Lecture 7 Negotiation Flashcards
BATNA
best alternative to negotiated agreement.
not the monetary outcome, but the action.
negotiation
interpersonal decision-making process, in which 2 (or more) parties reach an agreement
normally broader, but focus on this definition
RP
reservation price. what is the price from which you are indifferent from reaching an agreement.
BATNA informs this, but is not the same.
ZOPA
zone of possible agreements; all the possible outcomes within a scale that will benefit participants more than not reaching an agreement.
discount rate
money in the hand is worth more than the promise or change of getting money later.
information assymetry?
you don’t know the others price range, so the process of negotiating is essentially trying to figure out the ZOPA.
agreement trap/bias
when there is no ZOPA people often still reach agreements and it occurs when negotiators reach agreements that are inferior to their best alternative.
when there is no ZOPA it is better to not negotiate
Why do we fall for the agreement trap
- strong emphasis on agreement when talking about negotiating. definition has agreement in it.
- 84% of non-expert negotiators say that reaching an agreement is one of the key aspects that constituted a successful negotiation.
study on why people want an agreement
gave people either a framed (agreement/impasse) or non-framed (option A/B) condition.
-> framing mattered; when it said agreement people rather chose that even when it did not benefit them.
another reason could be commitment
why is it that many people seek for agreements
- need for closure & resolution
- fear of uncertainty
- immediacy of the current negotiation
- fear of hurting the relationship
- confusion about BATNA & RP (own)
- expectation of settlement
things to prepare for negotiation to avoid agreement trap
- know your BATNA
- be aware of your psychological tendencies
- consider which ones are strongest for you and rehearse fighting them
- think in advance how to walk away without hurting the relationship
- create value in negotiations when there appears to be no ZOPA.
creating value in negotiations?
When negotiating for a job not all things are equally important for you as your employer.
- taking value = about dividing the pie
- creating value = increasing the pie
fixed pie bias
- assumption there is a fixed amount of resources
- leads people to interpret negotiations as purely win or lose
- more common in non-experts
mutually benficial
win-win
multiple issues
you can only increase pie when there is more than one aspect
assumption of fixed pie
when you break this assumption you can start to search for mutual value
distributive issues
issues that are similarly valued by both parties: each party wants the opposite outcome.
distributive negotiation
the process of dividing up the pie value in negotiation
integrative issues
issues that are differently valued by both parties: one negotiation party cares more about the issue than the other.
integrative negotiation
the process of creating value and increasing the pie of value in negotiation
compatible issues
issues on which both parties want the same outcome even though they might not know it
compatible negotiating
figure these issues out in order to increase the pie of value in negotiation
pareto improvement
pareto improvement benefits at least one member without harming the other
how to increase the pie in practice
- build trust, share (some) info
- ask and answer questions
- propose multi-issue offers
- MESO
- search for “post-settlement” settlements
- contingency contracts: when X1 happens than X2 happens
MESO
making multiple equivalent simultaneous offers; gives flexibility
two concepts we will consider to understand the other negotiator
- perspective taking = the cognitive capacity to consider the world from another individuals viewpoint
- empathy = the ability to connect emotionally with another individual
how does perspective taking and empathy shape negotiation outcomes?
study
better to empathize or understand
study had recruiters in 3 manipulations
- control
- empathy
- perspective taking
then looked at difference in joint gains and gains of each party.
-> perspective taking had highest joint gains and lowest in control condition
-> for getting maximum points (best outcome for both) 40% of dyads in perspective taking got there, empathy 22% and control 12%.
so perspective taking maximizes both and empathy makes the recruiter worse of.
results of empathy and perspective taking
- perspective taking results in greater succes than empathy
- perspective takers can reach deal with larger pie and large share of the pie
- understanding the interest and motives of the negotiation partner is more valuable than connecting with them emotionally
