Quiz Notes

Chapter 3 BATNA - Best alternative to a negotiated agreement Negotiation dance - Process of making offer and then reaching mutually agreeable settlement Bargaining Zone (ZOPA)- Region between each party's reservation point Suboptimal - Negotiators are worse off by not reaching an agreement Negative bargaining zone - Offers no positive overlap between parties' reservation points Bargaining surplus - amount of overlap between reservation points. Measures bargaining zone Negotiator's surplus - positive difference between reservation point and settlement outcome Mixed motive - motivated to cooperate to ensure settlement reached in positive bargaining zone. Motivated to compete to obtain as much bargaining surplus as possible. Pie Slicing Strategies 1. Assess BATNA and improve it 2. Determine your reservation point, but do not reveal it. 3. Research the other party's BATNA and estimate their reservation point 4. Set high aspirations (Be realistic, but optimistic) Anchor point - High initial offers (aspiration) that sway negotiation in one party's favor Winner's curse - First offer is immediately accepted by other side b/c too generous Boulwarism - Making your first offer, the final offer 5. Make the First Offer (if you're prepared) Not a range Silence ?Rejection - Always wait for a response before making further concession 6. Immediately reanchor if the other party opens first a. diminishes prominence of anchor point b. shows a willingness to negotiate Do not adjust BATNA or target 7. Plan your concessions Pattern of concessions Quid pro quo - Back and forth concession between parties Unilateral - One way Bilateral - Both ways Magnitude of concessions GRIT model (Gradual Reduction in Tension) - Based on reciprocity Concession made by first party is significant, but not so much that if the other party does not reciprocate, you're not at a big disadvantage Black Hat (BH) - Tough stance White Hat (WH) - Softer stance Best method is BH/WH - B/c other side is relieved for you to finally go WH Timing of Concessions Immediate, gradual or delayed Gradual concessions = Hi buyer satisfaction b/c they felt they earned the deal 8. Use an objective-appearing rationale to support Gets other to buy into reasoning Use diction "fair" and "compromise" 9. Appeal to Norms of Fairness Fairness is hot button b/c most negotiator's want to be fair 10. Don't' fall for even split ploy B/c based on arbitrarily arrived at values Chapter 11 Explicit negotiations - people seek to reach a mutual agreement in terms of a binding contract Tacit negotiation - Without contracts and explicit negotiations. Fate determined by the action they take, and the action taken by others. 2 main type of negotiation situations Cooperative Contract explicit Mutual understanding Negotiate via proposals and counter proposals People usually come to the table voluntarily Noncooperative Contract is tacit People often do not know what others will do Negotiate through their behaviors and actions People pulled into negotiations without wanting to be Social Dilemma - People engage in behaviors that maximize self-interest but lead to collective disaster such as a bidding war or negative campaign Differences from prisoner's dilemma Multiple people. Costs of defection are spread out upon multiple parties Greater risk and more uncertainty -> People behave more greedily Provide anonymity - people feel less accountable People have less control over the situation Tragedy of the commons Doing something is good for you and doesn't harm environment noticably, but if everyone follows suit, then harms environment big time Types of Social Dilemmas Resource conservation (collective traps) - eg environment Public goods dilemmas (collective fences) - eg Not pay taxes, join union etc. Kinds of Social Dilemmas Intraorganizational - Taking resources and budget fixing, giving committe work and recognition Extra " - Taking price/brand competition, overharvesting, pollution - contributing - paying taxes, public television Competitive advertising Building Cooperation in Social Dilemmas Structural strategies Align incentives that promote cooperation Monitor behavior Regulation - Govt. intervention Privatization - Govt handing land to private individuals Tradable permits - Total allowable fish to be \ Psychological strategies Psychological contract Norm of commitment - people feel psychologically committed to word Superordinate Goals - Set appropriate behavior & people more likely to follo Communication - If people communicate before making decision, then people make better decisions Personalize others - people will defect against dehumanized bureaucracy Social sanctions - let people know your intentions Focus on benefits fo cooperation Encouraging Cooperation when its illegal to cooperate Keep your strategy simple so competitors can predict your behavior Signal competitors via your actions Do not be the first to defect Focus on your payoffs, not your payoffs relative to others Be sensitive to egocentric bias - people see own actions as more cooperative vs others Escalation of Commitment Escalation of commitment - tendency of negotiators to persist in losing course of action Personal escalation dilemmas - involves only one person, eg gambling Interpersonal escalation dilemmas - involve two or more people in competitive relationship eg union strikes Avoiding Escalation of Commitment Set limits, stick to to BATNA Avoid tunnel vision - get several perspectives on situation Recognize sunk costs Diversify responsibility and authority Redefine situation Volunteer dilemma - 1 person sacrifices interests for good of group. E.g. designate dtree Ultimatum Dilemma - $100 bill splitting Subgame perfect equilibrium - rational within each period of the game Prisoner's Dilemma - 2 person One shot Dominance detection- Both sides pick confession Equilibrium outcome - outcome determined by the decisions of both sides Defection! Repeated interaction Backward induction - person decides what to do by looking backward from last stage of game Defection! remains the dominant course of action Infinite interaction cooperate Common myths about interdependent decision making You can outsmart opponent Play tough - Bad, will escalate conflict It's a game of chance anyways Ways to recover from a defection Make situational attributions - accept some blame for situation Make small steps toward cooperation GRIT Let other party get even or catch up Make decisions at same time as opponent - helps induce cooperation Chapter 2 - Preparation before a negotiaion Self-Assessment What do I want? Reactive devaluation - "grass is greener", not wanting what the other party is giving Focal Point - Arbitrary reservation point, fake, made up during negotiation Create equivalent packages of offers Give impression that you're not a positional negotiator. Strategic Risk - Riskiness of tactics used at the bargaining table. BATNA Risk - Maybe BATNA is a job you haven't interviewed for yet Contractual risk - willingness of other party to honor its terms Endowment Effects - Someone who possesses an object may have a reference point that reflects their endowment, or that they own the object Counterfactual thinking - Thinking about what might have been Sure thing principle - If X is preferred to Y no matter whether A happens or not, pick X Often violated because people don't look ahead to outcome of each possible Overconfidence - Believing 3rd party negotiator will find in one's own favor. Party - person who acts in accord with their preferences Hidden Table - Party that is part of negotiation, but not at negotiation party Monolithic - Whether parties on the same side of table are in agreement Consensus Conflict - One person's beliefs are incompatible with anothers Scarce Resource Competition - People vie for limited resources Dispute resolution - claim made by one party and rejected by another party Linkage Effects - Some negotiations effect other negotiations Ratification - needing contract approved by another body or group Shortest final deadline counts for both sides Rate of concessions increase as deadline approaches Set a final deadline to avoid time related costs Time Horizon - time between end of negotiation and realization of negotiated elements Better to hold negotiations at your place if possible Both sides must have power for a negotiation to take place Precedent is important Chapter 5 Adjucation - Disputants present evidence and arguments to a neutral 3rd party who has power to hand down binding decision. 2 Types of power approaches Threats Contests - parties take action to determine who will prevail Expect your style to be reciprocated To move opponent towards interest based negotiations 1. Do not reciprocate their style 2. Provide opportunities to meet in person 3. Stay focused on the issues, don't attack other person's character 4. Reward interest based behavior with concessions 5. Reciprocate, but combine with interest based questions or proposals 6. Agree to talk 7. Cooling off periods 8. parphrasing 9. Label the Rights or Power strategy the opponent is using 10. Structural strategies Multisetp negotiation process - When dispute not resolved one level, it moves up chain in org Wise Counselor - senior eexecutive Loop Back procedures Looping back from rights Information procedures Minitrials - have unbiased lawyers present each side to neutral judge/advisor Advisory procedures Loop back from power Crisis procedures 3rd party intervention Med-arb - mediator serves as arbitrator Arb med - arbitrator makes decision and puts in sealed envelope on table to motivate Notification and consultation - prevent disputes Forum - institutionalizing consultaitonand post dispute analysis Rights and Power can be appropriate approaches Other party refuses to come to table Negotiations are at an impasse