Ep 443 | Robert Cialdini, Charlie Munger, and the Law of Reciprocity

Thank you for joining me today. It's Brian Gubernick, and welcome to the No Days Off podcast, where we believe that every single day brings a new opportunity to get better. Today I want to tell a story that was shared with me by No Days Off listener, part of the No Days Off Nation, Peter Chatelle. He shared a great story that I thought would resonate with our audience, and so I'd like to retell it. And then we're going to talk about the law of reciprocity. So Robert Cialdini— many of you may have heard of Robert, he's written a number of books— Robert, uh, received— one day he's sitting at his desk and he receives an envelope, this legal-sized envelope, and inside the envelope is an A-share of Berkshire Hathaway. So if it's a certificate for an A-share of Berkshire Hathaway stock. Now, an A share in Berkshire Hathaway is worth several hundred thousand dollars per share. There's A shares, there's B shares. The B shares are worth hundreds of dollars. The A shares are worth hundreds of thousands of dollars. So in this envelope, Robert Cialdini gets an A share of Berkshire Hathaway. He also gets a note that says, Professor Cialdini, I read your book multiple times. He's referring to the book Influence, I believe. I read your book multiple times and it's made such— so much money for us that by the principle of reciprocity in your book, you are owed something in return. It is this A-share of Berkshire Hathaway stock. And the note is signed by Charlie Munger, vice president of Berkshire Hathaway, Warren Buffett's partner, a guy we've talked about quite a bit here at No Days Off. Now the share's value at that time was $75,000. So Charlie Munger Sends Robert Caldini a share of Berkshire Hathaway worth $75,000 and says, you've done, you've done so much for me with your book that by the principle of reciprocity, which is described in the book, you're owed something in return. Here's an A share. It's a pretty amazing thing because Charlie's act of reciprocity here, it's now worth, that share is now worth in excess of $600,000. And it's a compelling example, as Robert tells, of the principle of reciprocity in action, which, by the way, as much as that share was valuable to Robert Caldini, the impression that Charlie Munger left on him over the next 24 years after he received this was even greater because Charlie was such an amazing human, wealth of knowledge, you know, and, and, and just had made such an impact on Robert Caldini's life. So Well, he was appreciative of the fact that Charlie Munger recognized the book and gave him an A-share. It was what Charlie contributed to the world that was, that was even more significant. But back to the story. Charlie ran or displayed, I should say, the principle of reciprocity, which is, which is simply put, people are more likely to say yes to you if they owe you something. Principle of reciprocity. People are more likely to say yes to to you if they owe you. This principle is based on the social rule that people should give back to those who have given to them. It's this quid pro quo approach or rule. So for example, if someone does you a favor, you probably feel obligated to do something for them in return, maybe a favor for them in return. If someone sends you a holiday card, which many of you are probably getting right now, you feel obligated to send a card back. If someone invites you somewhere to an event or a party, you feel obligated to invite them to one of yours. That's exactly what happened with Charlie. He felt he owed Robert after receiving the knowledge through Robert's book Influence. And so, motivated by this feeling that he had, he had, he had received so much, he returned the favor by sending an A-share. I think it's a pretty amazing, um, story. The simple fact that Charlie Munger sent such a valuable share, but it's a great demonstration of how reciprocity works. Now, Robert Cialdini goes on to say that the principle of reciprocity is incredibly versatile, highly versatile in business, and he gives a few examples of gifts that could help initiate the reciprocity process. Maybe it's information that you possess. You have very valuable information and you give somebody that insider information or that valuable information knowing that or believing that at some point they're going to return the favor. Maybe you're giving them some sort of corporate gift knowing that at some point in the future it's going to prompt a reaction out of them. Maybe you're going to invite them to an event of yours knowing that they're going to return the favor. When given sincerely, these sorts of, of gifts that I just described increase the chances of a positive response to the request that you make next. Now, full transparency, I give a lot of my time to people or to organizations, whether I'm teaching or coaching or whatever it is in fact I'm doing. And while I don't have like this rule in my mind that I've got to get something in in return. I, I do know that when I put in the work and I put in the time and I do these things, that it might help me down the road in that I may need something or make a request that that individual does feel at least some degree, to some degree, that they may owe me something in return. There's a higher chance that I'm going to get a positive response to the next request I make. Now, Robert Cialdini then goes on to explain that among the key aspects of success— successful reciprocity, there is one thing that matters most. And he says that timing, the timing is everything. In other words, you got to be the one to give first. You got to be the one to give first. Why? Because the first gift is what stimulates a return gift. Whereas a return gift just primarily, primarily serves to restore balance, as, as Robert would say. So timing matters, and being the first to give is what kicks off this law of reciprocity, because the first gift prompts a return gift. A good example of this: you go to, you go to some websites, and some websites require that you provide, you know, contact information before giving you any sort of valuable information. Well, according to Robert, this would be the wrong way to go about things. Instead, someone goes to the site and they get valuable information like, like a PDF of the top 10 reasons to do whatever it may be, or, or maybe some other form of valuable information or expert tips. And in this specific scenario, right, you are giving information as the website host and therefore it's fair to ask for contact information in return. However, if someone just goes to a site, you automatically require them to enter their contact information before you give them the valuable information, you can't really expect them to fill it out because you asked them for something first before you actually gave. I think it's something for all of us to think about because this reciprocity concept plays all throughout business, right? All of us, most of us are in some form of sales in business every day, you know, whether you're selling a product, a widget, a service, whatever it may be, uh, or you're not in that type— sales are always important. You're always negotiating. Reciprocity can actually boost negotiation outcomes. There's lots of different ways to leverage reciprocity. One particular way to leverage it is in concessions and concessions. So Robert Cialdini explains that negotiation research shows that when you retreat from your original request to a smaller one, the other side then feels obligated to make a concession in return, and that ultimately brings you closer to your goal. So say I make an offer of, you know, X dollars, and they say, no, we don't, we don't like that that offer. It's too low. Well, I may give some concession in order— in other words, I may, you know, raise my price a slight bit, but I may then in turn say, hey, I'm going to then need my timing. So I'll give you a little bit more in price, make the concession, but I'm going to ask for an extended closing time. And that would be an example of me giving and then the opposing side, the other side, feeling, uh, an obligation to, to give back in return, to return the favor. Makes sense? Now, Cialdini points out that this concession strategy only works if you make your, your more moderate offer immediately after the other person rejects your first offer. Because if you don't, your subsequent offer is just seen as a new offer. So timing here matters. Someone makes an offer or a counteroffer to you and you immediately respond with some form of concession, ask for something, and ideally they're giving that, giving that back to you because of this law of reciprocity. So I thought that this story was an excellent way. First of all, it's just a great story altogether, but it's a great way to display how the law of reciprocity works. I think the focusing question for you is where can you leverage this technique or this strategy today? You just got a really strong persuasion tip from Robert Cialdini, and it's time to put it to work. So how do you leverage this in your world today as you're negotiating? Or maybe more specifically around, you know, the earlier story, where can you be giving such that down the road it'll pay off for you in your favor? That's all I have for you today, the No Days Off Podcast. Thank you so much for listening. And remember, every single day brings a new opportunity to get better. So let's get after it.