Negotiation Auction Game
In what we call the Negotiation Auction Game a certain value of cash money is placed on auction to a group of players. We suggest a small amount like $10 or possibly $20, however this auction activity works well with anything between $5 up to $100 (we suggest only using a higher amount if those playing are senior management or wealthy individuals). In this example of the negotiation auction game, we are using the auction of a $20 cash note. In all these negotiation games we recommend starting the bidding at 5% of the cash value – so therefore in this instance the opening bid will be $1. To get the game going you will ask for an opening bid of $1.
The real crux and twist of this negotiation auction game is the rule that both the second highest as well as the winner (in other words the highest bidder) must hand over in cash their final and therefore highest amounts that they bid. The other rule that must be explained at the briefing before the auction commences, is that only the highest bidder will win the $20 cash prize.
The usual outcome of the Negotiation Auction Game
In most negotiation auction games that we have facilitated as part of a team building activity (and in some instances from charity fundraisers), is that both the top two bidders on the auction, will end up paying more than the $20 that you are auctioning.
In some instances, you will even get both the top and second highest bidders to pay more than $200 each (that is 10 times the prize money).
We have found that usually the bidding gets going from all over which quickly pushes the bidding rate from the opening $1 to around $7 or $8. Again, from previous experiences that there will often only be 2 players still going once in the $9 to $15 range. There is always laughter when the bid gets more than the $20 amount. Strangely enough you will probably not have to push either of the 2 players to keep going at this point.
At this point you are welcome to offer the remaining players extra time before ending the auction by counting down 3, 2, 1 after each of the bids. carry on, but you can question them and give them extra time to consider before ending the
Why do players end up paying so much?
- The fact is that the players are drawn to the prospect of winning the $20 for what is perceived as a small upfront amount.
- At a later stage in the auction the players become trapped as they get close to the $20 amount because they do not want to end up losing their $20 bid. The players at this point are hoping that the other player (or in some instances players) will back down and accept defeat, once they bid their next amount. At this point they are now hoping to get out with only incurring a minimum amount of loss.
- The biggest psychology is that the ego is now playing an important factor – and now neither of the players wants to back down, particularly because their co-workers are actively involved. What now happens is the limbic emotional part of the players brains ends up overruling the cortical part of the brain, which is normally used for logical thinking.
- Of course, the players also want to appear remaining consistent with the commitments they have shown in the early part of the negotiation auction game. In the players current state of mind, if they back down it will show that they were foolish to have got so involved in what has become a fierce bidding war.
- All of the above have contributed towards a winning at any cost situation.
The Lessons to be learnt from the Negotiation Auction Game
This fun activity presents a lot of opportunities to get those participating to contribute towards a meaningful discussion and debriefing process.
There are 4 motivators in this activity that can be focused on.
- The facilitator can question the different perceptions and meanings of the concept of winning.
- The question around how the loss can have been avoided once the bid amount approached the $20 prize amount. This debate usually ends up with the suggestion that the top 2 bidders should have had a discussion or even suggested a sharing of the prize.
- Another area to question is how the irrational escalation of the bid amount could have been avoided near the start of the auction.
- The closing discussion point can be around how can the lessons learnt be applied to the players own company, or in some instance within personal relationships that are tricky.
We suggest that during the debriefing and discussions it can be agreed that the additional money can be contributed towards a wort cause. This can of course open another discussion around who the beneficiary should be.
You may be interested to know that numerous negotiation skills courses incorporate this activity in their course material.