TASK 7 - NEGOTIATION Flashcards

1
Q

negotiation

A

= process in which two or more parties need to reach a joint decision

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2
Q

theories

- game theory

A
  • people act 100% rationally in negotiations

x which is not true

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3
Q

theories

- decision-analytic approach

A
  • give best advice to focal negotiators involved in real conflict with real people
  • prescriptive from the focal negotiators point of view
  • descriptive from the competing party’s point of view
  • structure based on assessment of three key sets of info –> should assess three components before entering any negotiation
    1. each party’s best alternative to a negotiated agreement (BATNA) + best estimate of others BATNA
    2. each party’s set of interests
  • positions = what parties demand from the other side
  • interest = motive behind those positions
    3. relative importance of each party’s interests
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4
Q

primary tasks of negotiation

- claiming value

A

= slicing the pie, individual gain

  • bargaining zone framework: each party has some reservation point (BATNA) below/above which one prefers impasse
  • -> positive bargaining zone: reservation points overlap –> give a set of resolutions both parties would prefer over impasse = settlement
  • -> negative bargaining zone: reservation points don’t overlap –> no agreement possible
  • key skill: determine the other party’s reservation point + aim for a resolution that is barely BUT STILL acceptable to the other party
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5
Q

primary tasks of negotiation

- creating value

A

= increases size of pie, joint gain

  • identifying + adding issues (assessing each parties interests) –> find trade-offs
    1) trade something they want more than you for something you care more about in return
  • -> whenever one party weighs issues differently than the other
  • more payoff then just claiming for both
    2) contingent/conditional contract
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6
Q

creating value

- cotingent contracts

A

= conditional; making claim to repay the advance of money you pay at the beginning if you are successful –> if confident about idea enter contract
- if-then agreements = which actions under certain conditions will result in specific outcomes
√ help manage biases
√ diagnose dishonest parties
√ motivation for performance

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7
Q

tools of value creation

  • trust relationships
    1. BUILD TRUST AND SHARE INFORMATION
A

= share information with each other about preferences (values they place on different issues)

  • -> maximise joint benefit
  • easiest way
  • building trust useful when cooperative behaviour cannot be interpreted as self-serving
  • relationship building increases likelihood of trustworthy/trusting opponent next time
  • build trust = be trustworthy
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8
Q

tools of value creation

  • trust relationships
    2. ASK QUESTIONS
A

= asking questions (necessary to collect information), not only reacting but listening for new information

  • -> understand other party’s interests
  • probability of answer is higher if you ask than if you not (no guarantee)
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9
Q

tools of value creation

  • competitive relationships
    3. STRATEGICALLY DISCLOSE INFORMATION
A

= give away some information of your own; reveal rather unimportant information

  • -> share information incrementally, back and forth
  • behaviours are reciprocated: information sharing to reach mutually beneficial agreements
  • both parties benefit as parties learn about levels of value; expand outcomes
  • minimise own risk: if other party does not share, decide to hold back as well
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10
Q

tools of value creation

  • competitive relationships
    4. NEGOTIATE MULTIPLE ISSUES SIMULTANEOUSLY
A

= negotiate multiple issues at once; nothing is settled until everything is settled

  • package-offers = deals that cover all the issues and communicate your preferred outcome across all issues
  • find out relative importance of each issue to each party –> find favourable, value-creating trades
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11
Q

tools of value creation

  • competitive relationships
    5. MAKE MULTIPLE OFFERS SIMULTANEOUSLY
A

= presenting several package-offers; avoid putting an offer on the table before actively collecting information

  • -> gain insights/valuable hints where to find trades based on other party’s preferences for one offer or parts
  • flexible negotiator: willing to be accommodating, interested in understanding other party’s preferences
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12
Q

tools of value creation

  • competitive relationships
    6. SEARCH FOR POST-SETTLEMENT SETTLEMENTS
A

= asking whether other party would be willing to take another look at agreement + see if it can be improved

  • -> reach pareto-superior agreement (= agreement potentially even better for both parties)
  • third party involvement: negotiator have right to veto, return to original agreement
  • both parties can benefit from enlarged outcomes
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13
Q

perspective taking

A
= understand others cognition
- essential management skill
√ reduces stereotyping
√ more creativity
x preferential treatment
x project low self-esteem onto other
x heighten prejudice
x difficult in competitive relationship: 'fight fire with fire' response
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14
Q

power

A

= probability that negotiator will influence a negotiation outcome in direction of his/her ideal outcome

  • HIGH power = higher likelihood of achieving goals
  • direct: BATNA, information
  • indirect: status, social capital
  • -> reinforce each other
  • -> fluctuations between contexts, cultures
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15
Q

power

- BATNA

A

= Best Alternative to a Negotiating Agreement
- strong BATNA: less dependent on opposing party; put pressure on opponent
√ better outcome in markets with higher demands
x anchoring –> satisficing on inferior outcomes
x affect motivation, persistence in striving for ideal targets
- most important
–> in Asia: status and social capital more valuable

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16
Q

power

- information

A

= market info, knowledge of culture, insight into counterparty’s anxieties, reservation price, general expertise in negotiations

  • strategic advantage: leverage that info
  • -> ‘doing ones homework’
  • -> questions
  • -> perspective taking
  • -> educated guessing
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17
Q

power

- status

A

= respect by other side

  • LOW status: tend to defer to higher-status counterparts
  • HIGH status: more trust, higher payoffs, more interactions
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18
Q

power

- social capital

A

= who you know + who knows you; vitamin B

  • bigger network: improved alternatives, acquire more valuable info, high status people as allies
  • -> facilitator of other types of power
19
Q

bargaining techniques

- distributive bargaining

A

= negotiations about fixed resources

  • competition
  • claiming
20
Q

bargaining techniques

- integrative bargaining

A

= collecting information about opponent

  • cooperation
  • creating
21
Q

biases

- fixed-pie assumption

A

= thinks that there is fixed proportion one can gain, and one can’t create value

  • value claiming too salient
  • inhibits search for mutually beneficial outcomes
  • incompatibility bias = their interest conflicts directly with those of the other side
  • -> win-lose: anything good for them must be bad for me
22
Q

biases

- framing effects

A

= context effects; if you see everything as a loss (negative frame) than you will lose either way (mentally)

  • negative frames: less likely to make concessions, reach mutually beneficial outcomes
  • depends on perceptual anchor –> create anchors that lead the opposition toward a positive frame
23
Q

biases

- escalation of conflict

A

= when negotiations become too emotionally loaded

  • avoid statements on rigid positions
  • sunk-cost effect = if you (emotionally) invested too much earlier, unlikely to go into a lower settlement
24
Q

biases

- overestimation of own value

A

= overestimation of chance that the other side will give you what you want (wrongly set BATNA)

  • think you can get really good offers
  • no positive bargaining zone
  • most likely when knowledge is limited
  • -> seek objective value assumption from neutral party
25
biases | - self-serving biases
= see oneself as a fair partner; define what is fair in ways that favour themselves - think you make really good offers - different notions of fairness on both sides lead to impasses
26
biases | - anchoring
= first offers strongly influence your later perception of offers
27
biases | - egocentric biases
= think others see the world from their view (cooperation, language)
28
biases | - perception of fairness
= when we perceive as more fair, more willing to negotiate
29
influences on negotiations | - relational self-construal
= individual defines him/herself in terms of relationships with close others - higher likeliness of transformation of motivation, willingness to sacrifice in close relationships - don’t perceive conflict as necessarily having zero-sum, rather as win-win situation
30
influences on negotiations | - trust propensity
= degree to which a person has benevolent expectations of others, even without prior interaction - HIGH: more cooperative negotiation (makes you vulnerable); signal to counterpart both, their motivation to trust + intention to build trust via their negotiation behaviour --> contributes positively to trust development - LOW: less cooperation
31
cultural differences | - comparative intercultural research
= compares negotiation behaviour and outcomes of individuals from two/more nations or cultural groups - culture influences which biases, goals, levels of trust to adopt - ‘culture-by-context’ perspective: respond differently to same kinds of contextual influences - goal-directed strategies 1. direct, early, sustained information exchange about underlying interests (WEST) - -> value creation 2. persuasion/offer, communicated indirectly/directly (EAST) - -> value claiming
32
cultural differences | - intercultural research
√ cultural intelligence, social goals for relationship building, concern for face, communication quality --> value creation x cultural distance, hierarchical concerns - creating more difficult (reaching any agreement) - less joint value - worse economic outcomes --> have to overcome underlying differences
33
west vs. east
WEST - emphasis on economic outcomes - information exchange strategy - more value creation - high trust - direct communication: “upgraders” - more obvious dominance - Americans focus on procedure EAST - emphasis on relational outcomes - persuasion & offer making strategy - more value claiming - low trust (more for in-group) - indirect communication: “downgraders” - less obvious dominance - Chinese on outcomes - stronger in-group/outgroup differentiation-
34
cultural differences | - improving miscommunication
√ how to express disagreement √ recognise emotional expressiveness √ how to builds trust (cognitive vs. affective) √ avoid yes-or-no questions (mean different things across cultures)
35
gender differences
= contextually-bound + subject to change - females: tend to dislike negotiation, less likely to initiate, greater anxiety; evaluated more negatively when negotiating assertively - males: on average better economic outcomes - role congruity theory: agentic behaviours usually considered essential for negotiating economic outcomes are not congruent with female gender role - social role theory: gender roles are composed of consensual beliefs about behavioural expectations related to men’s/women’s roles --> deviation = social backlash - reduced: √ negotiation experience √ provided with bargaining range √ advocating for another individual
36
gender differences across cultures
- patriarchal gender roles (western world) vs. matrilineal gender roles (women inherit economic power; Africa) - matrilineal females: earn more surplus (have experience in seller role) - -> bargaining outcomes = culture dependent = women don’t have natural disadvantage in bargaining
37
zero-sum vs. win-win
1) zero-sum perceptions: if one person benefits, the other must make a sacrifice (either-or strategy of conflict resolution) 2) win-win perception: individuals focus on long-term benefits of sacrificing their self-interest
38
zero-sum | - interdependence theory
= transformation of motivation; one departs from self-interested goals to make choices that are prosocial or promote the well-being of relationship partners --> in important relationships transformation of motivation (choices that help partner) - don't see it as zero-sum but as win-win
39
norm of the self-contained individual
= independent individuals less likely to sacrifice own interests - -> choices that benefit the self as necessarily harming the relationship - -> choices that benefit the relationship as necessarily harming oneself
40
steps in cross-cultural negotiations (LECTURE)
1. exploration learning: try to understand cultural aspects of other party 2. preparation for possible risks - underestimation vs. overestimation of differences 3. adjusting to counterparts - develop own rituals
41
cultural differences | - negotiation styles (LECTURE)
- long-term vs. one time deal - win/zero-sum negotiation vs. win-win - informal vs. formal attitude - direct vs. indirect communication style - show vs. hinder emotions - leader vs. group decision
42
trust (LECTURE)
``` cognitive: - content + skills based - how professional you look - what information you share affective: - relationship based - can i trust you outside negotiation? ```
43
cultural approaches
``` face: - EAST - interdependent, relying on society dignity: - WEST - individuality - everyone is worth the same honour: - MIDDLE EAST (Arabia…) - focus on one's reputation, what others think of you ```