Business Bluffing Reconsidered

Essay by henry1580University, Bachelor's April 2005

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Imagine that I walk into a car dealership and tell the salesperson that I absolutely cannot pay

more than $10,000 for the car that I want. And imagine further she tells me that she absolutely cannot sell the car for less than $12,000. Assuming that neither one of us is telling the truth, we are bluffing about our reservation prices, the price above or below which we will no longer be willing to make the transaction. This is certainly a common practice and, moreover, is most likely minimally prudent-whether our negotiating adversary is bluffing or not, it will always be in our interest to bluff. Discussions of bluffing in business commonly invoke reservation prices, but need not; one could misrepresent his position in any number of areas including the financial health of a company poised for merger, the authority that has been granted to him by the parties that he represents, or even one's enthusiasm about a project.

The goal of bluffing is quite simple: to enhance the strength of one's position during negotiations.

Bluffing has long been a topic of considerable interest to business ethicists. On the

one hand, bluffing seems to bear a strong resemblance to lying, and therefore might be thought to be prima facie impermissible. On the other, many people have the intuition that bluffing is an appropriate and morally permissible negotiating tactic. Given this tension, what is the moral standing of bluffing in business? The dominant position has been that it is permissible and work has therefore been done to show why the apparent impermissibility is either mismotivated or illusory. Two highly influential papers have taken different approaches to securing the moral legitimacy of bluffing. The first, by Albert Carr, argued that bluffing in business is analogous to bluffing in poker and therefore...