Problem 7 Flashcards
When is negotiation needed/used the most ?
When 2 parties need to reach a joint decision but have different preferences
–> needed to reach a mutually agreeable outcome
Game theory
Is a model that analyzes all the outcomes that will emerge in negotiation contexts, if all parties act rationally
–> first outline the conditions that define how decisions are made, then add all the different combinations of player moves
Decision analytic approach
Focuses on how non-rational (normal) people actually behave when negotiating, rather than how we should behave
–> goal is to provide guidance for the person wanting to negotiate, by predicting the the other party’s expected behavior Based on 3 structures
1. Alternatives
–> BATNA
2. Each parties set of interests
3. Relative importance of each parties interests
BATNA
Refers to our “Best alternative to a negotiated agreement”
–> provides a lower bound for determining the minimum outcome we require of a negotiated agreement
e.g.: will decline any negotiated agreement that provides less than BATNA, which in turn indicates our reservation point
Reservation point
Refers to the least favorable point at which one will accept a negotiated agreement
What are the 6 most important keys to successful negotiations / tools for Value creation ?
- Building a relationship of trust to the other party
- Asking questions + listening to new info
- Disclosing info strategically
- Negotiating multiple issues simultaneously
- Making multiple offers simultaneously
- Searching for a PSS
–> important to analyze the interests of the opposing party + determining the other parties reservation point
Positive bargaining zone
Occurs when the reservation points of the 2 parties overlap
Negative bargaining zone
Occurs when the reservation points of the 2 parties do not overlap
–> no resolution will occur
In which way can contingent contracts/bets be successful in negotiations ?
- Allows each side to bet on its opinion
- Each seller will recognize their susceptibility to this effect and thus adjusts their expectations
In which way can building trust by sharing info help the negotiation process ?
- Sharing info with each other will most likely only happen when the parties trust each other due to vulnerability
- One will be ale to understand the values the opposing party places on different issues
–> should only disclose info that is not too important
When negotiating we tend to focus on persuading the opposing party + concentrating on what we are going to say next, which rather leads to unfavorable outcomes .
What should we rather focus on ?
- On asking questions + listening actively for new info
–> this way we’ll understand the other party’s interest the best
- Revealing info of comparatively minor importance that focuses on try trades we are willing to make
–> this might build trust + elicit reciprocity to create info sharing
How can making multiple package offers simultaneously ameliorate the negotiation process ?
Allows one to come across as a flexible negotiator
–> builds a trusting relationship
What is a Post-settlement-settlement (PSS) ?
A PSS process is initiated after an initial agreement is already found.
–> offers a last attempt, with limited risk to either party, to ensure that a Pareto-efficient agreement has been found, by engaging a 3. party
Pareto efficient agreement
Refers to an agreement whereby every party is content with the outcome
Are there gender differences in the ability to negotiate ?
Yes,
Women are less likely to initiate them and are less assertive when conducting them
Where do the gender differences in negotiation stem from ?
They are due to cultural variations
ex.: matrilineal culture economically empowers women + gives them an active role in economic transaction which results in better negotiation skills
What are the 4 most important sources of power at the bargaining table ?
1. Alternatives
–> having leverage
2. Information sharing
3. Status
–> reputation
4. Social capital
What is the definition of power in negotiation ?
It refers to the probability that a negotiator will influence a negotiation outcome in the direction of his/her ideal outcome
–> the more power one has, the higher the probability of winning due to more confidence
What is social capital?
In which way can it be used as a source of power in negotiating ?
- It refers to ones strong social network
- By increasing this, the negotiator increases the likelihood of improving his/her alternatives, status + capacity to acquire valuable info
Self worth
Refers to a persons view of his/her value in society
–> the way a person sees himself in relation to others
Dignity culture
Refer to cultures where self worth is based on individual goals + pursuit of these goals and values
–> dignity is based on ones own assessment of whether ones standards are met, not easily challenged by others
e.g.: West
Face culture
Refer to cultures where self worth is based on others assessment of whether ones social role obligations are fulfilled
–> individuals do not act freely nor are autonomous
e.g.: East asia
Honor culture
Cultures where self worth is based on individuals reputation + own assessment of what others think of them (Looking glass self)
–> honor means fulfilling ongoing social roles
e.g.: Middle east
Insight (when negotiating)
Refers to a negotiators level of awareness of their counterparts concerns, interests + priorities
