MIDTERMS Flashcards
What are the three approaches to negotiation?
1) Rational
2) Psychological
3) Anthropological
What are two major models in rational approaches?
1) Distributive Bargaining
2) Integrative Negotiation
What is the synonym of “distributive bargaining”?
Competitive bargaining, Zero-sum game, Fixed-pie, Claiming value
What is “distributive bargaining”?
- Alternative name - “competitive bargaining”
- Approach - Rational
- Negotiation items / issues - single issue stake / single interest
- Focus - claiming as much value as possible from the existing items / issues
What is “integrative negotiation”?
- Also called - cooperative negotiation
- Approach - Rational
- Positive-sum game
- Strategy - win-win strategy
- Focus - create value for both parties - mutually beneficial solutions
What are the 4 types of individual differences?
1) difference in interests
2) difference in risk tolerance
3) difference in time preferance
4) difference in judgements about the future
What are the three situations when you should not agree to start a negotiation?
1) when you are unprepared
2) when your negotiation partner is making unethical demands
3) when your negotiation partner is acting in bad faith
4) when waiting would improve your situation
What is BATNA? Define it in one sentence.
BATNA is the Best Alternative To a Negotiated Agreement
What should be done in the post-negotiation stage?
1) review the contract carefully with lawyers and experts
2) be prepared to renegotiate
3) ensure the execution of the agreement as planned
4) maintain good relations with the negotiation partner
Explain the Dual-concerns Model
- Framework for understanding negotiation behaviour
- TWO DIMENSIONS -
1) Assertiveness = negotiator is concerned with their own negotiation outcomes
2) Cooperativeness = negotiator is concerned equally with the negotiation outcomes of others - FIVE TYPES -
1) Problem-solving = collaborative + integrative
2) Yielding = accommodating + obliging
3) Inaction = avoidance
4) Contending = competing / dominating
5) Compromising = seeking middle-ground - balancing self-interests with others interests
Abe is a buyer and Betty is a seller. Abe’s reservation point is $200,000 and Betty’s is $150,000.
a) Is there positive ZOPA?
b) Let’s assume that Abe does not have any idea about Betty’s reservation price. In this uncertain situation, Abe has received an offer of $180,000 from somebody else. What should Abe’s new reservation price be?
a) Yes, there is positive ZOPA of $50,000.
b) Abe’s new reservation price should be $180,000, because he has been guaranteed a purchase for $180,000.
- unaware of Betty’s RP -/ ^180,000
- (v) further negotiate with Betty
If you are a buyer, which one should be higher than your target price? The initial price or the reservation price?
RESERVATION PRICE - more favourable to purchase closer to target price which is ideal purchase price
The other’s resistance price should be equal to your ______________
Target price
What is sunk cost?
- Money that a person invested that is now lost
- incurred cost that has not been recovered
What is Boulwarism? How is it different from take-it-or-leave-it?
BOULWARISM - tough
- first offer = final offer
- no concessions
- AIM - convince other party that that offer is best offer
- RESULT - eliminates negotiation process
TAKE-IT-OR-LEAVE-IT - rational
- final offer in negotiation process is not very detailed
- RESULT - possibility for further negotiation
B<TILI - flexibility
What is “anchoring effect” in negotiation?
- exposure to seemingly high (as opposed to low) price = “anchor”
- influences negotiator’s response to it
- tendency to adjust offer closer to anchor
- affects negotiation outcome
When should you go first and make the initial offer?
1) when you are prepared and have good information
2) when you have the advantage of anchoring effect