Summary.    Being deceptive — or not totally honest — in negotiations is fairly common. But two experiments found that it can have a harmful effect: It can spread in an organization. This article discusses the research findings and offers measures that can curb the practice...

Imagine you’re trying to strike a deal with a supplier or you are a supplier trying to strike a deal with a potential customer and the other company’s negotiator lies to you. Do you A) respond with honesty or B) lie right back?

Choice A is for the white knights among us who strictly follow Kant’s categorical imperative of acting the way how you would want others to act. However, many people opt for the “tit for tat” behavior and choose Option B: They lie back.

But as our research — published in the Journal of Operations Management — found, there is a dark side to doing so. Lying once can be contagious. It can pave the way for lying again in other interactions or negotiations with people at other companies. Therefore, there are actions that companies should take to curb such behavior and prevent it from spreading.

Our Findings

We set up two experiments with 350 and 424 salespeople with B2B sales negotiation experience. In both experiments, participants acted as sales managers for a beauty and home care products supplier and engaged in negotiations over the product prices with purchasing managers from different customer firms.

Our results revealed clear contagion effects. Our first experiment showed that only 16% of participants who were on the receiving end of honesty lied in the final negotiation, but 55% of participants who witnessed deceptive behavior lied.

In our second experiment, we made tweaks to make dishonesty somewhat less appealing and to check for the robustness of the results. The contagion effect remained: More than twice as many participants chose deception when previously witnessing it as those who were previously subjected to honesty. Inversely, both experiments also confirmed the contagion of honesty. Surprisingly, the frequency with which participants were exposed to a behavior did not change contagion effects overall. A single incidence was sufficient to spark contagion.

Preemptive Measures

Our experiments suggest that a company should be careful about whom it does business with, because in the end, its behavior is likely to be influenced by theirs. But how do you keep your company from being infected? The following measures may help:

Ensure your negotiating team has at least two people.

The mere existence of a second pair of eyes may make the lead negotiator more aware of his or her own behavior and, as a result, resist the kind of impulsive actions that lead to lies.

Strongly reinforce your code of conduct.

For example, you might require employees in negotiation positions to undergo biannual ethics training rather than the one-off crash ethics course at the beginning of employment that other workers often receive. You might also ask team leaders to remind employees about the company’s core ethical principles in monthly team meetings. Finally, negotiating teams could jointly review their behaviors after a negotiation to reflect on whether the code of conduct was violated. Knowing that one’s dishonest negotiation behaviors will be reviewed by colleagues may create peer pressure, causing that person to better adhere to the code of conduct.

Carefully screen the other company’s negotiators.

Certainly, some degree of dishonesty can be viewed as part of the negotiating game, but given that such behavior can infect your team and have lasting effects, you shouldn’t tolerate extremes. To that end, you could keep a record of other parties’ behaviors or have your team’s negotiators compare notes about previous interactions with the person in question.

If it turns out that the person was a bad actor, you could demand the other company replace him or her and explain why you are making that request. Or you could choose not to do business with that company.

During negotiations, you could also use software to identify bad actors. With the help of an automated language analysis program called Linguistic Inquiry and Word Count, we analyzed the phrasing of negotiation statements and found that, on average, honest statements had a higher degree of words reflecting analytical thinking (e.g., “know,” “cause”) and authenticity (e.g., “I,” present-tense verbs) and a lower degree of emotional words (e.g., “fear,” “happiness”) than lying statements.

While there is no vaccine, these measures may help your firm become more resilient against contagious dishonesty.