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
What is an Integrative/Cooperative negotiation?
Its suiting strategy ?
- Is a about cooperating to finding a win-win solution for both parties
- The strategy consists of behaviors that convey info about the parties interests + priorities
–> type of info sharing operationalized by questions, answers, statements, recognizing trade offs
What is a Distributive/Competitive negotiation?
Its suiting strategy ?
- Is about fixed resources that are subject of the negotiation
ex. : money - Refers to a strategy that consists of behaviors that try to influence the counterpart to make concessions
–> ranges from threats to appeals to sympathy
What is negotiating like in Face/ Eastern cultures ?
Competitive behavior, thus value claiming
–> BUT: engage in less info sharing
What is negotiating like in Dignity/Western cultures ?
Cooperative behavior, thus value creation
–> no need to outperform due to the fact that self-worth is intrinsically determined + social structures are more egalitarian
Creating Value
“Increased size of the pie” , identifying the opposing party’s issues/interests, then finding trade offs across those
–> its aim is to find a solution with which both parties are better off than when they would have just compromised
Claiming value
“Slicing the pie”
–> its aim it to determine the other party’s reservation point + aim for a resolution that is barely acceptable to the other party
What are common negotiator biases/mistakes ?
1. Fixed pie assumption
–> related to Incompatibiltiy bias
2. Framing effects
3. Escalation of conflict
4. Overestimation of own value
5. Self serving bias
6. Anchoring
Incompatibility bias
Assuming that ones interests, will always directly conflict with those of the other side
–> occurs when value claiming is too salient
e.g.: “Anything thats good for the other party, is bad for me”
Framing effects
Negative framers are less likely to make concessions + reach mutually beneficial outcomes
–> depends on the perceptual anchor
Overestimation of own value
Wrongly set BATNA
–> will elicit a negative bargaining zone
Self serving bias
Refers to the tendency for people to define what is fair in ways that favor themselves
Anchoring
Occurs when an individual depends too heavily on an initial piece of information offered when making decisions
–> thus are more biased to first offers
Role congruity theory
Proposes that a group will be more positively evaluated when its characteristics are recognized as aligning with that group’s typical social roles
ex.: girl dancing ballett
Name the main differences in negotiation across cultures.
- Long term relationship vs one time deal
- WIN negotiation vs WIN-WIN negotiation
- Informal vs formal attitude
- Direct vs indirect communication
- Showing vs hiding emotions
- Leader vs group decision
Down-graders vs Up-graders
Refers to a certain communication style
Upgraders:
- “totally, completeley, absolutely”…
Downgraders:
- “partially, mayber, a little bit”..
Fixed pie assumption
Devaluating everything that the opposing party offers, just because it is coming from the opposing party (no trust)
