NEG Chapter 3.

Question 1

JUST READ THROUGH: PIE-SLINCING Strategies:

Answer 1

• Most negotiators will not reveal their reservation point, but it may emerge unintentionally
• Even if someone reveals his or her reservation point, the other party has no way to verify that the first party is telling the truth
• With regard to slicing the pie, negotiators should be willing to settle for outcomes that exceed their reservation point and reject offers that are worse than their reservation point
• How can I achieve most of the bargaining surplus for myself?
• Reach agreement if ZOPA is positive + claim as much of pie as possible
• People frequently settle for outcomes worse than their BATNA (agreement bias) and reject offers better than their BATNA (hubris)
• If negotiators follow ten basic strategies, they can substantially increase the probability they will obtain a favourable slice of the pie

1. Assess your BATNA and improve it
   ♣ BATNAs involve some uncertainty, however it is not a good excuse for failure to assess one’s BATNA
   ♣ Great BATNA can help negotiator get bigger slice of pie
   ♣ Negotiators should improve their BATNA before entering into negotiation
2. Determine your reservation point, but don’t reveal it
   ♣ Don’t reveal your BATNA or reservation price during the course of negotiation, even in the friendliest of situations
   ♣ If you do, the counterparty has no incentive to offer you more
   • You have a great BATNA and consequently an aggressive reservation price and you would not be happy if the counterparty matched or barely exceeded your reservation point. In this sense, negotiators signal their BATNA
   ♣ Many negotiators reveal their true reservation price if they trust and like the other party or desire a long-term relationship
   ♣ Revealing information about your BATNA is not a pie-slicing strategy
3. Research the counterparty’s BATNA and estimate their reservation point
   ♣ When the counterparty discloses his or her BATNA at the outset of the negotiation, negotiators actually make less demanding offers, disclose more truthful information and settle for less profit than when the counterparty does not disclose a BATNA
4. Set high aspirations (Be realistic, but optimistic)
   ♣ Your first offer represent an important anchor point in the negotiation
   ♣ When we use the first offer made by each party as a measure of his or her aspirations, those aspirations or target points determine the final demands made by negotiators, more so than do BATNAs
   ♣ Negotiators who set high aspirations end up with more of the pie than those with lower aspirations
   ♣ Strategically wise to make your first offer slightly lower than the other party’s reservation point and then you can bargain up to their reservation point
   ♣ Promotion-focused negotiators conceptualize goals as ideals and opportunities
   ♣ Prevention-focused negotiators conceptualize goals and obligations and necessities
   • Set goals in the upper ends of the ZOPA are less likely to concede and outperform
   ♣ Don’t become anchored by your reservation point
5. Make the first offer (if you are prepared)
   ♣ The party who makes the first offer obtains a better final outcome
   ♣ First offers acts as an anchor point and correlate with final outcomes
   • An opening offer shouldn’t give away too much of the bargaining zone
   • Many people worry they will insult the other party if they open too high(if selling) or too low(if buying)
   • First offer that falls within the bargaining zone acts as a powerful anchor point in negotiation
   • Your offer should not be a range
   o By stating a range, you give up precious bargaining surplus
   • if you have made an offer, then you should expect to receive some sort of counteroffer or response
6. Immediately re-anchor if the other party opens first
   ♣ Counteroffers do two things:
   • They diminish the prominence of the counterparty’s initial offer as an anchor point in the negotiation
   • They signal your willingness to negotiation
   ♣ Thinking about the opponent’s BATNA or reservation price or even one’s own target point completely negates the powerful anchoring impact that the other party’s first offer might have on your
   ♣ Don’t adjust your BATNA based upon the counterparty’s offer and don’t adjust your target
7. Plan your concessions
   ♣ Most negotiators expect to make concessions during negotiations
   ♣ Need to consider:
   ♣ The pattern of concessions
   • Negotiators who make fewer and smaller concessions maximize their slice of the pie, compared to those who make larger and more frequent concessions
   • Takes place in quid pro quo
   ♣ The magnitude of concessions
   • The amount reduced or added from one’s previous offer
   • The concession offered by the first party is significant, but not so much that the offering party is tremendously disadvantaged if the counterparty fails to reciprocate
   ♣ Timing of concessions
   • Refers to whether they are immediate, gradual or delayed
   • When the seller made gradual concessions, the buyers reaction was most positive with high satisfaction
8. Support your offer with facts
   ♣ Present a rationale that is objective and invite the counterparty to buy in your rationale
   ♣ If your facts can be easily counter argued by the other party, you will not benefit by making arguments
   ♣ Important to be more informed than the other party
9. Appeal to norms of fairness
   ♣ Variety of norms of fairness exist and negotiators usually focus on norms of fairness that serve their own interests
10. Do not fall for the “even split” plot
    ♣ The even split between whatever two offers are currently on the negotiation table, has an appealing flavour to it
    ♣ Based on values arrived at arbitrarily
    ♣ The person who suggests the even split is in an advantageous position. Before accepting or proposing an even split, make sure the anchors are favourable to you