These days, a lot of research is happening on the psychology of ethics in negotiation. Negotiation is a very simple process if the ethical considerations are overlooked. Establishment of the correct ethical standards and their compliance in the negotiation makes it a fairly complicated process. The process of negotiation, by nature, has many elements that contrast with the standards of ethics. “To conceal one’s true position, to mislead an opponent about one’s true settling point, is the essence of negotiation” (Wetlaufer, 1990). Therefore, an effective negotiator is similar to an expert poker player who “plays the cards close to the vest and does not display the true strength or weakness of the client’s hand” (Temkin, 2004, p. 183). Buyer beware is the fundamental principle of all legal and business interactions. Both buyers and sellers have certain ethics responsibilities that they must fulfill in their negotiations. The buyer has the ethical responsibility to ask the right questions and the seller has the ethics responsibility to answer them without any affirmative misrepresentations. Generally, a negotiator is likely to be accused of fraud if he/she makes positive misstatements. Nevertheless, the negotiators have an ethical responsibility to disclose under some circumstances. “First, when the negotiator makes a partial disclosure that is, or becomes, misleading. Second, where the negotiator acts as a fiduciary. Third, when the negotiator has important information about the transaction
not accessible to the other side. Fourth, where required by statute” (Burr, 2012, p. 3). The law assumes a very important role in making the sellers conform to the standards of ethics in their negotiations with the buyers. In some states, the silence of sellers incurs them legal liabilities. “[T]he laws in many states require home sellers to disclose known defects of a serious nature. Sellers who fail to satisfy this duty may be sued for the damages caused by the undisclosed defects” (Craver, 2005, p. 3). This way, the states oblige the sellers not to make partially correct statements in their attempt to hide the flaws of their product. It is quite advisable for the states to make such laws because they serve as disincentives for those who tend to make partially true statements in their negotiations. Nevertheless, there are certain situations in which disclosing certain information is not the responsibility of the negotiator since it is not related to the matter under consideration. In such cases, the negotiator’s “statements should be phrased in a manner that conveys - both explicitly and implicitly - truthful information” (Craver, 2005, p. 3). Puffing is a common technique employed in the negotiations in order to increase the profitability of business. While it is unethical for the negotiator to tell the bidders about the faulty amounts offered by other interested parties, the negotiator might be very choosy in his/her statements so that the price may not be lowered. “I am not disclosing what offers have actually been received, but am only indicating - truthfully - that some offers have been tendered...While I may have no affirmative obligation to disclose these facts, if I choose to discuss them I must do so honestly” (Craver, 2005, p. 2). Negotiation is a very complicated process from the ethical perspective.