Chapter 3: Distributive Negotiation-Claiming Value Flashcards
represents the range between each party’s reservation points
bargaining zone (or ZOPA)
T or F: A bargaining zone can be positive or negative.
True
(look at camera roll to see example of this in picture form)
In a (positive/negative) bargaining zone, negotiators’ reservation points overlap.
positive
In a (positive/negative) bargaining zone, there is no positive overlap
between the parties’ reservation points; therefore, parties
should pursue other alternatives rather than spending
fruitless hours trying to reach an agreement.
negative
(This creates an environment for integrative negotiation)
T or F: With negative bargaining zones, other things will be thrown into the negotiation.
True
(Basketball hoop at yard sale example; throwing in a basketball, shoes, and jersey to make buyer spend 100)
the amount of overlap between
negotiating parties’ reservation points; a measure of the value that a
negotiated agreement offers to both parties compared to the value of not reaching a settlement
bargaining surplus
the positive difference between the settlement outcome and the negotiator’s reservation point
negotiator’s surplus (think of this as profit)
(see picture of this in camera roll)
The total negotiator’s surplus of both parties adds up to the size of the _____ or _______ surplus.
ZOPA; bargaining
T or F: You should compete for that bargaining zone surplus. You want to earn the bargaining zone surplus.
True
The bargaining surplus illustrates the mixed-motive nature of negotiation: negotiators are motivated to both ______ and _______ with the other party
cooperate; compete
The most commonly asked question about negotiation is:
How can I claim most of the bargaining surplus for myself?
T or F: Most negotiators will not reveal their reservation point.
True
(and even if someone reveals their reservation point, we have no way to verify whether the information is valid or an exaggeration.)
T or F: Negotiators should be willing to settle for outcomes that exceed their reservation point and reject offers that are worse than their reservation point.
True
(ex: RP is $70. Somebody offers you 71. You should accept)
If negotiators follow these 6 basic value-claiming strategies, they can substantially increase the probability they will obtain a favorable slice of the pie:
- Accurately assess your BATNA.
- Unpack (rank) your multiple alternatives.
- Improve your BATNA. (do this by finding other alternatives that may get ranked higher than your #2 alternative)
- Determine your reservation point, but do not reveal it.
- Research the counterparty’s BATNA and estimate their reservation point.
- Set high aspirations (be realistic but optimistic) (avoid the chilling effect = when you’re too optimistic)
Your ______ ______ defines the upper limit of what you can get in a negotiation.
aspiration (or target) point
Because you will usually never get more than your first offer, your first offer represents an important _______ _______ in the negotiation.
anchor point
(goal is to anchor as close as possible to your offer/aspiration/target point as possible. You do this to try and bargain on your side of the bargaining zone. (ex: like playing football and wanting to be on your side of the field))
The _______ Effect can occur when negotiators make proposals the counterparty considers extreme and can cause the counterparty to be offended and walk away
Chilling
occurs when the negotiator’s first
offer is immediately accepted by the counterparty, signaling that the negotiator did not set his or her aspirations high enough
the winner’s curse
making one’s first offer one’s final offer; this often unsuccessful strategy engendered hostility from the counterparty.
Boulwarism
(ex: Walmart does this… way to remember: think of a bull → one person kinda BULLies the other into an offer)
KNOW THIS: refers to the fact that intuition and folklore advise negotiators to never open first, yet much scientific research argues that negotiators should always open first due to a “first mover advantage.”
practitioner-researcher paradox
(Basically saying, we used to think that you shouldn’t make that first offer, but research is now saying you should. Why? To get that good anchor point.)
The Anchoring Information Model (AIM) states that first offers have two effects:
1.They serve as _______ that pull final settlements toward the initial first-offer value (anchoring).
2. They convey information about the sender’s priorities which makes the sender vulnerable to exploitation and ________ the risk of a first-mover disadvantage.
- anchors
- increases
In the situation in which the negotiator has good information and the counterparty is believed to also have good information, it is (wise/unwise) to make the first offer.
wise
(you can make an assertive opening offer that operates as a psychological anchor)
First Offers– Who should make the first offer in the following situations:
a. If you don’t have good information, and they do have good information
b. If you have good information and they don’t have good info
c. If both parties don’t have good information
a. let them open first
b. let them open first (why? → they may make you an outlandish offer and you are like heck yea bc that’s way more than what i was thinking)
c. you should make first offer
T or F: The first offer that falls within the bargaining zone acts as a powerful anchor point for the counterparty’s counteroffer.
True
(Ideally your opening offer should not give away too much of the bargaining zone)
Why is there a disadvantage with stating a range of offers?
the counterparty may focus overwhelmingly on the attractive endpoint from their point of view.
The ______ _____ ______ argues that counterparties are influenced by both endpoints of the range as they evaluate the proposer’s reservation price as well as how polite they believe an extreme counteroffer would be.
tandem anchoring account
______ offers are more potent than round number anchors because precise offers are viewed as based on more information and greater negotiator competence.
precise
(CAREFUL THO: precise offers work when the recipient is an amateur, but can backfire when the recipient is an expert)
(Early/late) first offers are more likely to lead to creative agreements that meet parties’ interests as compared to (early/late) first offers
late; early
(Still want to give the first offer, but doing it within the time of appropriateness so you can make the right and appropriate researched number)
the reductions that a negotiator makes during the course of a negotiation.
concessions (when you give up something in order to achieve something else.)
Negotiators need to consider four things when formulating counteroffers and concessions:
- Concession reciprocity (ex: if you give up 20 and I give up 20, we’ll be 40 closer)
- The pattern of concessions
- The magnitude of concessions (how much is the concession)
- The timing of concessions (ex: takes a couple days to take place, then concessions pick up the pace → signals the end of the negotiation)
the tendency of negotiators to
reciprocate concessions
concession reciprocity
the tendency for some negotiators
to be disinclined to make concessions
concession aversion
What is the term that matches these definitions:
a. concessions made by one
party
b. concessions made by both sides
c. when one party makes
more than one concession in a row before the other party
responds or counteroffers.
a. unilateral concessions
b. bilateral concessions
c. premature concessions (ex: someone makes a concession and doesn’t hear back in a week, so they send another concession. This is premature. Don’t do this.)
Another consideration when making concessions is to
determine how much to concede.
* The ________ of a negotiator’s concessions is a powerful
communication tool and it is unwise to make consistently greater concessions than the counterparty.
* Negotiators are advised to _____ the concession magnitude of the counterparty.
* Negotiators can signal they are getting near their reservation point by ________ the size of their concessions plus ________ frequency.
- magnitude
- match
- reducing; increasing
What does GRIT stand for in the GRIT Model?
Graduated Reduction in Tension Model
a conflict resolution method in which parties avoid escalating conflict to reach mutual settlement within the bargaining zone
GRIT Model
(essentially saying if there is a standoff in a negotiation, one side is going to have to decide to concede.)
The GRIT Model is based on the ________ principle, which calls for one
party to make a concession and invites the other party to reciprocate with a concession.
reciprocity
A common concession technique where one party suggests “meeting in the middle” of the offer that is currently on the table.
even-split ploy
(meeting in the middle is bad at the beginning of a negotiation. But, it may get to a point where you should.)
The time of concessions refers to whether they are ________, ________, or _______.
immediate, gradual, or delayed
- Analysis has shown that sellers who made immediate concessions received the most (negative/positive) reactions from buyers.
- In contrast, when the seller made gradual concessions, the
buyer’s reaction was most (negative/positive), with (low/high) satisfaction
- negative
- positive; high
(making the other side work for it = more satisfying; kind of like the winner’s curse again)
the arguments or persuasive
rationale that often accompanies an offer.
substantiation
(Is just justifying and being able to justify why your offer is what it is.)
Negotiators often use 2 types of rationales:
- Constraint rationales
- Disparagement rationales
Which type of rationale does the following describe, constraint or disparagement?
a. refer to one’s own limited resources (Ex: “I can’t pay more…”).
b. critique the negotiated object
or service (Ex: “It’s not worth more…”)
Which one is the better one to use and more professional?
a. Constraint (better one to use)
b. Disparagement
Negotiators often use one of three fairness principles when it comes to slicing the pie:
- Equality rule
- Equity rule
- Needs-based rule
Match the following definitions to which fairness principle they describe:
a. prescribes that distribution should be proportional to a person’s contribution.
b. prescribes equal shares for all
c. states that benefits should be
proportional to needs.
a. equity rule
b. equality rule
c. needs-based rule
People pay themselves substantially more than they are willing to pay others for doing the same task. This effects judgements of fairness and is known as __________.
egocentrism
Egocentric judgments of fairness emerge when people select fairness rules in a self-serving fashion:
- When people make minimal contributions, they often prefer
(equality/equity) rather than (equality/equity).
- When people’s contributions are substantial, they opt for
(equality/equity) rather than (equality/equity).
- equality; equity
- equity; equality
_______ exists in a relationship if each person’s outcomes are proportional to his or her inputs
equity
Making an irrevocable commitment such as a “final offer”
should be done only when you really mean what you say and are prepared to walk away from the bargaining table. You should only walk away from the bargaining table if your _______ is more attractive than the counterparty’s offer.
BATNA
the value a person places on his or her public image, reputation, and status vis-à-vis other people in the negotiation.
“face”
saving your reputation. May lose the situation, but still save your reputation.
saving face
When it comes to slicing the pie, the most valuable piece of information is a negotiator’s _______.
BATNA
T or F: Negotiators should not reveal their reservation price and never lie about their BATNA.
True
T or F: A negotiator who is well versed in the psychology of fairness is at a pie-slicing advantage.
True
