessarily be completely tight lipped. You can disclose something. It doesn’t have to be a very privileged piece of information. But if you disclose some piece of information, it can jump start that process of mutual self-disclosure and trust, because trust is the key thing here. When people trust each other, they’re less likely to lie to each other.

SARAH GREEN CARMICHAEL: Mm. So, you in the article talk about a few other ways in which people can prompt the counterpart to disclose some information wittingly or unwittingly. One of those methods you talk about as promoting them to leak information indirectly about what they value. What would be some advice on how to do that concretely or maybe an example of that in action?

LESLIE JOHN: So, if you’re dealing with a counterpart that– I think most people can relate to this. I certainly can. A counterpart who is just, you just feel like you’re getting nowhere. You feel like you’ve tried everything. You’ve bent over backwards to get information out of them and they’re just not moving to the point where it could even be irrational from the counterpart’s perspective, because sharing information can help both parties– even the sharer– to get better outcomes. So, one tactic that you can deploy in this situation is to prompt leakage, is to prompt the other party to disclose information without them even knowing that they’re disclosing.

And one way you can do this is by presenting different packages of deals. So, to be concrete, you tried everything to try to understand your counterpart to get information out of them, because a lot of the reason why we need to get information from our counterparts is to– not to use it against them, per se, but it’s to understand them, to understand what they value. Because really the source of win-win outcomes in negotiations, the source of value creation lies in understanding what each party wants. And lots of people come into negotiations with a combative mindset, but really if you lose that mindset and you view it as I’m trying to understand this person because if I understand what they care about I can find things that they care a lot about that I don’t care much about, and when we find those things we can trade them. So, I can give you something cheaply. I can give you something that you care a lot about and I don’t really care about. That’s a cheap trade for me, and it’s a high value creation trade because you like it a lot.

So, in order to discover these value creating trades, we need to learn about each other. OK, so imagine you’re with a counterpart who is not enlightened in this way and is being very stubborn and not sharing information with you. What can you do?

Well, one thing you can do is you can try to prompt them to leak information to you. So, imagine that you are in a negotiation with a prospective employer. So, the employer has offered you a job but you have to negotiate the details. And you’ve been trying to understand what levers, if any, your employer has to move. What levers do they have to give you more of potentially what you want to make the job even more attractive to you? And they’re just kind of stonewalling you. They’re not answering your questions. What can you do?

Well, what you can do is you can come up with two different offers to your employer, so essentially two different compensation packages that you are indifferent between. You don’t have a preference over package A or package B. Now, to come up with these two packages of course, you need to understand yourself. You need to understand your own preferences.

So, assuming that you understand your own preferences that you can then come up with two different compensation packages, two alternatives, that you are indifferent between. They’re just as attractive to you. You could say, for example, package A I’m going to be working long hours, but I’m going to be making a very high salary. Package B, the salary is going to be lower, but I’m not going to be working as many hours. OK, so there’s two levers here in this very simple world I’ve created, salary and number of hours you work.

And then you go to your employer and you say which of these two compensation packages would be more viable to you? And if your employer has a preference between the two, first of all, you understand that they value things differently than you do, because you’re neutral between them and if they have a preference then there’s a difference there in how you value these different attributes, and a light bulb should go off in your head that this is an opportunity for a value creating trade.

The second thing it tells you is if they tell you which package they prefer, that tells you which of the two levers they are more able to move on. So, if they come back to you and they say, OK, the lower salary fewer hours is more doable for us, that tells you that they do have some flexibility, even though they’re telling you they don’t, and they probably have more flexibility on the number of hours lever as opposed to the salary lever, which is often a very tough lever for employers to move around and oftentimes job seekers have much more success in getting the employer to move on levers other than salary.

And there’s also a more qualitative advantage to this approach. And that is that the kind of meta benefit is that it signals that you are flexible and you’re willing to work with the person, which can also have advantages

SARAH GREEN CARMICHAEL: OK, that makes a lot of sense. So, one of the other things that really struck a chord with me in the article is the section where you talk about the benefits of asking direct questions, but then also the need to notice whether people are dodging, because I think– and you cite some interesting research on this– that actually we’re terrible at detecting dodges if they’re skillful dodges, and that really struck a chord with me as someone who does a lot of interviews. There have been cases where I sat down with people– not in the podcast but in front of a big audience– where you’ve got adrenaline, and you’re distracted, and there’s a lot going on. And I didn’t notice until I got the transcript back that they dodged half my questions.

And so I think it might be similar to a high stakes negotiation in which there might be a lot going on. You might have a lot of adrenaline. And you come out of the room being like, oh, that was great. And then you think about what you learned and you’re like huh. I don’t actually have the information I need. So, how can in the moment, how can people get better at detecting those kinds of dodges?

LESLIE JOHN: Yeah, it’s true. We’re not– myself included– we’re not good at detecting dodges. When we ask someone a difficult question and if they give us a very eloquent response, even if it doesn’t answer the question, we’re kind of duped by eloquence. And politicians are the classic example, right? In debates or in Q&A periods they’re asked tough questions by the media and then they say something eloquent that is completely unrelated or only in the most vague sense related. So, they’re really good at it.

So, what can we do? Well, it’s a simple answer and that is pay more attention to the words that are coming out of the person’s mouth. When you ask a question they’re going to answer, they’re going to say something. They may not answer. They’ll say something.

Before you ask another question to that person, before a word comes out of your mouth, ask yourself did this person answer my question. And lots of times the answer is actually no. If the answer is no, then you want to probe. And if information is important to you, you might want to probe a little bit more to try to get to the answer. Ask the question in different ways, for example.

SARAH GREEN CARMICHAEL: That’s good advice. I think one other scenario that may come up for people– and I’ve been proceeding to this point in the interview as if the person is either clueless or mal-intentioned that you’re talking with. But there could be situations where the person has good intentions but just can’t deliver on them. You ask them we need this by Friday and they say yeah, we’ll make that. And you kind of wonder, can they really do that? If there is a situation where you suspect that your counterpart is maybe over-promising, how can you make sure that they really are giving you good information or that they actually deliver on the outcome you’ve negotiated?

LESLIE JOHN: It’s a great question I like the way you framed it, too, because certainly there are times when people deliberately lie about when they can deliver on something. But lots of situations– I would like to think most of those times when people are wrong it’s not because there’s malice. It’s not because they’re deliberately trying to deceive you. They’re just overconfident or they’re overly optimistic, wishful thinking, or they just don’t know and they feel like they have to say something.

When you get an answer that just seems a little bit too good to be true, what you can do is you can add contingencies in. So, imagine that you are asking a supplier to supply you with something, and you ask them when they can deliver on that. They give you a date. It strikes you as wildly optimistic.

So, instead of debating with them whether they can deliver by this date and whether they’re lying or not, you don’t have to do any of that. All you have to say is, OK, let’s just put some contingencies around this. In the unlikely– unlikely to you– event that you can’t deliver on that date, then can we agree to have you compensate me by lowering the price a little bit, for example? And this is really nice because if the person is not lying and they sincerely believe that they can deliver by this date, they should be completely comfortable entering into such a contingency contract. Because to the supplier if the supplier truly believes that he or she is going to deliver by that date, the contingency is almost moot because from the supplier’s perspective yeah I’m for sure going to deliver by that date, so it’s moot that if I don’t– because that’s not going to happen– I pay you more. So, it’s nice for that reason.

On the other hand, the darker side of it is if your counterpart is actually lying, is misrepresenting themself, if the supplier say knows full well that he or she cannot deliver by that date and is just telling you that date, then he or she may be very unwilling to enter into that contingency contract. And so, that actually gives you a signal as to whether the person is being truthful or not, but more importantly it protects you. In a way, it doesn’t matter if that person is lying, because if they agree to the contingency, you’re protected in the event that what they’re promising you doesn’t happen.

SARAH GREEN CARMICHAEL: Sort of like a home inspection is often a contingency on buying a house?

LESLIE JOHN: Exactly.

SARAH GREEN CARMICHAEL: OK, so there is one other tip I wanted to ask you about that you had in the article, because I just thought it was so interesting. And that was to frame your question as a negative assumption rather than a positive one. So, I would say something to you if I’m buying a house from you I would say, and I’m pretty sure the boiler needs to be replaced, right, instead of and the boiler looks new, right? Why should I be a pessimist in that conversation?

LESLIE JOHN: It turns out that it’s easier for people to lie by affirming an untrue statement than to lie by negating a true statement. It sounds more complicated than it is. It means exactly, per the example you gave. Imagine you are in a situation where you’re selling your house and you know that the boiler needs to be replaced and you’re not very comfortable saying that straight up, because it’s going to cost you money– totally natural feeling.

If the prospective buyer says to you, hey, yeah, so the boiler looks great. How easy would it be for you to just be like yeah? It’s fairly easy to do that.

SARAH GREEN CARMICHAEL: You’re like yeah it’s pretty good. Don’t make eye contact, walk away.

LESLIE JOHN: Yeah, and by easy I mean it doesn’t feel that bad when you’re in this position of being less than truthful. It’s psychologically easier is what I mean. We can delude ourselves into thinking we’re not.

SARAH GREEN CARMICHAEL: A sin of omission is not as bad as a sin of commission.

LESLIE JOHN: Beautiful, yes. And so, whereas in the other state of the world that you highlighted, if the buyer is a little more savvy and says, oh, this boiler looks like it needs to be replaced, then it is harder psychologically to say no, no, no, it doesn’t need to be replaced. That’s a sin of commission, right?

SARAH GREEN CARMICHAEL: Right.

LESLIE JOHN: And it’s harder psychologically to grapple with, and because it’s harder to lie in that situation you’re less likely to lie.

SARAH GREEN CARMICHAEL: So, we have now run through a bunch of different tactics for dealing with someone who is either hiding some information or maybe downplaying some information. If there is someone who– despite our comment at the beginning that you can’t really tell if someone’s lying– if they’re someone you’re dealing with where you just think this person is lying to my face, should you call them on it? I mean, what should you do in that situation if you really think, wow, this person is really spewing a lot of nonsense.

The other day I was at a friend’s house and she has a two-year-old and a four-year-old. The two-year-old just yanked out a hunk of his older sister’s hair and is wandering around the house with this little handful of blonde hair. And then he’s like, oh no, I didn’t pull her hair. I’m like, I can see that you did it. I mean, most negotiators are a little more sophisticated than that, but if you basically have caught someone, caught red-handed. I have evidence, right? So yeah, or if something someone says is just way too good to be true, then your alarm bell should go off for sure.

LESLIE JOHN: The example you gave reminded me of this hilarious viral sensation awhile back where it was a toddler who had sprinkles all over his face.

SARAH GREEN CARMICHAEL: Yeah.

LESLIE JOHN: And do you remember this? And then the camera goes to the half empty sprinkle jar. And the mom is like, Joey, did you eat sprinkles? Joey’s like nope, don’t know what you’re talking about. Joey, why do you have sprinkles on your face? I don’t have sprinkles on my face. It’s just such an interesting– but yeah, so there are situations where you have a strong hunch or you have evidence that the person is lying to you. What do you do?

In that situation, I would go back to contingencies, because contingencies are a beautiful way to insure yourself. And it also means that you don’t have to get into a fight or a debate about the person as to whether they’re lying. You don’t have to accuse them of anything. You just say, OK, if that’s what you say then let’s just factor in a contingency that’s built on that belief being true of what you’re telling me. And so, that way if they’re lying, you’re not going to proceed without them agreeing to a contingency, because you think they’re lying.

SARAH GREEN CARMICHAEL: Right.

LESLIE JOHN: So, they either don’t agree to the contingency, in which case that’s a complete red flag, a dead giveaway that they’re lying. It smokes out liars in other words. One of my wonderful colleagues, Max [? Fazerman, ?] that’s the phrase he loves to use to preach the value of contingency contracts. They smoke out liars. But the other is that if your counterpart does agree to it, then you have an insurance policy. If they lie to you, there’s no downside for you in a way. So, I don’t know. Does that answer your question?

SARAH GREEN CARMICHAEL: I think that makes sense. I guess I’m just thinking I could see that in that situation you might get angry and frustrated and think I’m going to nail this guy. And I think so often what’s tricky about negotiations– especially [? fraught ?] ones– is that you have to not do what feels emotionally good and just proceed in a rational way, which I just find for a lot of people is tricky.

LESLIE JOHN: Oh, my gosh, it is so hard. I’m talking now as if you should be calm and collected. That’s the ideal, but I lose my cool in these situations. I am one of the worst offenders, probably. So, it does– I think with practice people can get better. As you negotiate more, you get better at not taking things personally and emotional regulation.

I agree with you that oftentimes our instinct is to confront that person, be combative, but that has risks of escalation and of both parties becoming angry. And when people are angry, it can increase the rate of impasse. Now, anger can be quite effective in negotiations. It can get you to claim more value in negotiations. You can get more stuff that you care about, in other words, but it’s also a risky strategy.

What I typically advise my students is understand what you’re getting into when you escalate things. It’s not without risks. And remember that in these situations where you’re feeling riled up, you can always go to the balcony, so to speak. You can always take a break. You don’t have to hammer out a deal right now. You can take a break, and that’s often not top of mind to people in the heat of the moment.

So, just remember, you can take a break. You also may decide to pursue your BATNA, your best alternative to a negotiated agreement. There is an alternative. There is always an alternative, so just remember that.

SARAH GREEN CARMICHAEL: OK, Leslie this has been a really interesting conversation. Thank you so much for coming in today.

LESLIE JOHN: Thanks a lot for having me.

SARAH GREEN CARMICHAEL: That was Leslie K. John, Associate Professor at Harvard Business School. Her HBR article, which you can find on HBR.org, is “How to Negotiate with a Liar.” For more, visit our website or connect with us on Twitter @HarvardBiz. You can also leave a review for us on iTunes, which helps new listeners find the show. Thanks so much.