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Contracts related to data center operations often require long and complicated negotiations, with numbers changing quickly as new details come to light. Be prepared. Don’t fall victim to the sunk cost fallacy.

In any negotiation, the longer that you continue to negotiate, the more likely it is that you will end up making a deal, however bad or good the deal might be. This is true for all levels of negotiation, whether for cheap jewelry at a roadside market in a foreign country, or in the board room. This is largely due to the Sunk Cost Fallacy, which was summarized by social scientist David McRaney as, “Your decisions are tainted by the emotional investments you accumulate, and the more you invest in something the harder it becomes to abandon it.” As the deals continue to change and adapt through negotiations, it becomes increasingly important to take a step back, investigate other options, and come back to the table with all of the facts on the table. Even though this can cost money in the short term on the basis of increased man-hours and a lack of apparent resources, in the long run the savings can often far outweigh the savings.
Aggressive negotiation requires a constant re-examining of previous deals, and constant comparison to the current deal. If the current deal is not an adequate improvement over previous deals then more negotiation is necessary. It is always an option to walk away from the table.


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