Navigating Multiparty Negotiation

Question 1

Maximizing Joint Value

Answer 1

• Differing preferences = Identify the issues & options that each side values relatively more
• Trade them off to maximize total value
• Use provided opportunities to increase the pie by making value-maximizing trade-offs

Question 2

Non-Linear Payoffs

Answer 2

• Non-linear utility funtions need to be taken into consideration
• E.g. CrediGo has a curvilinear (kurvenförmig) utility function on loan size -> Preferring options in the middle

Question 3

Inequivalent Options

Answer 3

• For some issues the counterparts have ranges of options that do not fully overlap with other party’s preferences
• One side may benefit disproportionately -> Can lead to Chilling effects
• E.g. Inspection frequency vs. Poultry density

Question 4

Team Negotiations

Answer 4

• Teams have an advantage over individuals in both creating and claiming value
• Creating value = Exchange more information and get interests better
• Claiming value = Strength in numbers (More people = Better chances?)
• Requirement is that team members have active preparation in order to avoid conflicts during final negotiation/ Roles and strategies have to be coordinated

Question 5

Conformity

Answer 5

• Asch-Experiment = Evaluating the likeliness of group members to agree on group’s (wrong) opinion
• Sizeable minority of responses conformed to the actors incorrect answers (36,8%)
• Overall 75% of participants gave at least one incorrect answer out of the 12 critical trials
• If actor gave correct response only 5% of the participants continued answering with the majority

Question 6

Good cop/ bad cop

Answer 6

• One member of the is cooperative and the other hostile

Question 7

Defense against Good cop/bad cop

Answer 7

• Divide their team
• Ask good cop what he thinks about what bad cop is saying
• Team advantage in negotiation disappears if roles and strategies are not well coordinated

Question 8

Team coordination

Answer 8

• Teams have an advantage over individuals in both creating and claiming value but only if well-coordinated
• Different members of the same team often have different interests and incentives
• Active preparation is necessary to align conflicting interests/ Implement a disciplined strategy

Question 9

Agent-Principal Problems

Answer 9

• Appears if one person (the agent) can make decisions on behalf of another (the principal)
• But (!) agent usually has different underlying interests/ It is very rare that incentive structures of two individuals perfectly match
• Agent-Principal problems are pervasive in organizational life e.g. real estate agents let their house longer on the market than their clients

Question 10

How to address agency problems?

Answer 10

• 1. Commissions
• 2. Profit sharing
• 3. Performance evaluations
• 4. Threat of termination
• 5. Awareness

Question 11

Value of Trustworthiness

Answer 11

• Fraud and non-cooperation are only an short-term strategy in social dilemmas
• Fairness comes first in the long run
• Building trust in those who work with you is the best long-term factor for professional success
• Long-term sustainable relationships are key in many situations