Lecture 7 Negotiation

Question 1

BATNA

Answer 1

best alternative to negotiated agreement.
not the monetary outcome, but the action.

Question 1

negotiation

Answer 1

interpersonal decision-making process, in which 2 (or more) parties reach an agreement

normally broader, but focus on this definition

Question 2

RP

Answer 2

reservation price. what is the price from which you are indifferent from reaching an agreement.
BATNA informs this, but is not the same.

Question 3

ZOPA

Answer 3

zone of possible agreements; all the possible outcomes within a scale that will benefit participants more than not reaching an agreement.

Question 4

discount rate

Answer 4

money in the hand is worth more than the promise or change of getting money later.

Question 5

information assymetry?

Answer 5

you don’t know the others price range, so the process of negotiating is essentially trying to figure out the ZOPA.

Question 6

agreement trap/bias

Answer 6

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

Question 7

Why do we fall for the agreement trap

Answer 7

• 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.

Question 8

study on why people want an agreement

Answer 8

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

Question 9

why is it that many people seek for agreements

Answer 9

• 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

Question 10

things to prepare for negotiation to avoid agreement trap

Answer 10

• 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.

Question 11

creating value in negotiations?

Answer 11

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

Question 12

fixed pie bias

Answer 12

• assumption there is a fixed amount of resources
• leads people to interpret negotiations as purely win or lose
• more common in non-experts

Question 13

mutually benficial

Answer 13

win-win

Question 14

multiple issues

Answer 14

you can only increase pie when there is more than one aspect

Question 15

assumption of fixed pie

Answer 15

when you break this assumption you can start to search for mutual value

Question 16

distributive issues

Answer 16

issues that are similarly valued by both parties: each party wants the opposite outcome.

Question 17

distributive negotiation

Answer 17

the process of dividing up the pie value in negotiation

Question 18

integrative issues

Answer 18

issues that are differently valued by both parties: one negotiation party cares more about the issue than the other.

Question 19

integrative negotiation

Answer 19

the process of creating value and increasing the pie of value in negotiation

Question 20

compatible issues

Answer 20

issues on which both parties want the same outcome even though they might not know it

Question 21

compatible negotiating

Answer 21

figure these issues out in order to increase the pie of value in negotiation

Question 22

pareto improvement

Answer 22

pareto improvement benefits at least one member without harming the other

Question 23

how to increase the pie in practice

Answer 23

• 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

Question 24

MESO

Answer 24

making multiple equivalent simultaneous offers; gives flexibility

Question 25

two concepts we will consider to understand the other negotiator

Answer 25

• perspective taking = the cognitive capacity to consider the world from another individuals viewpoint
• empathy = the ability to connect emotionally with another individual

Question 26

how does perspective taking and empathy shape negotiation outcomes?

study

better to empathize or understand

Answer 26

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.

Question 27

results of empathy and perspective taking

Answer 27

• 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