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
When should you wait and let the other person call the first price?
when you are unprepared and don’t have good information > give away crucial information - RP
What are the disadvantages of making an exaggerated offer?
1) potential of offer being rejected by other party
2) perceived as “tough” attitude - negatively affects long-term relationships - vFuture negotiation cooperation
What is the “White Hat/ Black Hat” strategy?
- begin negotiation by making generous concessions
- become tough + unyielding in later stages
- opposite BH/WH strategy - begin tough > larger concessions later
What are the various tactics to close the deal? Explain.
1) provide alternatives
2) assume the close
3) split the difference
4) exploding offer
5) sweeteners
6) saving face
At the end of a negotiation, there is a deadlock between you and your negotiation partner. You simultaneously give them multiple final offers and let them choose one. What is this tactic called?
providing alternatives
In what situation are hardball tactics effective? How do you respond to them?
- when negotiation partner has poorly prepared negotiation
- when negotiation partner has weak BATNA
Respond
- discussing them
- ignoring them
- responding in kind
- co-opt the other party
Explain “up-graders” in expressing their disagreement with their negotiation partners. Give names of three nations who are up-graders.
- exaggerate extent of disagreement
- provoke anger
- vehemently challenge coutnerpart
eg - RUS, GER, NTH
Explain “down-graders” in expressing their disagreement with their negotiation partners
- soften disagreement
- avoid expressing negative feelings
eg - JAP, MEX, PERU, THAI
What are four types of integrative negotiation?
1) different preferences for different items and issues
2) instrumental interests v/s different items and issues
3) finding a new negotiation partner for integrative bargaining
4) adding issues and bundling issues
Explain “position-based” approach and “interest-based” approach to integrative negotiation
POSITION-BASED
- answer “what do they want?”
- window-open
- false-conflict
INTEREST-BASED
- answers “why do they want it?”
- window closed
- illusionary conflict
eg - EGT V/S ISR - Sinai Penninsula
Explain why the US became a sucker when it tried to conduct integrative negotiation with North Korea in 1994.
- Integrative negotiation fails when you cannot trust your partner
- NK - nuclear reactor - ‘cheaper power for electricity’
- US - security concerns
- NK - real reason - ‘nuclear weapons’
- US - naive - light water reactor - does not give plutonium - cannot make nuclear weapons
What is “Pareto Efficiency”?
- goal of creating value to push the claiming value to a point where there is no argument that would make any party better, without decreasing outcomes to the other parties.
What are the two dilemmas in exchanging information?
1) Dilemma of Honest - “how honest should you be with your partner?”
2) Dilemma of Trust - “how honest do you think your negotiation partner is being with you?”
How are “Affective Trust” and “Cognitive Trust” different?
- Affective Trust - subjective - based on personal liking and friendship
- Cognitive Trust - objective - based on abilities
What are three ways to build affective trust?
1) gift-giving
2) similarity and praise
3) reciprocity
4) fair treatment and trustworthy
What are three ways to build cognitive trust?
1) expertise on items and issues of negotiation
2) expertise on negotiation itself
3) being consistent in behaviour and argument
What is the synonym of distributive bargaining?
A) win-win
B) non-zero sum game
C) divide a fixed-pie
D) value creating
C
What is a wrong description of negotiation?
A) most actual negotiations are a combination of claiming and creating value process
B) negotiators must be able to recognise situations that require more of one approach than the other
C) negotiators must be versatile in their comfort and use of both major strategic approaches
D) negotiator perceptions of situations tend to be biased towards seeing problems as more distributive or competitive than they are in reality
E) none are wrong
E
What is not a destructive consequence of conflict?
A) competitive, win-lose goals
B) misperception and bias
C) emotionality
D) decreased communication
E) shrink the conflict
E
When distributive strategies are likely to be used?
A) when a negotiator wants to maximise the value obtained in a one-shot deal (no long-term relationship)
B) when the relationship with the other party is not important
C) when they are at the claiming-value stage of negotiation (usually in the final stage)
D) when only one issue or one interest remains at stake
E) all of the above
E
What is usually a good way to make concessions in the US?
A) make an immediate concession if the other strongly resist your offer
B) make a series of concessions if the other strongly reject your offers
C) make multiple concessions in a decreasing order
D) none of the above is a good recommendation for making concessions
C
What is a good recommendation for negotiation bargaining?
A) express your glee after a successful deal
B) verify the contract before signing it
C) write a flexible contract to handle uncertainty
D) the contract does not need to be reviewed by lawyers
E) none is a good recommendation
B
What is not one of the 4 steps in position v/s interest type of integrative negotiation?
A) prepare the negotiation
B) identify and define the problem
C) surface interests and solutions
D) generate alternative solutions
E) evaluate and select alternative
A
Which of the following should happen in identify and define the problem stage?
A) understand each other’s interests
B) attempt to understand the other’s real needs and objectives
C) do not judge the other’s behaviour with your standards
D) try to find compatible interests
E) try to have information exchange
E
Which of the following processes is important to achieving almost all integrative agreements?
A) moderating the free flow of information to ensure that each party’s position is accurately stated
B) exchanging information about each party’s position on key issues
C) emphasising the commonalities between the parties
D) searching for solutions that maximise the substantive outcome for both parties
E) all of the above are processes that are central to achieving integrative agreements
E
Which of the following statements about interests are true?
A) there is only type of interest in a dispute
B) parties are always in agreement about the type of interests at stake
C) interests are often based in more deeply rooted human needs or values
D) interests do not change during the course of an integrative negotiation
E) all of the above statements about interests are true
C
