Negotiations (Week 11)

Question 1

Positions

Answer 1

A party’s stand on the issue (stated agenda)

Question 1

Interests

Answer 1

Underlying concerns/motives that would be affected by the resolution (hidden agenda)

Question 2

BATNA

Answer 2

Best Alternative to Negotiated Agreement –> “backup plan” for each party if the negotiation falls through

Question 3

Reservation Price

Answer 3

“Bottom line” price –> for buyers, it’s the most they’re willing to pay. For sellers, it’s the least they’re willing to sell for.

Question 4

Bargaining Zone (ZOPA)

Answer 4

Range between two parties’ reservation prices

Question 5

Target price

Answer 5

Each party’s realistic view of what the outcome will be.

Question 6

Integrative Bargaining

Answer 6

Seeking a “win-win” solution; relationship with other party is important to maintain. Usually multiple issues at hand.

Question 7

Distributive Bargaining

Answer 7

Usually results in “win-lose” solution; interests of parties are opposed; achieving short term goal > maintaining long term relationship (value claiming)

Question 8

Framing effect

Answer 8

The way that we hear information changes how we evaluate our options (i.e. the order of words, phrasing, etc.)

Question 9

Escalation of commitments

Answer 9

We become too invested to walk away, even when it’s in our best interest to do so (i.e. staying in a job you hate)

Question 10

Sunk cost theory

Answer 10

Refusal to abandon a course of action due to a previous investment of resources (i.e. spent too much money, can’t turn back now)

Question 11

Fixed-pie bias

Answer 11

Belief that the other person must be directly opposed in an argument

Question 12

Asymmetrical information

Answer 12

One of the parties involved usually has more information than the other (i.e. seller knows more than the buyer, doctor knows more than the patient)