Negotiation Flashcards
Negotiation
social interaction where parties with non-identical preferences allocate scarce resources through joint decision making
“the act of back-and-forth communication intended to reach agreement”
Characteristics of Negotiation
- two or more parties
- conflict of interest
- resolution of tangibles
- resolution of intangibles
- interdependent parties
Types of Negotiation
Distributive
Integrative
Distributive Negotiation
- One-shot/’Fixed Pie’
- More for one side = less for the other
- Naive perspective
Integrative Negotiation
- multiple issues
- opportunities to ‘expand the pie’
- more common type
BATNA
Best Alternative To a Negotiated Agreement
- back up plan
- what you’re left with if can’t reach a deal
- option too compare other deals
Ex. keep current car vs. new car
unemployed vs. job offer
Apartment A vs. Apartment B
Reservation Point
least favorable agreement you are willing to accept
- walk away point
- bottom line
- point where agreement is indifferent
(only reveal reservation point if you are prepared to walk away)
Aspiration Point
what you ideally want to achieve
- realistic high mark to shoot for
- doesn’t need to be rational but SOUND rational
- used rationale to support your first offer
First Offer
always make first offer
- anchoring effect
- NEVER a range
if not first immediately counteroffer
- re-anchor
Concessions
the iterations of offers after initial
- pattern should be bilateral (one at a time and start with what is least important)
- magnitude should be decreasing
- timing should be gradual not immediate
- RATIONALE IS SO IMPORTANT
Example of Concessions
Sandra makes 3 concessions for a total of $12 ( $4 less each time)
Linda makes 4 concessions for a total of $10 ($4, $3, $2, $1)
- Linda did concessions right
ZOPA
Zone of Potential Agreement
- the overlapping range between each individuals preference and BATNA
- bargaining room
