The Power of Influence In Business Relationships

When you establish business relationships, do you recognize the power of influence? An example of how we influence or persuade others and negotiate with one another can be found in financial transactions. At the Center for the Study of the Brain, Mind, and Behavior at Princeton University, Dr. Jonathan Cohen and his colleagues study game theory – more specifically, ultimate games. In one research case, two players are involved, one giving the other an ultimatum.

For example, you and Frank are given $100 with the following stipulation: Frank decides how the money will be divided between you and him and proposes that plan to you. If you agree, then Frank gets the money and it is divided accordingly. If you reject the plan, neither of you gets the money. So Frank has to try to come up with an allocation plan that gives him the most money yet enough to gratify you so that you won’t reject his proposal.

You should be happy with any amount, since even $1 is better than nothing. But human nature is such that most people in your position refuse to accept the ultimatum if it’s “insultingly” low. For example, if Frank decided to share only $30 out of $100, most people would reject such a proposal. They’d rather get nothing than feel they’re being treated so unfairly. Then both lose out. That makes more subjective sense than logical sense – and that’s human nature.

But put in terms of social evolution, if you were joining a new group, your status would depend, to a large extent, on your ability to display power over others, which is largely manifested in terms of gratification of needs. If you settle for a smaller proportion in an ultimate game, you’re not as likely to garner respect. However, as time and the game go on, early refusals of smaller shares – resulting in no “income” – give way to the proposer offering you larger shares in order to make the game work – to keep you as a working member in the group.

In other words, if you refuse smaller portions, at first you get nothing, but neither does Frank, since both players have to agree for the proposition to work. Over time, Frank learns to respect your demands for a higher share and eventually an equilibrium arises in which you get more than originally offered, Frank learns that doing so is the only way to go, and a healthy relationship is formed. This will work out satisfactorily only if you are willing to refuse a small offer initially, even if you make nothing on that initial offer.

The underlying importance of the research described is the radical notion that we affect one another in ways never before understood. If you have any business or working relationship at all, then what each of us does affects the other much more directly than we ever realized. Imagine what that means to individuals working together on a daily basis. Imagine what that means to a boss trying to influence the workforce he or she manages. Imagine what that means to the leaders of industry as they influence and persuade those in their organizations to follow visions of financial success. Finally, imagine what that means in terms of the neuroscience of negotiations and marketing. There’s no turning back from this new power of making connections with others.