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13 Cards in this Set
- Front
- Back
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Game Theory
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Mathematical models used to determine the best outcome in a multiparty decision making situation, if they play rationally
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Raiffa's Decision-Analytics Approach
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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 |
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BATNA
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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 |
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Party's Interests
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Look beyond other's stated position
Consider their interests What are the reasons for their stated positions? |
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Importance of Each Issue
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Understand
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Pareto Efficient Agreement
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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 |
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Creating Value Through Bets
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Bets help:
Manage bias Identifies bluffs Establish incentives for contractual performance |
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Risk Perception
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A party that is more risk adverse will give up more upside for a greater level of security.
"Risk Sensitivity" |
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Gather Information
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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 |
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Negotiator Cognitions
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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 |
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Framing
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Loss Frame "I'm getting less that I asked for"
Gain Frame "I'm getting more than I had before" |
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Nonrational Escalation of Conflict
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We are so concerned about winning that we end up with result below our BATNA.
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Negotiator Overconfidence
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You over value your position or what you have to offer.
Most likely to occur when a party's knowledge is limited. |
