Negotiation Study Guide #1 – Flashcards

Understanding the other sides thinking is the problem. People tend to assume that what they need to know more about is the object or the event. Conflict lies within their heads or dealing with the differences within their heads II. Put yourself in their shoes. People tend to pick out and focus on the facts that confirm their prior perceptions and to disregard or misinterpret those that call their perceptions into question. If you want to influence them, you need to know the power of their point of view and to feel the emotional force that they believe in. Withhold judgement to try on their views. III. Don't deduce their intentions from our fears. People tend to assume that whatever they fear, the other side intends to do. IV. Don't blame them for your problem. Even if blaming is justified, it is usually counterproductive because the other side would become defensive and resist and stop listening V. Discuss each other's perceptions by making them explicit and discussing them. VI. Look for opportunities to act inconsistently with their perceptions. The best way to change someone's perception is to send them a message different from what they expect.

I. First, recognize and understand emotions, theirs and yours. Ask yourself if you are feeling nervous, is your stomach upset, are you angry at the other side? Remember they have feelings too. II. Pay attention to "core concerns": autonomy, appreciation, affiliation, status, and role III. Consider the role of identity IV. Make emotions explicit and acknowledge them as legitimate V. Allow the other side to let off steam VI. Don't react to emotional outbursts

I. Good negotiators are born: most great negotiators are self made, requires feedback and practice. While experience is helpful, it is not sufficient, meaning that you need to develop effective negotiating skills. II. Good negotiators take risks: By stating this is my final offer makes you a tough negotiator. Tough negotiator is rarely effective but can be effective if they learn how to determine the appropriate time to make a final offer. III. Good negotiators rely on intuition: Effective negotiation involves deliberate thought and preparation and is quite systematic. Develop strategies that are proactive rather than reactive. IV. Negotiators are fixed sum V. You either need to be tough or soft VI. Life experience is a great teacher

I. "your position is something you have decided upon. Your interests are what caused you to decide."

Leaving money on the table (lose-lose negotiation) occurs when negotiators fail to recognize and capitalize on their win-win potential II. Settling for too little or paying too much (winners curse) occurs when negotiators make too large concessions, resulting in a too-small share of the bargaining pie III. Walking away from the table (hubris) occurs when negotiators reject terms offered by the other party that are demonstrably better than any other option available to them IV. Settling for terms that are worse than your current situation (agreement bias) occurs when negotiators feel obligated to reach agreement even when the settlement terms are not as good as their other alternatives

I. Identify shared interests to help produce an agreement. Shared interests are lie latent in every negotiation. Shared interests are opportunities, not godsends. Stressing your shared interests can make the negotiation smoother and more amicable. II. Dovetail differing interests in case each side wants different things. Differences can lead to a solution. III. Ask for their preferences by invent several options all equally acceptable to you and ask which option they prefer.

Egocentrism-the tendency for people to view their experiences in a way that is flattering or fulfilling for them. This causes them to reflect upon their own values to use to exhibit decision making biases II. Confirmation bias- the tendency of people to see what they want to see when appraising their own performance. Leads people to selectively seek information that confirms what they believe is true. III. Satisficing-settling for something less than they could otherwise have. The opposite of optimizing. IV. Self-reinforcing incompetence- A cycle in which the lack of skill deprives them of not only the ability to produce correct responses but also the expertise necessary to surmise that they are not producing them. Ex. Students know they failed the test think they scored 60% when they really scored 12%.

I. Determining what would constitute an ideal outcome is known as a target or aspiration II. Problems that arise when finding a target: 1.underaspiring negotiator that sets his aspirations too low. Makes an offer that is immediately accepted 2.overaspiring negotiator or positional negotiator is seen as too tough and sets the target point too high and refuses to make any concessions 3. grass-is-greener negotiator or reactive devaluation does not really know what he or she really wants but knows they want what the other party doesn't want to give

ZOPA- Zone of possible agreement or bargaining zone II. ZOPA is the overlap of the buyer's reservation price and the seller's reservation price III. If the buyer's reservation price is bigger than the seller's reservation price, than there exists a zone of possible agreement. If the buyer's reservation price is less than Seller's reservation price, then a zone of possible agreement does not exist IV. The range between negotiators reservation points. V. Overlap means that mutual agreement is better than resorting to BATNAs

I. The fixed-sum to be divided= Buyers reservation price- surplus reservation price. X*=final outcome Buyer's Surplus=Buyers reservation price- X* Seller's Surplus=X*- Seller's reservation price II. Each party knows their own reservation price, but has only probabilistic information about the other party's reservation price. Can make estimation regarding the other party's reservation price. III. The positive difference between the settlement outcome and the negotiators reservation point

People make estimates by starting from an initial anchor value and adjusting from there to yield a final answer. However, they generally do not make sufficient adjustments. II. Final agreements are more strongly influenced by initial offers than by subsequent concessionary behavior. Initial offers provide an anchor because the party who makes the first offer obtains a better final outcome III. Opening offers should not give away too much of the bargaining zone. Ideally a negotiator's first offer acts as an anchor for the counterparty's counteroffer IV. First offer should not be a range because it gives up bargaining surplus. Instead of a range, counter by making several offers that are all equally satisfying to you. V. Once an offer is on the table, be patient and silent. Premature concessions are when they make more than one concession in a row before the other party responds or counteroffers. Wait for a counter offer before saying anything else.

Typically involves a single issue II. Involves fixed sum games- one person's gain is another person's loss III. Almost directly conflicting interests- each party is attempting to maximize his/her share of the fixed sum payoff IV. Simply dividing the "pie"-trick is parties generally do not know exactly how large the "pie" actually is

BATNA- Best alternative to negotiated agreement II. Key question- "What are you going to do if you do not make a deal with this person?" Answer: Determined by your available alternatives III. BATNA is your greatest source of power IV. Improve your BATNA before and when you negotiate. BATNA should only change as a result of objective facts and evidence. BATNA is time sensitive because of market forces and environmental and situational conditions V. Don't "fall in love", have wishful thinking, and unrealistic optimism VI. Counterparts perceptions of your BATNA are also very important VII. This is your ability to walk away VIII. Reveal your BATNA when it is strong by highlighting the strength of your BATNA without providing specifics but beware of issues of trust and credibility

When trying to find the ZOPA, compare the buyer's and seller's target price and reservation price. The overlay of reservation price is the ZOPA. II. When creating a target price, aggressive goals can make you feel worse with the outcome and we assume symmetric information. III. Define your aspiration level

I. RP is your "bottom line" II. The point at which you are indifferent to whether you achieve a negotiated agreement or walk away. Beyond the reservation price, you prefer no agreement III. Is your BATNA +/- things that make you want to do the deal such as opportunity costs, switching costs, ego, idiosyncratic preferences IV. Do not reveal your reservation price because the other party can push for a resolution that is only marginally acceptable to you V. Should only change if your BATNA changes or if the terms of the deal change

Concessions are the reductions that a negotiator makes during the course of a negotiations. II. Unilateral concessions are concessions made by one party III. Bilateral concessions are concessions made by both sides IV. People expect other to respond to concessions by making concessions in kind but should not offer more than a single concession at a time

I. Equality rule or blind justice: prescribes equal shares for all without regards to inputs, everyone benefits or suffers equally II. Equity rule or proportionality of contributions principle: distribution should be proportional to a person's contribution. III. Needs based rule or welfare based allocation: benefits should be proportionate to need

Money you have invested that is, for all practical purposes, gone. II. Ex. Purchase price that home sellers paid for their house III. Sunk costs influence not only our own behavior but also the behavior of the counterparty

Are anchors, are salient numbers, figures, or values that appear to be valid but have no basis in fact.

1. Different Types of Issues (Slides 6) I. Distributive issues: competitive, zero-sum: parties' interests are directly opposed II. Compatible issues: both parties want the same thing III. Integrative issues: expand the pie for mutual gain by logrolling

I. The locus of achievable joint evaluations from which no additional joint gains are possible II. "with any pareto inefficient agreement, there exists an alternative that would benefit at least one party without injuring the other party" III. Ex. In the new recruit negotiation, the candidate gives up one thing to optimize in another while the recruiter gives up one thing to optimize in another

When you agree to meet in the middle on each segment. Ex: on the new recruit negotiation, the recruiter and the candidate went with their third option

Issue by issue causes you to become a sequential distributive negotiation, more disagreement and contentiousness can cause impasse, is a longer process and takes longer, more damage to the relationship, does not allow trade offs ii. Package deals benefits: provides information on interests, priorities, & potential tradeoffs. You are also able to rank priorities, suggests flexibility (real and perceived), improves outcomes and efficiency, and easier to find common ground since you are trading off on entire issues instead of the distribution within each issue iii. Package deals caveat: you may take your most important issue off table and package the remaining issues. Don't allow the other party to do this.

Negotiators make bets based upon different world occurrences. II. For the contracts to work they must satisfy not creating a conflict of interest, contracts should be enforceable and therefore often may require a written contract, contracts should be clear, measurable, and readily evaluated to leave room for ambiguity, and contracts require continued interaction among parties

Approach as joint problem solving task: ensures a more efficient outcome, strengthens relationship, agreements more stable II. Focus on interests, not positions: Interests may differ leading to creative solutions, positions prone to ego-involvement, positions endanger ongoing relationship III. Separate people from problem

MESOs: Multiple equivalent simultaneous offers II. Options for making offers in a multi issue negotiation: single issues sequentially, package offers, or MESOs III. Advantages for MESOs: anchors the negotiation, gathers information from the other side about relative priorities, allows you to make aggressive offers while signaling cooperation, tests the truth, makes "concessions" that do not cost you anything, highlights your own value, has a higher outcome than one proposal. IV. Disadvantages to MESOs: potential for cherry picking of responses (counteract with scoring system), gives away information (but OK if offers are aggressive), and time consuming to develop.

I. Taking the perspective of the other party, negotiators attempt to see the world through the counterparty's eyes. II. By taking the perspective of the other party, they are more likely to avoid impasses, enhances problem solving abilities, more successful in terms of a number of social enterprises, III. Perspective taking is a cognitive ability to consider the world from another's viewpoint... not the same as empathy IV. Leads to more accurate understanding of other parties, more likely to discover potential, achieve maximum joint gains, and secure peace

Ethics are often a problem in negotiation because of psychological tendencies that foster poor decision making II. Unethical negotiation tactics are evaluated on a continuum of "ethical appropriate" to "ethically inappropriate"

a statement is fraudulent when the speaker makes a knowing misrepresentation of a material fact on which the victim reasonably relies and which causes damage. II. Impacts yourself through mental energy cost and self-perception (guilt III. Impacts on negotiation through incites desire for retaliation in the deceived, could prevent a beneficial agreement, affects long term relationship IV. Impact on organization and society through increases general suspiciousness, and the free rider syndrome (want the benefits of lying without the costs of being lied to)

Long term orientation: holistic and balanced view on future consequences. Causes a lower bottom line mentality and no increase to unethical behavior. II. Short term orientation causes a higher bottom line mentality and an increase in unethical behavior III. Wells Fargo, Enron, and VW

I. Advantages of using agents: may have special knowledge, expertise, or influence. Unbiased by sentiment and emotion (detachment), help to maintain confidentiality, add tactical flexibility (anonymity and ratification) II. Disadvantages of using agents: interests not always aligned with clients. May care less about the long term relationship or clients' reputation. Costs money. More to manage- extra communication increases chance of information distortion or missing information. Can create a more adversarial climate, or one that isn't adversarial enough.

I. People engage in deception by the lure of temptation, uncertainty, powerlessness, and anonymity of victims II. Dishonesty is influenced by emotional reactions to wealth based inequity III. Negative inequity leads to envy and subsequent hurting behavior, conversely, positive inequity leads to guilt and motivates helping behavior IV. Being in a team or group may increase the tendency to lie, groups are less honest than individuals V. Perspective taking can lead people to prophylactically engage in unethical behavior to prevent being exploited.

Give away some information to get information (priorities among issues and do not reveal your reservation price II. Logrolling: making negotiation concessions or the 'trading-off' of issues so as to maximize each sides' value, or mutually beneficial tradeoffs III. Bridging: new options that satisfy both parties IV. Make a package (multi-issue) offer V. Make a post-settlement settlement: your final agreement becomes your BATNA