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13 Cards in this Set

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Game Theory
Mathematical models used to determine the best outcome in a multiparty decision making situation, if they play rationally
Raiffa's Decision-Analytics Approach
1. Each party's best alternative to a negotiated agreement (BATNA)
2. Each party's underlying interests
3. The relative importance of each party's interests
BATNA
Best Alternative To Negotiated Agreement

Lower limit to any negotiated agreement

Compare what you are offered or offering to your BATNA

Yes if Higher
No if Lower
Party's Interests
Look beyond other's stated position

Consider their interests

What are the reasons for their stated positions?
Importance of Each Issue
Understand
Pareto Efficient Agreement
An agreement when there is no other agreement that would render both parties better off

Best way To reach it: trade issues of differential value
Creating Value Through Bets
Bets help:
Manage bias
Identifies bluffs
Establish incentives for contractual performance
Risk Perception
A party that is more risk adverse will give up more upside for a greater level of security.
"Risk Sensitivity"
Gather Information
Share preferences with other party

Ask questions about their interests

Reveal info that focuses on trades you are willing to make

Many offers at once
All rejected? Ask which is closest.

Search for pareto-superior agreement
Negotiator Cognitions
If I win, you lose.
Makes solution difficult to find.
Creates stubborn parties
Zero-sum game, reject all
Finding all interests, to max win/win situation
Framing
Loss Frame "I'm getting less that I asked for"

Gain Frame "I'm getting more than I had before"
Nonrational Escalation of Conflict
We are so concerned about winning that we end up with result below our BATNA.
Negotiator Overconfidence
You over value your position or what you have to offer.

Most likely to occur when a party's knowledge is limited.