W5: Negotiation

W5: Negotiation

1. Decision Situation Matrix

   • Mapping Styles

2. Types of negotiations

   • Distributive: Shares and Salaries. All distributed equally.
     • Involves fixed-sum games- one person gain is another person's loss
     • Conflict interests: each party attempt to maximise share
     • Dividing pie: goal maximize slice
     • Preparation
       • Target Point
         • Bargaining zone: the space between the buyers reservation price and the sellers reservation price. If B>S then possible agreement
           • Vice versa if B<S then negative barganing zone
       • Best Alternative To a Negotiated Agreement
         • Do everything you can do to improve BATNA
         • Consider all alternatives
         • Counterpart of BATNA also important
       • Reservation price: bottom line hich you are indifferent to whther you achieve a negotiated agreement or walk away
         • Reservation price= BATNA + or - transaction cost of BATNA
         • This should never change unless: BATNA changes or term Changes
   • Integrative: Investment, Intangible and Patents. Sub-group
     • Involve multple issues: positions could represent differnet interests and there are often many interests behind any one position
     • Opportunity for enlarging the pit
     • Can increase the benefits available to each side by capitalizing on differences in parties preference s
     • Always involves a distributive componenet
     • Goal: to create a shared goal and value for everyone
     • Pareto efficient: when there is no agreement that would make any party better off without decreasing the outcomes of any other party
       • Pareto Inefficient agreement, there exists an alternative that would benefit at lesat one party without injuring any party
     • Integrative negotiations difficult
       • Non-separability of integrative and distribute negotiation: once value has been created, parties must determine how to divide it up
       • Value-claiming tactics impede value creation
         • fixed-pie bias assume that there is always a winner and a loser
         • People feel they have kost if outcome is lower than others even if above their BATNA
         • Sharing information and cooperating which are hard to achieve under a fixed-pie biases
     • Getting information for integrative agreements
       • 1. Build tust and share information
       • 2. Ask questions to understand interest
       • 3. Give away some information about prefeences and priorities

3. Initial offers stronger than final agreements,but if you make the first offer you taking the risk of undercutting the bargaining zone

   • Goals Predict offers
   • Justify or explain it based on your BATNA and goals
   • Timing and other sides alternatives
   • Talk about the offer as long as possible
   • The more complex the greater the anchoring advantage
   • Concessions
     • New concession need to be smaller than the previous one
     • Develop a rationale around each of your concession
     • Make concession after getting the full list of demands
     • Offer concesssions only if your previous one was reciprocated

4. Trade off differences: when the other side cares more about something that you do, you want them to have but in exchange of something

   • Difference in priorities
   • Difference in risk preference
   • Difference in the assessment of the probability of future events
   • Differemce in time preferences

5. Persuasion tactics

   • 1. Reciprocity: we try to repay in kind what others give to us
   • 2. Commitment: Once we make a choice or take a stand we will encounter personal and interpersonal pressures to behave consistently ith that comitment
   • 3. Authority: we tend to obey authorities in a mindless fashion
   • 4. Social proof: the greater the number of people who ind the idea correct, the more it wil be thought its correct
   • 5. Linking: we prefer to say ye to the requests of people we know and like
   • 6. Scarcity: we tend to assign more value to opportunities when they are less avilable

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