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238 Cards in this Set

  • Front
  • Back
Introduction

Preparation for Negotiation:

Steps of Negotiation & Def. of BATNA

1
4 Main Steps of Negotiation:
1. Pre-Bargaining Prepartion
2. Exchange Information
3. Offers and Counteroffers
4. Agrmt or Impasse (no progress possible)



BATNA = "Best Alt to Negotiated Agrt"

It is the course of action that will be taken by a party if the current negotiations fail and an agrt cannot be reached.

Should never accept lower than BATNA.
Introduction

Preparation for Negotiation:
7 Keys for Preparing a Negotiation & Elements to Preparation

2
7 Keys:
1. Interests
2. Options
3. Alternatives
4. Standards
5. Relationships
6. Communication
7. Commitment

In order to prepare, you must:
1. Clearly understand your OWN situation and interests.
2. You must understand the situation and interests of the opposing side.
3. You must synthesize the competing interests in order to conceive of a strategy for reconcile.
Introduction

What is a Negotiation

0
It is to reach an agreement to handle conflict and reach a compromise; a means by which one resolves a dispute; to satisfy each other's needs; think win-win.
Introduction

Preparation for Negotiation:

3 Aspects

3
1. Internal Preparation -
Look for interests/needs, options, and alternative (including BATNA) of the negotiator (YOU)

2. External Preparation -Look for interests/needs, options, and alternative (including BATNA) of the other negotiator (OTHER GUY)

3. Synthesis - Look for common ground, and strategize. Remember that the interests/needs of the other party must be satisfied, before an agreement can be reached.

Remember that the interests/needs of the other party must be satisfied before an agreement can be reached.

Determine whether mutual ground is possible.
Introduction

Information Exchange (during neg.)

1 of 2 Aspects

4
Acquiring Information:

Use open-ended questions and probing follow-up questions
Introduction

Information Exchange (during neg.)

2 of 2 Aspects

5
Disclosing Information:

This is done to inform the other party, to persuade the other party and (not stated in the book) to satisfy the need to be heard.
Introduction

Agreement Proposals (during neg.) - First Offer

6
The first offer:

The one making the first offer reveals information, and shapes the other party’s expectations about the range of potential possible agreements.
Introduction

Agreement Proposals (during neg.) - Counter Offer

7
Counter offers:

The counter offer can shape the expectations of the other party.

An offer that is too aggressive or too generous can be problematic.

The counter offer can allow reframing.
Introduction

Agreement Proposals (during neg.) - Is it better to make first offer?

8
Birke & Fox:

Little empirical evidence but 2 psychological phenomena may be in effect:
(1) in situations where there other party has little knowledge of what is reasonable, a 1st offer can be served to exploit anchoring bias, and draw the other party into a scenario that is more favorable to the me before the other party makes an offer that anchors us in a range that favors him
(2)the theory of reciprocity in which one should reciprocate concessions made by another

*basically go to as extreme as possible w/out bad faith.
Introduction

Resolution to Neg.

1 of 2 outcomes

9
Agreement:

An agreement should leave both parties better off than they would have been without the agreement. If not, someone has failed. Agreements should be memorialized
Introduction

Resolution to Neg.

2 of 2 outcomes

10
Impasses:

The most frequent cause of an impasse is that BATNA exist outside of the agreement.

Poor negotiating skill is the next most frequent cause of an impasse.
Conceptual Models of Neg.

Carrie Menkel-Meadow, Toward Another View of Legal Negotiation: The Structure of Problem-Solving.

11
Problem Solving vs. Adversarial

Problem-Solving:

The negotiators attempt to make both parties better off. Here the negotiators attempt to meet the needs (interests) of each party. FOCUS ON FINDING SOLUTIONS TO THE PARTIES' SET OF UNDERLYING NEEDS AND OBJECTIVES.

Adversarial:

The negotiators attempt to capture gains at the expense of the other party. This is also referred to as “zero-sum” or “constant-sum” negotiation, and is a form of “distributive” bargaining. FOCUS ON "MAXIMIZING VICTORY".
Conceptual Models of Neg.

Russell Korobkin: Positive Theory of Legal Neg. - General

12
Focus on the tactics, which help them understand the parameters of the bargaining zone or allocate the cooperative surplus produced when the parties agree to a trx that makes both parties better off.
Conceptual Models of Neg.

Russell Korobkin: Positive Theory of Legal Neg. - Zone Definition

13
Zone Definition. The distance between the reservation point (RPs) (“walk away points—BATNAs) of the two parties
Conceptual Models of Neg.

Russell Korobkin: Positive Theory of Legal Neg. - Why Persuade the Opponent?

14
Efforts at persuasion are to satisfy one or both of two goals:

(1)to shift the bargaining zone to the advantage of the negotiator, either by convincing the opponent that this RP is worse than he believed before beginning, or that the negotiator’s RP is better than previously believed; and

(2) to establish an objection and therefore "fair” – method of agreeing on a sale price that falls within the bargaining zone.
Conceptual Models of Neg.

Russell Korobkin: Positive Theory of Legal Neg. - Surplus Allocation

15
Surplus allocation effectively divides the cooperative surplus that the parties create by reaching an agreement.
Conceptual Models of Neg.

Russell Korobkin: Positive Theory of Legal Neg. - Surplus Allocation & Integrative Bargaining

16
Surplus allocation effectively divides the cooperative surplus that the parties create by reaching an agreement.

Integrative bargaining requires the parties to redefine the negotiation’s subject matter in a way that benefits one party more than it costs the other.
Conceptual Models of Neg.

Robert H. Mnookin, Why Negotiations Fail: An Exploration of Barriers to the Resolution of Conflict.

Factors That Impeded Agmt: Strategic Barriers

17
Strategic Barriers.

Information asymmetry-the possession by each negotiator of some information that the other does not have. This allows the p[arties to bluff and lie about their interests and preferences.

Strategic behavior aimed at maximizing the size of the party’s own “slice” of the “pie.” These are claiming tactics, and may result in claiming tactics by the other side, thus pushing up the cost of the agreement.
Conceptual Models of Neg.

Robert H. Mnookin, Why Negotiations Fail: An Exploration of Barriers to the Resolution of Conflict.

Factors That Impeded Agmt: Principal-Agent Problems

18
Principal-agent problems. The basic problem is that the incentives for an agent negotiation on behalf of a party to a dispute may induce behavior that fails to serve the interests of the principal itself.
Conceptual Models of Neg.

Robert H. Mnookin, Why Negotiations Fail: An Exploration of Barriers to the Resolution of Conflict.

Factors That Impeded Agmt: Cognitive Barriers

19
Cognitive Barriers.

Risk Aversion: Most people will take a sure thing over a gamble, even where the gamble may have a somewhat higher “expected” payoff. The proportion of people who will gamble to avoid a loss is much greater than those who would gamble to realize a gain.

Loss aversion: In order to avoid what would otherwise be a sure loss, many people will gamble, even if the expected loss from the gamble is larger. Both sides may fight on in a dispute in the hope that they may avoid any losses, even though the continuation of the dispute involves a gamble in which the loss may end up being far greater.
The Structure of Negotiation

Estimating the Bargaining Zone - 4 Basic Strategic Goals of Neg.

20
1. Determining whether a bargaining zone exists –that is, whether a mutually beneficial agreement is possible—and identifying the range of possible agreements.

2. Changing the scope of emphasis of the negotiation in a way that makes a transaction mutually beneficial when otherwise there would be no possibility of finding a mutually beneficial agreement, or in a way that makes an agreement even more mutually beneficial than it would otherwise be.

3. Exercising negotiating power to capture some or all of the benefit that the parties will create by reaching an agreement at the expense of the other party.


4. Appealing to procedural or substantive social norms to reach agreement on how to divide the benefits that the parties create by entering into a transaction.
The Structure of Negotiation

BATNAS and RESERVATION PRICES: Russel Korobkin's Def. of Reservation Point

21
Reservation point/price: In any negotiation, the maximum amount that a buyer will pay (or the seller will take) for a good, service, or other legal entitlement is called his/her “reservation point” or, if the deal being negotiated is a monetary transaction, his “reservation price” (RP).
The Structure of Negotiation

BATNAS and RESERVATION PRICES: Russel Korobkin's Def. of Bargaining Zone

22
Bargaining zone. If the buyer’s RP is higher than the seller’s RP, the distance between the two points is called the “bargaining zone.” (An agreement for an amount within the zone is superior to no agreement.)
The Structure of Negotiation

BATNAS and RESERVATION PRICES: Russel Korobkin's Def. of Internal Preparation

23
Alternatives and BATNA's
The Structure of Negotiation

BATNAS and RESERVATION PRICES: Russel Korobkin's Def. of External Preparation

24
The opponent's alternatives and BATNA.
The Structure of Negotiation

Prescriptive Approach to Calc Reservation Price

25
CALCULATING RESERVATION PRICES: A PRESCRIPTIVE APPROACH.

1. Alternatives,
2. Preferences
3. Probabilities of Future Events.
4. Risk Preference - most individuals are risk averse, meaning they prefer a certain cost/benefit to a probabilistic cost/benefit.
5. Transaction Costs - take into account any associate relative transaction costs.
6. Value of Time - determine if you place a higher value on transactions that can be consummated in the future versus now.
7. Effect on Future Opportunities.
The Structure of Negotiation

Aspirations - General

25a
Individuals usually obtain better bargaining outcomes if they begin an endeavor with a specific, concrete aspiration rather than a more ambiguous “do your best” aspiration.
The Structure of Negotiation

Aspirations - G. Richard Shell - Bargaining for Advantage - Goals vs. Aspirations

26
Individuals usually obtain bargaining outcomes if they begin an endeavor w/a specific, concrete aspiration rather than a more ambiguous "do your best" aspiration.

Find out where you want to go, and why.

What you aim for often determines what you get.

1) Your goals set your upper limits.
2) Goals trigger psychological “striving” mechanisms.
3) We are more persuasive when we are committed to achieving some specific purpose. “What convinces is conviction.”

BE SURE TO SET AN OPTIMISTIC, JUSTIFIABLE TARGET.
The Structure of Negotiation

Aspirations - G. Richard Shell - Bargaining for Advantage - Goals vs. Bottom Line

27
A bottom line is the minimum acceptable level you require to say “yes” in a negotiation.

A goal is different from a bottom line. It is your highest legitimate expectation of what you should achieve.

Humans have a limited capacity for maintaining focus in complex negotiations. Consequently, it is better to focus on goals, rather than bottom lines.
The Structure of Negotiation

Aspirations - Notes - The Power of Aspiration

28
Negotiators with high aspirations obtain more desirable outcomes than negotiators with more modest aspirations.
The Structure of Negotiation

Aspirations - Notes - The Why Should Aspirations Affect Outcomes?

29
Perhaps negotiators achieve more satisfaction, or “utility,” from each dollar they receive up to their aspiration level than each dollar they receive beyond their aspiration level, causing them to bargain harder to satisfy their aspiration than to exceed their aspiration.

a. Negotiators set their aspiration levels at the point where their marginal utility of achieving more from the bargain peaks.
b. Negotiators can create such a peak in the marginal utility they enjoy as a result of achieving more by setting an aspiration level. In other words, the aspiration levels create the peaks.
The Structure of Negotiation

Aspirations - Notes - The Risk of High Aspirations

30
Do not treat the aspiration level as the reservation point/price. Otherwise, you may walk away from a possible deal that would be superior to pursuing your BATNA just because the deal terms fail to meet the aspiration level.
The Structure of Negotiation

Aspirations - Notes - How Should Negotiators Determine Their Aspirations

31
One approach is to set the aspiration level at the estimate of the opponent’s reservation point. There are problems with this approach:

a. Negotiators are uncertain about their opponent’s precise reservation price. If the level is set too high, impasse may occur, even though BATNA has been exceeded.

b. If both negotiators attempt this strategy, it will be impossible for both to satisfy their aspirations. On or the other fails, or an impasse occurs.

c. If the parties have repeat dealings, it might not be in either’s long-term interests to aspire to capture all of the cooperative surplus. If the other party accepts a deal at the reservation point, and walks away with only minimally satisfaction, the other party may look for other trading partners in the future.
Psychological Factors in Evaluating Alts

Risk Preference and the Framing Affect - Economic Theory

32
Economic theory predicts that rational negotiators will be risk adverse.
Psychological Factors in Evaluating Alts

Risk Preference and the Framing Affect - Prospect Theory

33
Prospect theory predicts that in the usual case decision makers will exhibit risk seeking tendencies when choosing between certain and probabilistic losses—they will prefer a probabilistic loss to a certain loss when the two have the same expected value.
Psychological Factors in Evaluating Alts

Risk Preference and the Framing Affect - The Framing Effect

34
The framing effect: This prediction of prospect theory—that individuals will prefer certain alternatives to risky ones in the realm of gains, but will prefer risky alternatives to certain ones in the realm of losses—is often know as the “framing” effect.

The framing effect implies that when a negotiated agreement would lead to a certain outcome, but the negotiator’s BATNA will lead to a probabilistic outcome (or vice versa), the negotiator’s reservation price will depend on whether he/she views the alternatives as “gains” or as “losses.”

Whether alternatives appear to be gains or losses depend, in turn on the reference point the negotiator relies on when evaluating his alternatives.
Psychological Factors in Evaluating Alts

Risk Preference and the Framing Affect - Framing According to Korobkin & Guthrie in Heuristics and Biases at the Bargaining Table

35
The decision to choose a certain outcome over a risky alternative depends on whether the reference point is the status quo or gains/losses in aspect to a reference point.

In the standard case, individuals tend to exhibit risk aversion when choosing between an option that promises a certain gain and one that has a chance of resulting in a greater gain, but risk-seeking tendencies when choosing between an option associated with a certain loss and one with a probabilistic chance of a larger loss.
Psychological Factors in Evaluating Alts

Risk Preference and the Framing Affect - Farnsworth's THE LEGAL REGULATION OF SELF-SERVING BIAS - In General

36
“People tend to believe what they want to believe. This observation is a shorthand description of the phenomenon known to students of cognition as self-serving bias. It can be understood more precisely as the tendency to make various judgments in a manner skewed to favor one's own self-interest.”
Psychological Factors in Evaluating Alts

Risk Preference and the Framing Affect - Farnsworth's THE LEGAL REGULATION OF SELF-SERVING BIAS - Suggestions for Dealing With

37
Personal Solutions - such as reeducation.

Penalizing bias (e.g., offer of settlement rules).

Separating Biased Parties From Decisions (selling the claim, contingency fees, use of third parties).
Psychological Factors in Evaluating Alts

The Endowment Effect and the Status Quo Bias - Reference Point Theory & Self Serving Bias

38
If the reference point theory of aspirations is correct, high aspirations will help a negotiator achieve more-favorable bargaining results when a deal is reached, but at the cost of a higher risk of bargaining impasse and less overall satisfaction with bargaining outcomes. Thus, the reference point theory not only offers a new way of thinking about the role of aspirations in settlement from a descriptive perspective, it also presents a challenge to the usual prescriptive advice that negotiators should always set high aspirations.

Negotiators’ estimates of value can be systematically biased in predictable directions because of a psychological tendency to view uncertain evidence in the best possible light. The “self-serving bias” can result in buyers setting relatively low and sellers setting relatively high reservation prices, thus reducing the size of the bargaining zone or eliminating a bargaining zone that might have existed in the absence of this bias.

All other things equal, individuals on average tend to prefer an option if it is consistent with the status quo than if it requires a change from the status quo.
Psychological Factors in Evaluating Alts

Anchoring Heuristic

39
Example: When people are presented with a possible answer and then given an opportunity to reach their own answer, their answer tends to be close to the answer they were previously shown-- irrespective of any relevance of the initial answer.

People make estimates by starting at an initial “anchor” position, which they adjust to yield a final estimate. Different anchors create different expectations and yield different estimates, and these estimates tend to be biased toward the original anchor.

Thus, anchors, like frames, serve to impede rational problem solving and decision-making, particularly with respect to opening offers.

Opening offers may anchor the opposing side’s expectations in negotiation.

In an experiment, the opening offer anchor significantly affected the likelihood of the subjects to accept or to reject an offer.

As a result, anchors influence a subject’s expectations.
Psychological Factors in Evaluating Alternatives

Reactive Devaluation - In General

40
Reactive devaluation. A negotiated agreement may be of less value to a negotiator than it would otherwise be merely because his opponent proposed it. This phenomenon –“reactive devaluation”—suggests that in some circumstances transaction that would ordinarily be judged by a negotiator to be more desirable than pursuing his/her BATNA may be judged less desirable than pursuing his BATNA when proposed by the opponent.
Psychological Factors in Evaluating Alternatives

Reactive Devaluation - Causes of Reactive Devaluation

True Reactive Devaluation

41
This might be caused by the human desire to have what is out of our reach. When a particular agreement comes within a negotiator’s grasp, that agreement might seem less desirable because it is available.
Psychological Factors in Evaluating Alternatives

Reactive Devaluation - Causes of Reactive Devaluation

Rational Updating of Preferences

42
If an opponent has private information about the quality of the negotiation’s subject matter, the negotiator might reasonably reassess that quality if the opponent is suddenly willing to part with the subject matter.
Psychological Factors in Evaluating Alternatives

Reactive Devaluation - Causes of Reactive Devaluation

Spite

43
If the negotiator dislikes the opponent, the negotiator may have a preference that the opponent not get what he/she wants. Consequently, when the opponent reveals what he/she wants by proposing an agreement, the value of the negotiator of reaching an agreement, as opposed to his/her BATNA, declines.
Integrative Bargaining

Expanding the Bargaining Zone - General

44
Don’t assume that a gain for one is a loss for the other. It is, generally, a mistake to assume that a gain for one party necessarily means an equivalent loss for the other party. (if it were like that, it would be "zero-sum")

It is true that when there is only one issue on the table and parties’ interests are in direct opposition, negotiations such as this can be called “zero-sum,” or purely “distributive.” [Example: Mutt and Jeff arguing find a dollar bill, and wish to bargain over how to divide it.]
Integrative Bargaining

Expanding the Bargaining Zone - Integrative Bargaining

45
Integrative Bargaining. Because human interactions are complex, there are usually potential ways to structure a deal that will benefit the parties more than merely dividing a single asset. Negotiations that take advantage of this potential are referred to as “integrative,” “value creating,” or “problem solving.”

The ideal agreement would benefit both parties without burdening either with any countervailing costs. Example: Jack Sprat and his Wife so Fat. This can be referred to as an “elegant option” or an “elegant agreement.”
Integrative Bargaining

Expanding the Bargaining Zone - Creating Cooperative Surplus

46
Creating A Cooperative Surplus. When parties are able to identify a common interest in negotiations they can expand the cooperative surplus that an agreement would create, because both their reservation prices shift in directions that make reaching agreement more valuable.

Example: Home buyer’s reservation price is $100,000, and the seller’s reservation price is $95,000. Buyer likes the chandelier and is willing to pay up to an extra $1,000 for the house if it is included. So the Buyer’s new reservation price is $101,000. The seller dreads moving the chandelier, and is willing to accept $1,000 less if the is relieved of that responsibility. His new reservation price is $94,000. By identifying their common interest in including the chandelier with the sale of the house, the parties can create $2,000 of joint value by replacing a transaction that would have created $5,000 of cooperative surplus with a new transaction that will create $7,000 of cooperative surplus.
Integrative Bargaining

Expanding the Bargaining Zone - Opposing Interests Does Not Preclude Integrative Bargaining

47
Opposing Interests Does Not Preclude Integrative Bargaining. Negotiators should not assume, without investigation, that their interests will conflict with their opponent’s, and they will not discover or capitalize on the potential of common interests. This is a mistake. Integrative bargaining is usually possible even when the parties have opposing interests. That is, the bargaining zone can usually be expanded even if the parties want the same thing.
Integrative Bargaining

Expanding the Bargaining Zone - Different Preferences Needed

48
All That Is Needed Are Diff Preferences. Integrative negotiation requires only that the parties have different preference structures such that they place a differential value on items that are the subject of the negotiation, even if they want all of the same things.

Example: Horace wants a Studebaker. His reservation price is $6,000. Sally, who owns the car, wants to sell it, and has a reservation price of $2,000. The parties have a cooperative surplus of $4,000. Any agreement between $2,000 and $6,000 will leave both parties better off reaching an agreement than pursuing their BATNAs. Horace wants a warranty, which he values at $1,000. Sally does not want to give a warranty, which she believes will cost her $500 (she owns a garage and can do any needed repairs herself). Considering the warranty, there is now a cooperative surplus of $4500.
Integrative Bargaining

Expanding the Bargaining Zone - Creating Private Value: The Key Role of Differences

49
Gain from negotiation often exists because negotiators differ from one another.

The basic principle underlying the realization of joint gains from differences is to match what one side finds or expects to be relatively costless with what the other finds or expects to be more valuable, and vice versa.
Integrative Bargaining

Expanding the Bargaining Zone - Differences of Interest Imply Exchanges

50
Although the parties may have opposing preferences on the settlement of each issue, they may feel most strongly about different issues.

You can use the preference that means little to you as bargaining power over the other party. You can obtain a joint agreement where both parties exploit factors that mean less to the counter party.
Integrative Bargaining

Expanding the Bargaining Zone - Probability Differences Suggest Contingent Agreements

51
Probability assessments of uncertain events derive from the combination of prior beliefs and observed evidence; discrepancies in either these factors may form the basis for contingent agreements. [Example: The buyer of investment property believes that the price will rise, and the seller believes that it will drop.]
Structure of Negotiation

Adjusting the Reservation Price During Bargaining;


24a
Adjusting the Reservation Price During Bargaining - Typically, a negotiator will estimate his RP before beginning negotiations. During a negotiation, a negotiator may acquire info about the proposed transaction that could not established during pre-bargaining preparation.

RPs are NOT static points.
Structure of Negotiation

3 Step Process for Determining RP;
Estimating the Opponent's RP

24b
3 Steps:
1. Acquire and analyze all relevant info that is available from other sources
2. actively seek to discover info relevant to RP known only to the opposing negotiator
3. view info provided w/skepticism

Estimating the Opponent's RP:
The negotiation itself presents a crucial opportunity for the negotiator to gather info abou opponent's reservation price.
Structure of Negotiation

Methods of Information Gather

24c
Active questioning, silence, use decision trees for complex negotiation
Psychological Factors in Evaluating Alternatives

The Endowment Effect and Status Quo Bias - The Endowment Effect

37a
The endowment effect is the value that an individual assigns to objects. This value increases substantially as soon as that individual is given the object.

Therefore, an individual will usually prefer to keep an item they possess than trade that item for one of objectively identical value

All other things being equal, an individual is most likely to exhibit a higher RP for an item if she owns it than if she does not own it.
Psychological Factors in Evaluating Alternatives

The Endowment Effect and Status Quo Bias - Causes of the Endowment Effect

37b
People are in favor of the status quo because it minimizes the likelihood of experiencing future regret.

Norm theory contends that people suffer more regret when they act affirmatively than when they are passive because action is more conducive to imaging steps that could have been taken that would have led to more desirable results.
Psychological Factors in Evaluating Alternatives

The Endowment Effect and Status Quo Bias - Causes of the Endowment Effect

37c
All other things equal, individuals on average tend to prefer an option if it is consistent with the status quo than if it requires a change from the status quo.

In other circumstances, however, reliance on this heuristic can lead decision makers to make choices that depart from the normative model. The status quo bias suggests that, all other things being equal, negotiators will prefer their initial endowments over endowments they might hope to receive through exchange, that they will favor deal terms that are consistent with legal default rules, and that they will prefer terms of trade that are conventional for the type of bargain that is at issue.
Psychological Factors in Evaluating Alternatives

Anchoring - Problems

39a
vii. However, there are problems with basing one’s expectations on opening offers
1. There may be no relationship between the opening offer and the opponent’s reservation price
2. There may be no relationship between the opening offer and the merits of the issue
Psychological Factors in Evaluating Alternatives

Anchoring Strategy

39b
The anchoring phenomenon, standing alone, suggests that an extreme opening offer can benefit the negotiator by favorably shifting the opponent’s reservation price; thus, enlarging the bargaining zone, so long as the offer is not so extreme that the opponent will not even consider it as a starting point for negotiations

An extreme offer might signal that the negotiator has a strong BATNA and reservation price or a great deal of patience.

An extreme offer might also position the negotiator to engage in a pattern of recipricol concessions that result in a desirable final agreement.

An extreme offer might also have a negative effect of sending a signal that there is no bargaining zone, reducing the potential for integrative bargaining, or reducing the level of trust among the negotiations.
Psychological Factors in Evaluating Alternatives

Anchoring and Negotiations

39c
When negotiators bargain about the price of an item, they need to be wary of first offers advanced by their opponents who may use these offers to "anchor" the negotiation around their number, thus subtly limiting the range of bargaining.

Anchoring works well when there are few market indicators to help establish an appropriate price or where one has little relevant experience or knowledge.

Unfortunately, even when one brings considerable experience to the table, he or she can still fall prey to anchoring.

Anchoring occurs not just with numbers. Negotiators also need to worry generally about "impression management" from their opponents. Research suggests that "parties typically establish the entire tone of a negotiation through the first array of moves and gestures." Thus, the first impression that one projects in a negotiation will often carry through the entire bargaining sequence.

Psychology professor Solomon Asch describes this as the "primacy effect," and it means that negotiators involved in high stakes deals need to be concerned from the very start of a negotiation about how they come across to the other side.
Integrative Bargaining

Expanding the Bargaining Zone - Issues Subject to Different Odds

52
Outcomes of the event under discussion may be uncertain and subject to different probability estimates. Here, a contingent agreement may be the solution.
Integrative Bargaining

Expanding the Bargaining Zone - Issues Subject to Different Odds

53
Contingent agreements may be employed in a second common class of situations where the parties believe that they can positively affect the chances for favorable outcome of the uncertain event.
Integrative Bargaining

Expanding the Bargaining Zone - Different Assessments of the Attractiveness of Proposed Procedures

54
Contingent agreements may be employed in a second common class of situations where the parties believe that they can positively affect the chances for favorable outcome of the uncertain event.
Integrative Bargaining

Expanding the Bargaining Zone - Differences in Risk Aversion Lead to Risk-Sharing Schemes

55
When there are probabilities of an uncertain prospect, negotiators can devise a way to share the risk.

In general, such mechanisms shift more of the risk to the party who is less risk-averse than the other.
Integrative Bargaining

Expanding the Bargaining Zone - Differences in Time Preferences Suggest Altered Payment Patterns

56
When there are probabilities of an uncertain prospect, negotiators can devise a way to share the risk.

In general, such mechanisms shift more of the risk to the party who is less risk-averse than the other.
Integrative Bargaining

Expanding the Bargaining Zone - Complementary Capabilities Can Be Combined

57
Differences in capabilities can take many forms (access to technology, to physical, financial, or human capital). Any such capability differences can form the basis for mutually profitable arrangements.
Integrative Bargaining

The Limits of Integrative Bargaining - Forms of Value Creation - Form I

59
Make the Pie Larger
The pie can be made larger only in the sense that is true of all bargaining including all bargaining that is merely distributive.

Then there is a zone of agreement within which both parties will be better off than they would have been in the absence of the agreement.

Though it involves the “creation of value” this type of transaction does not involve integrative bargaining.

The tactics associated with integrative bargaining will not promote the immediate pecuniary self-interest of a party.
Integrative Bargaining

The Limits of Integrative Bargaining - Forms of Value Creation - Form II

60
Value creation is possible when there is one issue (e.g., the amount of money to be paid for some product), and one party cares more about that issue than does the other.

Here, the size of the pie will vary across the range of possible agreements, but in which the parties can reach a range of different agreements.
Integrative Bargaining

The Limits of Integrative Bargaining - Forms of Value Creation - Form III

61
If there are some possible agreements that both parties would regard as better than others, then the size of the pie created by the agreement depends both upon the parties’ ability to reach some agreement (Form I value creation) and upon their wit and ability to arrive at one of the better agreements.

This is a non-zero-sum game; win-win bargaining
Integrative Bargaining

The Limits of Integrative Bargaining - Types of Situations That May be Encountered

62
Differing Interests, Including Multiple Issues Differently Valued

Differing Assessments as to Future Events: Differing Probabilistic Assessments of the Likelihood of Some Future Event or the Likely Future Value of Some Variable

Different Preferences Regarding Risk
Integrative Bargaining

The Limits of Integrative Bargaining - Integrative Agreement

63
An “Integrative Agreement” Is Relative. An agreement is integrative if it creates a larger cooperative surplus than the parties would enjoy in some other state of the world. Integrative agreements are those that expand a bargaining zone, not those that merely identify that a bargaining zone exits between two parties for an obvious transaction.
x. Economies of Scale. Another avenue for creating value, different from integrative bargaining, is the economy of scale.
Integrative Bargaining

The Limits of Integrative Bargaining - Economic of Scale

64
Economies of Scale. Another avenue for creating value, different from integrative bargaining, is the economy of scale.
Integrative Bargaining

The Limits of Integrative Bargaining - Integrative vs. Distributive Bargaining

65
Integrative versus Distributive Bargaining. Integrative bargaining creates value for the parties jointly, establish a bargaining zone where none would have otherwise existed or expanding a bargaining zone that would have existed anyway. How the negotiators divide the cooperative surplus is a matter of distributive bargaining, not integrative bargaining.
Integrative Bargaining

Strategies for Reaching Integrative Agreements - General

66
Identifying the integrative potential of a negotiation requires both creative thinking about how to solve problems and superb communication skills.
Integrative Bargaining

Strategies for Reaching Integrative Agreements - Adding to and Subtracting Issues from the Negotiation Package

67
Negotiators expand the bargaining zone by adding or subtracting issues from what they initially perceive to be the negotiation package.

Adding an issue will only expand the bargaining zone when that issue is valued more by the buyer than by the seller.

Adding issues is an effective strategy when the parties have common interests, just as it is when the parties have opposing interests, but difference in their preference structure.

It is often the case that even more value can be created when the negotiators adds more than one issue to a negotiation.

It may be equally useful for negotiators to think about how they can create value by subtracting issues. In general, subtracting issues creates value for the negotiators when a component of the package being negotiated is more valuable to the party that currently posses it than to the other party.
Integrative Bargaining

Strategies for Reaching Integrative Agreements - Logrolling

68
“Logrolling” is a term often used to describe the practice of two or more legislators trading votes on bills that are of little importance to them in return for votes on bills that are very important to them

Conceptually, logrolling is just a slightly different perspective on the strategy of adding and subtracting issues.

In practice, it is useful to think in terms of adding and subtracting issues when the negotiation package is open ended and malleable, and to think in terms of logrolling when the negotiation package contains multiple items that appear fairly well fixed.
Integrative Bargaining

Strategies for Reaching Integrative Agreements - Avoiding the Fixed-Sum Error

69
It is a mistake to enter negotiations assuming that the other party’s preferences and interests are in complete opposition to their own. Negotiators more susceptible to the fixed-sum error achieve poorer results in bargaining exercises than negotiators who accurately perceive or identify during bargaining interactions that the opponent has a different preference structure.

To be successful at integrative bargaining, then, it is important for negotiators to enter bargaining situations with precisely the opposite assumption: that the opponent probably has either somewhat different preferences or, at a minimum, the same preferences but in a different order of priority.
Integrative Bargaining

Strategies for Reaching Integrative Agreements - Focusing on Ultimate Interests Rather than Switched Positions

70
Look past superficial demands advanced at the bargaining table by both parties, and investigate the more general, or core interests of one party at a relatively low cost to another, thus creating value.

Roger Fisher, William Ury & Bruce Patton, Getting To Yes.

1. For a wise solution reconcile interests, not positions.
2. Interests define the problem.
3. Behind opposed positions lie shared and compatible interests, as well as conflicting ones.
4. The most powerful interests are basic human needs.
(a)Security
(b)Economic well-being
(c)A sense of belonging
(d)Recognition
(e)Control over one’s life
Integrative Bargaining

Strategies for Reaching Integrative Agreements - Confronting Adverse Selection and Moral Hazard Problems

71
Negotiators can increase the value of an agreement, and thus expand the bargaining zone, by focusing on mitigating two common risks of contracting: “adverse selection” and “moral hazard.”
Integrative Bargaining

Strategies for Reaching Integrative Agreements - Confronting Adverse Selection and Moral Hazard Problems - Adverse Selection

72
The problem of adverse selection stems from the fact that sellers usually have more information about the quality of their wares than do potential buyers.

If the goods are high-quality, value can be crated by the seller insuring the quality of the goods in some way, often by providing a warranty.

This expands the bargaining zone by adding an issue that typically will have great value to the buyer, because it limits the buyer’s adverse selection risk, but will usually have only a minimal cost to the seller, because he/she knows the goods are high quality and the warranty will not likely be invoked.
Integrative Bargaining

Strategies for Reaching Integrative Agreements - Confronting Adverse Selection and Moral Hazard Problems - Moral Hazard

73
The problem of moral hazard arises when the seller’s actions after an agreement has been reached can affect the value of the subject of the negotiation. The solution is to structure an agreement that compensation is dependent upon performance.

The ability to structure contracts to minimize the risks of adverse selection and moral hazard is an integrative bargaining skill that scholars have identified as one hallmark of superior transactional layers.
Integrative Bargaining

Strategies for Reaching Integrative Agreements - Exploring the Opponent’s Interests and Preferences: Asking Questions

Part 1 of 2

74
Research suggests that negotiators spend most of their time during bargaining making arguments in an attempt to persuade the opponent. Integrative bargaining requires negotiators to place a greater emphasis on developing an understanding of the opposing party.

Bargaining should be seen as an opportunity to develop the knowledge about the opposing negotiator that can make such prposals possible.

Integrative bargaining requires negotiators to place a greater emphasis on developing an understanding of the opposing party.

An obvious place to begin is by using bargaining sessions to ask questions about the other party’s preferences. Ask “what” questions.
Integrative Bargaining

Strategies for Reaching Integrative Agreements - Exploring the Opponent’s Interests and Preferences: Asking Questions

Part 2 of 2

75
After understanding the opponent’s positions, it is important to search for the interests that underlie those positions and the relative value that the opponent places on each of those interests, as it is differences in interests and in priorities that form the basis for integrative agreements. Ask “what” and “why” questions.

Priorities can be probed directly by asking which of the many interests expressed by the opponent are most important, or what relative value the opponent places on the various interests.

If this does not work, ask “what if” questions designed to elicit the opponent’s opinions about a variety of potential tradeoffs.

A variation on asking “what if” questions is making multiple alternative proposals for agreements, varying the issues included in the negotiation package in each.
Integrative Bargaining

Strategies for Reaching Integrative Agreements - Revealing Interests and Prefrences

76
It is helpful to explicitly describe your underlying interests, and how you value and prioritize potential elements of the negotiation package.

Being clear about what you want, why you want it, how you prioritize issues, and the relative value you place on different aspects of the negotiation can encourage your opponent to fall prey to the fixed-sum error and help him to identify the integrative potential of a negotiation.
Integrative Bargaining

Strategies for Reaching Integrative Agreements - Post-Settlement Settlement

77
Once negotiators have agreed on a specific transaction, they continue to brainstorm various other agreements that would adjust the initial agreement or add or subtract issues. The parties agree to abide by the terms of the original agreement, however, unless both agree to revise the agreement based on their further discussions.
Power

Integrative Bargaining vs. Distributive Bargaining

78
Integrative bargaining is about enlarging the cooperative surplus that the negotiators can create by reaching an agreement; distributive bargaining is about dividing that cooperative surplus

First, distributive bargaining is necessary in any bargaining situation in which the bargaining zone is wider than a single point.

Second, distributive and integrative bargaining are complementary rather than mutually exclusive approaches. Integrative bargaining is non-zero sum: it concerns finding ways to increase the parties’ joint benefits from contracting. Distributive bargaining is zero sum: each benefit to one party entails an equivalent cost to the other.
Power

Two Basic Methods for Dividing Cooperative Surplus

79
1. Power - Force opponents to concede to their demands by explicitly or implicitly threatening to break off negotiations without reaching agreement if the opponent does not yield

2. Social Norms - Social norms govern what constitute a fair division of a cooperative surplus
Power

What is Power?

80
In the broadest and most elemental sense, power is the "ability to act or produce an effect."

The critical element of power is the ability to have one's way, either by influencing others to do one's bidding or by gaining their acquiescence to one's action. This necessarily includes the ability to achieve one's ends even in the face of opposition.

A true “test of power is whether one's goals can be met even when charm and persuasiveness prove inadequate to the task,” and when rational and legitimate standards cannot resolve the issue.
Power

What is Negotiating Power?

81
The ability of the negotiator to convince the opposing party to give her/him what he/she wants even when doing so is incompatible with the opponent’s interests.

It is the ability to bend the opponent to your will.
Power

Sources of Power: What is it and Where does it come from? - Personal Power

82
This includes “the inherent individual traits that a person brings to a negotiation not directly associated with his or her organizational status. This includes things such as a person's intelligence, persistence, courage, physical strength, appearance, celebrity, memory, confidence, awareness, education, interpersonal skills, emotional control, intuition, friendliness, and willingness to take risks.”
Power

Sources of Power: What is it and Where does it come from? - Organizational Power

83
“Given the situational nature of power, . . . organizations, which by their very nature are hierarchical and interactive (with power typically concentrated at the top and flowing downward), . . . play as large a role in power dynamics as personal power does. . . .They provide financial and human resources that vastly exceed those that can be mustered by isolated individuals.

“Power flows to individuals in organizations simply by virtue of their position. A certain amount of power inheres in positions irrespective of the individual in the position, but motivated individuals can often increase the power of their positions by working hard and seizing available opportunities.”
Power

Sources of Power: What is it and Where does it come from? - Informational Power

84
“Information power . . . tips the scales in favor of one party and . . . is the power source most easily increased in negotiations.

The more information that a party has, the more likely it is that he or she can see the context of a given situation clearly and respond accordingly. This is particularly critical where decisions must be made quickly with limited resources.”
Power

Sources of Power: What is it and Where does it come from? - Expertise

85
“Expertise is one of the most critical and powerful sources of information. Those who are viewed as having mastered an area of knowledge can often influence a proceeding by expressing an opinion about a critical point in contention, often without justifying the basis of their opinion.”
Power

Sources of Power: What is it and Where does it come from? - Moral Power

86
“We use the term "moral power" to refer to those instances in which negotiators achieve gains through appeals to fairness or morality.

In some instances, moral claims may be the only source of leverage available against those with greater power. Moral appeals seem likely to carry the greatest impact when they employ empathy to persuade opponents to place themselves in one's shoes.
Power

When Distributive Bargaining Is, and Is Not, Necessary

87
Distributive bargaining is necessary in any bargaining situation in which the bargaining zone is wider than a single point. If the bargaining zone will be only a single point, or such a small number of points, as a practical matter, distributive bargaining is unnecessary. This occurs where there is a competitive and liquid market for the item in question.

Example: the purchase of stock on the stock exchange.

Distributive and integrative bargaining are complementary rather than mutually exclusive approaches. Integrative bargaining only obviates the need for distributive bargaining in the special circumstance in which a negotiation with no bargaining zone is transformed into a negotiation with a bargaining zone of a single point. The more successful negotiators are at integrative bargaining, the more necessary distributive bargaining will be, because they will have created a larger cooperative surplus that then must be divided.
Power

Tactics By Which Negotiators Can Successfully Exercise Negotiating Power - Improving their BATNA, or Reducing the Opponent's BATNA

88
1. While power emanates from a strong BATNA, the success of a negotiator’s attempt to exercise power by threatening impasse will actually depend on the opponent’s perception of the bargaining zone, rather than the actual parameters of the bargaining zone.
2. Steps taken away from the bargaining table (as in preparation) to improve a negotiators BATNA or worsen their opponent’s BATNA will alter the negotiating zone. Thus, negotiators can gain power by changing their opponents’ perceptions of the bargaining zone, even if they do not change the actual bargaining zone.
Power

Tactics By Which Negotiators Can Successfully Exercise Negotiating Power - Why can the opponent's perceptions of the bargaining zone be manipulated

89
1. Negotiators can rarely know the opponent’s reservation price with certainty. The negotiator may not even know the opponent’s BATNA. Even if the BATNA is known, the negotiator is unlikely to know for certain how the opponent subjectively evaluates the quality of the BATNA relative to the possibility of reaching a negotiated agreement.

2. The negotiator may know his/her own precise reservation price with certainty.

3. Because all negotiators can have only uncertain estimates of the bargaining zone, the negotiator can capture some or all of the cooperative surplus created by reaching agreement by convincing the opponent to revise his/her estimates of the size and location of the bargaining zone.
Power

Changing the Bargaining Zone

90
Because negotiators who can most credibly threaten to walk away from the bargaining table has the power to impose his will on his opponent, negotiating power emanates directly from the parameters of the bargaining zone.

Power results from a strong BATNA

The presence of relatively good alternatives to reaching an agreement provides the negotiating power.
Power

Commitment

91
The challenge is to make a threat credible.

A threat is at best worthless unless the threatened party believes that the party making the threat will actually carry out his demands.
Power

Patience

92
Demonstrating the ability to wait longer for concessions than the opponent is willing to wait.

The party that is more impatient to reach an agreement will likely lose the zero-sum battle of the wills.

The power of patience is best understoond by thinking of patience as a measure of how costly it is for a party to delay in reaching an agreement.

A negotiator is patient if the costs to her of continuing negotiations rather than reaching an immediate agreement are relatively low; a negotiator is impatient if the costs to her of continuing negotiations are relatively high.

Two factors that are primary drivers of impatience
a. Costs of Lose Time
b. Costs of Negotiating – financial and nonfinancial aspects
Power

"Positive" and "Negative" Leverage

91
Negotiation power depends less on the other side's strength than on one's own needs, fears, and available options.

“A full assessment of the parties' power, however, requires a look beyond their BATNAs. Alternatives give negotiators leverage by establishing ways they can function without one another. But a proper power calculus also includes an assessment of what each party can do for and to the other. Professor Richard Shell calls the former "positive leverage" and the latter ‘negative leverage.’"
Power

Dangers of "Positive" and "Negative" Leverage

92
“Positive leverage is "needs based" and negative leverage is ‘threat-based.’" Both are dangerous and misleading. This is because “Power in negotiation stems from what each side can do for and to each other, not from what each side can do compared to one another.”
Power

The Danger of the "Negotiator Bias"

93
“Perceptions can also play a critical and confounding role even when no bluffing occurs. One of the most common and deadly perception traps is what we call a " negotiator's bias " in bargaining situations.

By this, we mean that the natural tendency of negotiators to enter deliberations with trepidation often leads to judgments, based on little or no evidence, that their opponents are negotiating aggressively and competitively, despite the negotiators' sincere efforts to bargain cooperatively.”
Power

Reducing the Opponent’s RP

94
Arguments should be made to reduce the opponent’s RP.

Rebuttal arguments can serve three purposes
1. Making rebuttal arguments can help a negotiator test the persuasiveness of the opponent’s points.
2. By rebutting, the negotiator tries to convince the opponent that the opponent’s efforts at reducing the negotiators RP have failed and, consequently, the barraging zone has not been shifted to the opponent’s advantage.
3. A rebuttal turns the tables on the opponent, by attempt to shift the opponent’s RP.
Power

Improving the Negotiators’ Own “Apparent” RP

95
Convince the OP of your own subjective belief about your RP. The negotiator presents an argument showing why he/she believes his BATNA is better. Even if the negotiator is not successful in convincing the OP sufficiently to gain the upper hand, the negotiator need only convince the opponent that he/she believes the argument he/she is advancing. Then the opponent will adjust downward the estimate of the negotiators RP. Thus, by convincing the opponent of his own subjective belief in the strength of his BATNA, the negotiator can shift the range of possible settlements downward.

Convince the OP that you are not risk adverse. Again, nothing depends on whether the negotiator believes the arguments made—all that matters is the ability to persuade the OP that the negotiator believes the argument being advanced.

The danger in both approaches, that if believed, the OP may choose to reach no agreement.
Power

Negotiating Techniques

96
No One Technique Works: “No one negotiation technique works all the time. In fact, there may well be times in which doing the exact opposite [is counseled] will prove to be a better approach than what [is suggested here]. As frustrating as it may be to hear, the only advice that applies universally to negotiations is ‘it depends.’"
Power

Characteristics of Effective Negotiators

97
1. They considered many options, including those suggested by opponents.
2. They devoted substantial time to refining and expanding areas of agreement.
3. They considered the "long-term" implications of agreements.
4. They adopted very flexible approaches in reaching agreements.
5. They avoided irritating words and phrases.
6. They made few immediate counterproposals.
7. They refrained from emotional attacks on opponents.
8. They tested their understanding frequently
9. They asked many questions.
10. They shared their feelings with their opponents
Power

Conclusions About Effective Negotiators

98
1. They entered negotiations with high aspiration levels.
2. They made high initial demands, avoided making first concessions, conceded slowly, and avoided making as many large concessions as their opponents.
3. They used concessions in a dynamic way. That is, they tested the validity of their assumptions and the intent of their opponents through concessions.
4. Prepared on the facts.
5. Prepared on the law.
6. Observed the customs and courtesies of the bar.
7. Took satisfaction in using legal skills.
8. Effective trial attorney.
9. Self-controlled
Power

Rules for Establishing Power

99
1. Establish credibility.
2. Do your research.
3. Don't have all the answers.
4. Don't quibble over the small stuff.
5. Create dependence.
6. Use the power of who you know.
7. Don't appear overbearing.
8. Use time strategically.
9. Don't play the same power hand twice.
Power

Overall Conclusions

100
1. First, effective negotiators prepare carefully and approach negotiation methodically.

2. Second, contrary to the general impression that many students bring to our courses, one need not negotiate aggressively to be effective (although aggressiveness can be effective).

3. Third, effective negotiators control their emotions during negotiations.

4. Fourth, effective negotiators engage in comprehensive questioning when they bargain.

5. Fifth, an ability to respond flexibly to different circumstances proves to be one of the most critical negotiation skills one can have.

“George Bernard Shaw once said, ‘Power does not corrupt man; fools, however, if they get into a position of power, corrupt power.’ By this, . . . Shaw meant that power can be misused, but it can also accomplish important and useful things.”

“Power above all is a matter of perception-and perceptions are highly changeable.”
Power

"Know Thyself" and To Thy Own Self Be True: Self Awareness and Self-Assessment

101
“Truly effective negotiators understand not only their opponents, but themselves as well. Because successful negotiation requires effective goal setting, emotional control, persistence, prudent risk-taking, and a variety of other personality traits, those who lack insight into themselves stand at a distinct disadvantage when dealing with others-especially others with more power. Self-awareness provides an indispensable guide for exercising self-control, and for understanding and dealing with others. This is critical for good bargaining results.”
Power

Use Weakness as a Source of Strength

102
“First, a weak party with little or nothing to lose can bring a powerful weapon-indifference-to bear.

Second, the plight of a weaker party may trigger feelings of sympathy and concern in the stronger party. This may lead the stronger party to forbear from taking action against the weaker person.

Third, weakness can trump a stronger party's power if the powerful party faces public criticism for taking action against the weaker.

Finally, weakness can lead to desperate acts, which in turn may make coercive behaviors by powerful parties very costly-so much that the battle may not be worth it.
Power

Bargaining With Weaker Parties: Advice For the Powerful

103
“First, do not always press advantages to the fullest. In a gracious manner, let the weaker party realize some gains that one could have taken for himself or herself, especially if there is even a slight possibility that one will do business with the weaker party in the future.”

“Second, when one has done well in a negotiation, without appearing obsequious or patronizing, one should go out of his or her way to reassure the other side how well they have done.”

“Finally, . . . those with more power about the critical need to permit the weaker negotiators to ‘save face.’"
Fair Division and Related Norms

Introduction

104
When power tactics fail to result in the division of the cooperative surplus created by an agreement, negotiators often reach agreements by appealing to substantive or procedural norms of fairness.

Negotiators will often reject even profitable offers if they perceive them as being unfair.

Reaching an agrmt often requires negotiators not only to believe that the deal point lies within the bargaining zone, but also that the division of the co-operative surplus is a fair one.

Fairness is a socially constructed concept that depends on context and the negotiators worldviews.

Some criteria for judging fairness includes equality, need, generosity, and equity.
Fair Division and Related Norms

The Reciprocity Norm - Introduction

105
Social convention demands reciprocity. -- If one person gives something of value to another, that person usually expect that the recipient will reciprocate in some way.

When people demonstrate reciprocity, they satisfy social convention.

People we might ordinarily dislike—unsavory or unwelcome sales operators, disagreeable acquaintances, representatives of strange or unpopular organizations—can greatly increase the chance that we will do what they wish merely by providing us with a small favor prior to their requests. In other words, uninvited gifts produce feelings of obligation.
Fair Division and Related Norms

The Reciprocity Norm - Using Reciprocity to Produce Unequal Results

105
Another feature of the reciprocity rule is that it can be used to bring about decidedly unequal results.

A small initial favor can produce a sense of obligation to agree to a substantially larger return favor.

The rule allows one person to choose the nature of the indebting first favor and the nature of the debt-canceling return favor; it can be manipulated into an unfair exchange by those who might wish to exploit the rule.
Fair Division and Related Norms

The Reciprocity Norm - Violating the Reciprocity Norm

106
A person who violates the reciprocity rule (a moocher or welsher) by accepting without attempting to return the good acts of others is disliked by the social group, unless prevented from repayment by reasons of circumstances or ability.
Fair Division and Related Norms

The Reciprocity Norm - Using Reciprocity to Obtain Concessions

107
Another consequence of the rule is an obligation to make a concession to someone who has made a concession to us.
Fair Division and Related Norms

The Reciprocity Norm - How the Reciprocation Rule Works

108
The reciprocation rule brings about mutual concession in two ways:
1. It pressures the recipient of an already-made concession to respond in kind.
2. Because of a recipient’s obligation to reciprocate, people are freed to make the initial concession and, thereby, to begin the beneficial process of exchange.
Fair Division and Related Norms

The Reciprocity Norm - Fairness and the Bargaining Zone

109
If the midpoint between the buyer’s and seller’s initial offers is within the bargaining zone, that midpoint is the most likely final contract price.

However, if the midpoint falls outside this zone, then it’s hard to predict where the final contract will fall.

The reason is that the concession will have to be lopsided, and it is hard to predict the consequences.
Fair Division and Related Norms

The Reciprocity Norm and Reservation Prices

110
Because the reciprocity norm is so ingrained in the negotiation process, expectations of reciprocal concessions can often make an initial offer or demand a signal of the negotiator’s reservation price.

Do not start the negotiation with a number that reflects where you expect to be at the end.

Refusing to engage in the negotiation dance of reciprocal concessions could cause an opponent to be believe not only that the negotiator is not dealing fairly but also that the negotiator is demanding a final deal that is far superior to his actual reservation price, whether or not this is the case.
Fair Division and Related Norms

The Reciprocity Norm - Nonmonetary Reciprocity

111
The reciprocity norm operates in a variety of ways, not merely when negotiators are haggling over price.
Fair Division and Related Norms

The Reciprocity Norm - Anchoring Effects and Reciprocity

112
Initial offers anchor the expectations concerning settlements.

Subjects who receive a large concession from one party may well be obligated to reciprocate by making a significant concession of their own.
Fair Division and Related Norms

The Reciprocity Norm - Boulwarism

113
The concept of a first, firm, fair, final offer made by the offer, who then refuses to negotiate further.

This is the negotiation tactic of refusing to revisit an initial offer.
3. While it may work in consumer transactions, if reciprocity is expected, it can prevent a successful negotiation.
Fair Division and Related Norms

Convention - Introduction

114
Another method of relying on social conventions to divide a cooperative surplus is to base the deal point on what is normal or conventional—that is, what agreements have been reached in other similar negotiating situations.

Convention carries with it a strong sense of reasonableness, such that an agreement reached on terms that are normal is one likely to be viewed as fair.

Convention can also provide
Fair Division and Related Norms

Convention - Problem

115
The problem is that the appropriate “reference transaction” from which to judge what is conventional is often contested. There may be an agreement to accept the normal price of the goods, but what is the “normal price”?

What constitutes normalcy, and therefore substantive fairness depends in part on social convention and in part on negotiator skill in framing the debate.
Fair Division and Related Norms

Convention - Reference Transitions

116
Occurs when the terms of future negotiations are referenced by past negotiations

The reference transaction provides a basis for fairness judgments because it is normal, not necessarily because it is just.

Terms of exchange that are initially seen as unfair may in time acquire the status of a reference transaction.
Fair Division and Related Norms

Convention - Fisher's Getting to Yes

117
1. The more you bring standards of fairness, efficiency , or scientific merit to bear on your particular problem, the more likely you are to
a. produce a final package that is wise and fair.
b. benefit from past experience.
c. obtain an agreement that is less vulnerable to attack.
d. reduce the number of commitments that each side must make, and then unmake, as they move toward agreement.

2. Always try to find fair standards.
3. Frame each issue as a joint search for objective criteria.
4. Never yield to pressure.
Fair Division and Related Norms

Convention - Other Focal Points - Prominence

118
The structure of the game itself sometimes dictates the final outcome. Even when it doesn’t, prominence can limit the most likely outcome. Thus, when you recognize the presence of prominent solutions and, the driving forces provided by the underlying structure of a bargaining game, you should work within that structure to your best advantage.
Fair Division and Related Norms

Convention - The Power of Reference Points Revisited

119
Reference points play a significant role in judgment of fairness.

Individuals often place a higher value on maintaining what they perceive to be the status quo in the face of a “loss” from that position than they place on capturing a “gain” from that position.
Structure of a Negotiation

Fair Division and Related Norms

Norms of Distributive Justice

120
Because reservation prices are usually unverifiable, negotiators often reach agreements by “splitting the difference” between two offers, rather than two reservation prices.

Individuals are more likely to offer and to accept unequal distributions if they perceive the inequality as resulting from relevant differences between the parties →that is, inequality is acceptable if equity is served.
Structure of a Negotiation

Fair Division and Related Norms

Norms of Distributive Justice - Equality

121
“Equality” (or parity) refers to identical distribution of benefits.
Structure of a Negotiation

Fair Division and Related Norms

Norms of Distributive Justice - Equity

122
“Equity” is the distribution of benefits according to the contribution or merits of the parties.
Structure of a Negotiation

Fair Division and Related Norms

Norms of Distributive Justice - Need

123
“Need” implies a distribution of benefits according to the differing individual needs of the parties.
Structure of a Negotiation

Fair Division and Related Norms

Norms of Distributive Justice - Fairness Norms and Relationships

124
Individuals’ preferences for equal allocations often depend on their relationship with the other party.

Friends are likely to have an easier time agreeing on a particular deal point in a negotiation than are strangers.
Structure of a Negotiation

Fair Division and Related Norms

Norms of Distributive Justice - Fairness and Preferences

125
Preferences among justice norms depend on individuals’ relationships to each other, and bargainers participating in an arms-length negotiation have an essentially antagonistic relationship that should cause each to advocate for a justice norm most beneficial to themselves
Structure of a Negotiation

Fair Division and Related Norms

Norms of Distributive Justice - The Incentive Effects of Distributive Justice Norm

126
If the value of an asset depends on future effort, and if economic efficiency is a primary goal of the negotiating parties (rather than, for example, the ongoing relationship between the parties), the equity norm will be more desirable.

Notice, however, that if the parties are negotiating only to divide an existing asset, these incentive considerations are not relevant because the value of the asset does not depend on future productive activity.
Structure of a Negotiation

Fair Division and Related Norms

Norms of Distributive Justice - Combining Fair Division with Integration

127
In most of the examples, two negotiators are in a buyer-seller relationship.
Here we can view integrative bargaining as an activity separate from dividing the cooperative surplus.

When negotiators rely on fairness norms solely in an attempt to divide an amount of money they are engaging in a purely distributive negotiation that, at that point, has no integrative potential.

In negotiating settings in which the parties must divide a shared set of entitlements – such as a divorcing couple or heirs, the relationship between integrative bargaining and fair division is more complicated. In this setting, when what is being divided is not money, the method of division can affect the integrative potential of the bargain.
The Negotiator

Introduction

128
In any negotiation situation, negotiators attempt to identify and estaimte the bargaining zone, expand the bargaining zone to enlarge the potential cooperative surplus of an agreement, capture a large portion of the cooperative surplus, and/or rely on social norms to reach a deal point and thus conclude a mutually profitable transaction.

Part III consists of analytical categories that can be used to help organize and understand the complicated dynamics of negotiation.
The Negotiator

The Negotiator's Dilemma

129
In order to engage in optimal integrated bargaining, expanding the bargaining zone as wide as possible and creating the maximum amount of cooperative surplus, negotiators must be open and forthright about their interests and preferences.

In contrast, for negotiators to capture the maximum amount of that cooperative surplus for themselves, they need to be secretive and even misleading about their BATNAs, reservation prices, interests, and preferences.

Whether to negotiate in the brightness of openness or the shadows of nondisclosure and sleight of hand → this is the negotiator’s dilemma.
The Negotiator

The Negotiator's Dilemma - The Prisoner's Dilemma as a Metaphor - Facts

130
Facts: two co-conspirators in a crime are arrested by the police and put in separate rooms for interrogation, where each prisoner receives the following information:

The police have enough evidence to convict him and his comrade of criminal conspiracy, for which each facts a sentence of one year in prison.

If the police obtain evidence that he and his comrade actually did the crime, the implicated prisoners will face a five year sentence.

If the prisoner provides a statement that implicates his co-conspirator in the commission of the crime, the district attorney will agree to a one year reduction of his sentence.

His comrade, the police represent, is receiving the same offer simultaneously.
The Negotiator

The Negotiator's Dilemma - The Prisoner's Dilemma as a Metaphor - Options for Each Prisoner & Possible Results

131
These facts create two options for each prisoner:

1. cooperate with his comrade by remaining silent

2. Defect from his comrade by providing a statement

4 possible results

Cooperate Defect
Cooperate 1,1 5,0
Defect 0,5 4,4
The Negotiator

The Negotiator's Dilemma - The Created Paradox & Dominant Strategy

132
The paradox is that each prisoner can maximize his individual payoff (that is, minimize his sentence) by defecting, but the prisoner’s are both better off it both cooperate than if both defect.

Defection becomes the dominant strategy. The prisoner will be better off employing that strategy than he would otherwise be no matter what strategy the other prisoner chooses.
The Negotiator

The Negotiator's Dilemma - The Created Paradox & Dominant Strategy

133
The paradox is that each prisoner can maximize his individual payoff (that is, minimize his sentence) by defecting, but the prisoner’s are both better off it both cooperate than if both defect.

Defection becomes the dominant strategy. The prisoner will be better off employing that strategy than he would otherwise be no matter what strategy the other prisoner chooses.
The Negotiator

The Negotiator's Dilemma - Solutions

134
Under rational choice theory, both will choose to defect and both will be sentenced to four years when they could have each escaped with only a one year sentence if both had cooperated.

The best combined strategy is cooperation, but this is the worst individual strategy, i.e., the cooperation strategy will only work if each side can be assured that the other will pursue it. This requires communication and trust (in the form of an agreement or otherwise).

The prisoners could solve their dilemma if they could enter into an enforceable contract in which both promise to cooperate by keeping silent.
The Negotiator

The Negotiator's Dilemma - Types of Cooperation Strategies - Introduction

136
1. What is the best strategy depends on what the other player is likely to be doing. What the other is likely to be doing may well depend on what the player expects you to do.
The Negotiator

The Negotiator's Dilemma - Types of Cooperation Strategies - TIT for TAT

137
1. Begin with cooperation.
2. Then do what the other player did on the previous move.
3. Using a “nice” strategy, you will never be the first to defect.
4. As a result, when two “nice” rules play, they are sure to cooperate with each other until virtually the end of the game.
The Negotiator

The Negotiator's Dilemma - Types of Cooperation Strategies - Downing

138
Downing attempts to calculate the probability that the adverse player will respond favorably to cooperative moves by DOWNING.

If the other player seems to be doing the same thing whether DOWNING cooperates or not, DOWNING begins to defect, losing hope of cooperation.

By assuming initially that the other player is uncooperative, DOWNING will defect on the first two moves, leading many other strategies to punish DOWNING (e.g., TIT-FOR-TAT).

Besides “niceness” another factor is “forgiveness.” This is the propensity of a strategy to cooperate immediately after the other player has defected.
The Negotiator

The Negotiator's Dilemma - The Prisoner's Dilemma w/a Finite Number of Rounds

139
1. Single Round
a. Both prisoners should defect if they wish to minimize their individual sentences because each is better off defecting regardless of whether the other cooperates or defects

2. Finite Number of Multiple Rounds
a. Mutual defection is also the dominant strategy in a multi-round version of the game so long as the number of rounds the game will be played is known at the outset.
This is because the last round is the same as a single round game. At this point, a reputation for being cooperative wont’ be of any further use.
The Negotiator

The Negotiator's Dilemma - Impact of Framing

140
An individual’s behavior depends not only on the objective payoffs that their choices will create, but also their percetions about what type of behavior is expected.
The Negotiator

Coping w/the Negotiators Dilemma

140
The prisoner’s dilemma can be a useful metaphor for considering approaches to negotiaton.

1. replace the prisoners with the negotiators.

2. define cooperation as the need to be open, transparent, and candid about one’s interests.

3. define defects as the need to be closed, secretive, and deceitful.
The Negotiator

Coping w/the Negotiators Dilemma - Wetlaufer: The Ethics of Lying in Negotiation - Distributive Lies

141
“Distributive” lies – those by which the liar seeks to capture an advantage over the other party.

What these lies have in common is that if successful, the liar becomes richer to the same degree to which the victim becomes poorer (Zero sum game).

There are two types of distributive lies:
a. Lies about reservation prices, opinions as to value, undisclosed principal situations (except where nondisclosure would constitute fraud) and other “deceptions essential to the process of negotiation.”
b. Lies or misreps as to operative facts
The Negotiator

Coping w/the Negotiators Dilemma - Wetlaufer: The Ethics of Lying in Negotiation - Impact of Lying

142
Lies told to secure distributive (pie-splitting) advantages may make it impossible to discover and exploit the integrative (pie-expanding) opportunities.

Lying may also cause defensive lying by others and in other negotiations.
The Negotiator

Coping w/the Negotiators Dilemma - Wetlaufer: The Ethics of Lying in Negotiation - Conclusions

143
Honesty is not necessarily the best policy

One who lies in negotiations is in a position to capture many benefits and suffer only a small cost or consequence → this can lead to an overproduction of lies.
The Negotiator

Coping w/the Negotiators Dilemma - Lax and Sebenius: The Manager as Negotiator

144
Shows an example of how deceptive negotiation strategies skew communication, making integrative bargaining elusive.
The Negotiator

The Negotiators Dilemma - Overall Conclusions

145
Misrepresenting BATNAs can produce a false belief that there is no bargaining zone.

There is data that shows that misrepresenting and obfuscating preferences in order to claim a larger share of the cooperative surplus can pay off. Studies indicate that on average, subjects who misrepresent do better in claiming cooperative surpluses than those who do not. However, this begs the question concerning how the cooperative surplus gets created - may be missing components of the surplus if fail to fully disclose facts.
The Negotiator

Conflict Style: Intro

146
Examining the effects of differences in a negotiator’s style

What effect do these differences have on the negotiation processes and outcomes?

Interpersonal dynamics affect negotiations.
The Negotiator

Conflict Style: Cooperation v. Competition

147
Legal negotiation proceeds consistently within the parameters of two basic approaches.

The majority of negotiators (65%) use a cooperative approach to negotiation.
iii. The second pattern (24%) uses a competitive approach.
The Negotiator

Conflict Style: Cooperation v. Competition - The Effective/ Cooperative Negotiator

148
The highest-rated characteristics of the effective/cooperative negotiators fall into six informal clusters.
The Negotiator

Conflict Style: Cooperation v. Competition - The Effective/ Cooperative Negotiator

Cluster One

149
Cluster One: Motivational Objectives
1. Conducting self ethically
2. Maximizing settlement for client
3. Getting a fair settlement
4. Meeting clients needs
5. Avoiding litigation
6. Maintaining or establishing a good relationship with opponent.
The Negotiator

Conflict Style: Cooperation v. Competitive - The Effective/ Cooperative Negotiator

Cluster Two

150
Cluster Two: Straightforwardness

1. Accurately estimate the value of the case
2. Know the needs of the client
3. Take a realistic opening position
4. Probe opponent’s position
5. Know the needs of opponent’s client
6. Willing to share info
7. Forthright
8. Truthful
9. Willing to move from original position
10. Objective
11. Fair Minded
12. Reasonable
13. Logical (not emotional)
14. Do not use threats
The Negotiator

Conflict Style: Cooperation v. Competitive - The Effective/ Cooperative Negotiator

Cluster Three

151
Cluster three: Personableness

1. Courteous
2. Personable
3. Friendly
4. Tactful
5. Sincere
The Negotiator

Conflict Style: Cooperation v. Competitive - The Effective/ Cooperative Negotiator

Cluster Fourt

152
Cluster four:

1. Organizing
2. Wise
3. Careful
4. Facilitating
5. Cooperative
The Negotiator

Conflict Style: Cooperation v. Competitive - The Competitive/ Effective Negotiator

153
1. The highest-rated characteristics of the effective/competitive negotiators fall into four informal clusters
The Negotiator

Conflict Style: Cooperation v. Competitive - The Competitive/ Effective Negotiator

Cluster One

154
Cluster One:
1. Maximizing settlement for client
2. Obtaining profitable fee for self
3. Outdoing or outmaneuvering the opponent
The Negotiator

Conflict Style: Cooperation v. Competitive - The Competitive/ Effective Negotiator

Cluster Two

155
Cluster Two:
1. Tough
2. Dominant
3. Forceful
4. Aggressive
5. Attacking
The Negotiator

Conflict Style: Cooperation v. Competitive - The Competitive/ Effective Negotiator

Cluster Three

156
Cluster Three:

1. Ambitious
2. Egotist
3. Arrogant
4. Clever
The Negotiator

Conflict Style: Cooperation v. Competitive - The Competitive/ Effective Negotiator

Cluster Fourth

157
Cluster Four

1. Make a high opening demand
2. Took unrealistic opening position
3. Used take-it-or-leave-it tactics
4. Rigid
5. Disinterested in needs of opponent’s client
6. Did not consider opponent’s needs
7. Unconcerned about how opponent would look to his clients
8. Willing to stretch the facts
9. Knew the needs of own client
10. Careful about timing and sequence of actions
11. Revealed information gradually
12. Used threats
13. Obstructed
14. Uncooperative
The Negotiator

Conflict Style: Cooperation v. Competitive - The Ineffective/ Cooperative Negotiator

158
The ineffective/cooperative negotiator does not have the skills or attitudes of the effective/cooperatives.

The ineffective/cooperative negotiator is:
a. Unsure of himself/herself
b. Unsure of the value of the case
c. Conservative, staller, cautious, deliberate
d. Tends to be an idealist (which may account for lack of versatility, adaptability, creativity and wisdom)
The Negotiator

Conflict Style: Cooperation v. Competitive - The Ineffective/ Competitive Negotiator

159
Ineffective / Competitive Negotiator
1. Characterized by negative traits
2. Can be described as irritating
The Negotiator

Conflict Style: Cooperation v. Competitive - Overall Conclusions

160
There is no difference in degree of effectiveness attributed to effective/cooperatives and effective/competitives.

It does not appear that either approach has the edge when it comes to obtaining the highest, (as compared to greatest, number) of effectiveness ratings.

There are a substantially greater number of effective attorneys of the cooperative type than of the competitive type.
The Negotiator

Conflict Style: Cooperation/ Competitive Styles & Integrative Bargaining

161
Cooperative and competitive negotiation styles should not to be confused with the willingness of a negotiator to pursue the negotiating goals of integrative bargaining (expanding the bargaining zone) and distributive bargaining (dividing the cooperative surplus).

The cooperative and competitive styles do not map exactly into integrative and distributive bargaining goals.

All negotiators must face up to the task of distribution.

Cooperative negotiators might be more likely to engage in integrative bargaining than competitive negotiators, however. On the other hand, being too cooperative might cause a negotiator to not engage in integrative bargaining, but rather to be satisfied with dividing equally or equitably the cooperative surplus.
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Empathy

162
Empathy is the process of demonstrating an accurate, nonjudgmental understanding of the other side’s needs, interests, and positions.
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Empathy

Two Components

163
Perspective Taking and Expression
a. Trying to see the world through the other negotiator’s eyes.
b. Facilitates value-creation by enabling a negotiator to craft arguments, proposals, or trade-offs that reflect another’s interests and that may create the basis for a trade.
c. Facilitates distributive moves by allowing the negotiator to better predict the other party’s goals, expectations, and strategic choices, thereby gaining a strategic advantage (knowing the other’s side’s next move).
d. Allows the negotiators to see through bluffing or other gambits based on artifice.
e. Negotiators with higher perspective-taking ability negotiate agreements of higher value than those with lower perspective-taking ability.
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Assertiveness

163
Assertiveness is the ability to express and advocate for one’s own needs, interests, and positions.

The underlying skills include identifying one’s own interests, speaking (making arguments, explaining), and even listening.
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Assertiveness

Benefits of Assertiveness

165
Assertion confers distributive benefits—assertive negotiators tend to get more of what they want.

Assertiveness contributes to value-creation because it is through direct expression of each side’s interests that joint gains may be discovered.
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Negotiating Styles: Competing, Accommodating, and Avoiding

Competing - Definition

166
A competitive style consists of substantial assertion, but little empathy.
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Negotiating Styles: Competing, Accommodating, and Avoiding

Competing - Characteristics

167
i. Want to experience “winning”
ii. Enjoys feeling purposeful and in control
iii. Exude eagerness, enthusiasm, and impatience.
iv. They enjoy being partisan, since conflict does not make them uncomfortable.
v. They stake out positions
vi. They fight hard to get the biggest slice of any pie
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Negotiating Styles: Competing, Accommodating, and Avoiding

Competing - Disadvantages

168
i. Competitive negotiators risk provoking the other side and incur a high risk of escalation or stalemate.
ii. Competitive negotiators are often not good listeners.
iii. They have difficulty developing collaborative relationships that allow both sides to explore value→creating opportunities.
iv. Other avoid them, perceiving them as arrogant, untrustworthy, or controlling.
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Negotiating Styles: Competing, Accommodating, and Avoiding

Accommodating - Definition

169
Consists of substantial empathy but little assertion
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Negotiating Styles: Competing, Accommodating, and Avoiding

Accommodating - Characteristics

170
i. Wants good relationships
ii. Wants to feel liked.
iii. Exudes concern, compassion, and understanding.
iv. Negotiates in “smoothing” ways to resolve differences quickly
v. Listens well
vi. Quick to second-guess their own interests.
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Negotiating Styles: Competing, Accommodating, and Avoiding

Accommodating - Advantages

171
i. They probably do have better relationships, or at least fewer relationships marked by open conflict.
ii. Other may see them as trustworthy, because they listen well.
iii. They create a less stressful atmosphere for the negotiation.
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Negotiating Styles: Competing, Accommodating, and Avoiding

Accommodating - Disadvantages

172
i. They can be exploited by hard bargainers extracting concessions by threatening to disrupt or terminate the relationship.
ii. Accommodators pay insufficient attention to the substance of the dispute, because they are unduly concerned about disturbing a relationship. Therefore, they can feel frustrated dealing with both substantive and interpersonal issues.
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Negotiating Styles: Competing, Accommodating, and Avoiding

Avoiding - Definition

173
Consists of low levels of empathy and assertiveness.
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Negotiating Styles: Competing, Accommodating, and Avoiding

Avoiding - Characteristics

174
i. Low level of empathy
ii. Low level of assertiveness
iii. Believes that conflict is unproductive.
iv. They are uncomfortable with explicit disagreement.
v. They disengage.
vi. They tend not to seek control of the agenda or to frame the issues.
vii. They deflect efforts to focus on solutions.
viii. They appear detached, unenthusiastic, or uninterested.
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Negotiating Styles: Competing, Accommodating, and Avoiding

Avoiding - Disadvantages

175
i. Avoiders miss opportunities to use conflict to solve problems.
ii. The often disengage without knowing whether obscured interests might make join gains possible.
iii. They leave value on the table, because they refrain from asserting their own interests or flushing out the other side’s.
iv. Avoiders fare poorly in the distributive aspects of bargaining.
The Negotiator

Conflict Style: Empathy vs. Assertiveness - Negotiating Styles: Competing, Accommodating, and Avoiding

Conclusions

176
If both negotiators can skillfully empathize and assert, the pair can work toward a beneficial solution that exploits the opportunities for value-creation and manages distributive issues.
The Negotiator

Conflict Style: The Thomas- Kilmann Instrument

177
Thomas describes the different categories in terms of the extent to which the negotiator focuses on satisfying her own desires, and the extent to which she focuses on satisfying the desires of the opponent.
The Negotiator

Conflict Style: The Thomas- Kilmann Instrument - Needs of the Opponent

178
1. Collaborating and accommodating orientations evidence a strong desire to meet the needs of the opponent.
2. Compromising orientation demonstrates a moderate desire to meet the needs of the opponent.
3. Competing and avoiding orientations reflect a lack of concern for satisfying the opponent.
The Negotiator

Conflict Style: The Thomas- Kilmann Instrument - Needs of the Negotiator (Their Own Needs)

179
1. Collaborating and competing orientations demonstrate a desire to satisfy the negotiators’ own interests.
2. Compromising orientation, to a lesser degree, demonstrates a desire to satisfy the negotiators own interests.
3. Accommodating and Avoiding orientations evidence a relative lack of desire to satisfy the negotiator’s own interest.
The Negotiator

Group Membership - Intro

180
The extent to which gender and culture can affect the negotiation process

Generalizing based on cultural background and gender can be dangerous.

The variance in negotiating behavior between individuals within a group will often be greater than the variance between groups, and stereotypes are likely to be misleading in individual cases.

In addition to the problem that stereotypes can be misleading, studying them also carries the risk of unconsciously and unintentionally reinforcing them.
The Negotiator

Group Membership - Benefits to Looking at Gender & Cultural Background

181
1. First, some generalizations may be accurate, on average, even given wide variation among members of a particular group.

2. Second, even if the stereotypes have little or no validity, if a significant number of negotiators assume them to be true, this could affect the way that those negotiators bargain with members of particular groups.
The Negotiator

Group Membership - Gender

182
The gender of the bargaining parties can be relevant to the study of negotiation for two reasons.
1. First, it is conceivable that men and women, on average, tend to adopt different negotiating tactics or interpersonal styles.
2. Second, it is conceivable that men and women, on average, achieve different negotiation outcomes.

B/c many people believe that men and women behave in stereotypically different ways when they interact, whether these differences are real or imagined, they may influence the way in which men and women interact when they negotiate because the participants expect these factors to affect their dealings.
The Negotiator

Group Membership - Gender: Common Stereotypes of Men

183
Common Stereotypes of Men

1. Rational and logical
2. Emphasize objective facts
3. Define issues in abstract terms
4. Rely on theoretical legal principles
5. Dominant and authoritative
6. Interruptive
7. Exert control
8. Employ direct language
9. Competitive and aggressive
10. Direct language
The Negotiator

Group Membership - Gender: Common Stereotypes of Women

184
Common Stereotypes of Women

1. Emotional and intuitive
2. Focus on relationships
3. Passive submissive
4. Exhibit tentative and deferential speech patterns
5. Adopt physical alignments that are cohesive and supportive
6. Make more eye contact
7. Less confident of their ability to influence others
8. Concerned with how people view their performance
9. More likely to avoid competition
10. Use qualifying language
11. Indirect language
The Negotiator

Group Membership - Gender: Men v. Women

185
While men negotiate, they generally endeavor to maximize their own side’s return, while women are inclined to emphasize the maintenance of relationships. This phenomenon may explain why women tend to employ more accommodating strategies than men when resolving conflicts.

Expectations → Men tend to expect “equitable” bargaining distributions, while women tend to believe in “equal” exchanges.
The Negotiator

Group Membership - Gender: 2 Significant Factors that Counterbalance Stereotypes

186
1. advanced education
2. increased communication and interpersonal transactions that enhance ability to decode signals
The Negotiator

Group Membership - Gender and Conflict Styles

187
One common stereotype of gender differences is that men are more concerned with winning and women are more concerned with maintaining relationships.

Male subjects are more likely than female subjects to use the competing style when dealing with conflict, while female subjects were significantly more likely to use the cooperating style.
The Negotiator

Group Membership - Gender and Fair Division

188
1. Women are perceived to be more altruistic than men.

2. Some evidence that women place more value than do men on treating a negotiating opponent fairly.
3. Women might be more likely to avoid selfish trading partners.
The Negotiator

Group Membership - Gender - Integrative Bargaining Agrmts

189
1. Women are more likely than men to attempt to find solutions to problems that satisfy everyone.

2. To the extent that empathy is necessary for identifying mutually advantageous bargains and finding ways to expand bargaining zones, female negotiators might attain more desirable bargaining outcomes.
The Negotiator

Group Membership - Gender - Gender Stereotypes and Lawyer- Negotiators

190
1. Female law students are more competitive and less accommodating than female undergraduate students. It can be hypothesized that “law school socialization severs to make women, as a group, more assertive.”

2. Gender-based differences in negotiating styles may be less pronounced among lawyer-negotiators than others.
The Negotiator

Group Membership - Culture

191
How a negotiator behaves in bargaining situations depends in part on the culture in which she/he has been socialized.

However, there is much variation among individual negotiators with the same background.
The Negotiator

Group Membership - Culture - Benefits to Studying the Role of Cultures

192
1. An understanding of cultural differences can usefully inform a negotiator’s approach to bargaining with someone from a different culture, especially if he/she keeps in mind that culture is not a perfect predictor of any particular negotiating behavior.

2. Another negotiator’s stereotypes of your culture will often affect how she/he bargains with you, so it is important to understand what stereotypes are widespread even if they are only marginally true or even completely false.
The Negotiator

Group Membership - Culture - Diff Bet Eastern & Western Cultures

Western Culture

193
The western focus is on the individual, solving problems, and material progress.

The western approach is a low-context, problem-solving model that views people as part of the problem, not the solution, believes each problem can be solved discretely, and defines goals in terms of matter, not psychic, satisfactions.

United States, Canada, Great Britain, and Western Europe
The Negotiator

Group Membership - Culture - Diff Bet Eastern & Western Cultures

Eastern Culture

194
The eastern stern emphasis is on the collective good and preserving social structures

The eastern approach is based on a nonverbal, implicit, high-context style of communications, that declines to view the immediate issue in isolation; lays particular stress on long-term and affective aspects of the relationship between the parties, is preoccupied with considerations of symbolism, status, and face; and draws on highly developed communication strategies for evading confrontations.

Japan and China
The Negotiator

Group Membership - Culture & Negotiation Except

195
1. Culture is the unique character of a social group.
2. It encompasses the values and norms shared by members of that group.
3. It is the economic, social, political, and religious institutions that direct and control current group members and socialize new members.
The Negotiator

Group Membership - Culture - Individualism vs. Collectivism

196
Individualism vs collectivist refers to the extent to which a society treats individuals as autonomous, or as embedded in their social group.
The Negotiator

Group Membership - Culture - Individualism vs. Collectivism

Individualism

197
i. Promotes the autonomy of the individual.

ii. Strong self-interests

iii. Set high personal goals in negotiation
The Negotiator

Group Membership - Culture - Individualism vs. Collectivism

Collectivism

198
i. Promote interdependence of individuals through emphasis on social obligations.

ii. Collectivists identify more strongly with their in-groups, and thus are more attuned to the needs of others than individualists, and tend to make stronger in-group/ out-group distinctions than individualists.

iii. Goals aligned with their in-groups’ goals
The Negotiator

Group Membership - Culture - Egalitarian vs. Hierarchy

199
Egalitarianism vs hierarchy refers to the extent to which a culture’s social structure is flat (egalitarian) versus differentiated into ranks (hierarchical).
The Negotiator

Group Membership - Culture - Egalitarian vs. Hierarchy

Hierarchical

200
In hierarchical cultures, social status implies social power. Social Superiors are granted power and privilege, but are obligated to look out for the needs of social inferiors.

Conflict within hierarchical cultures poses a threat to the social structure, since the norm in such a culture is not to challenge the directives of high status members.

Hierarchy reduces conflict by providing norms for interaction, primarily by channeling conflict that does break out to superiors.
The Negotiator

Group Membership - Culture - Egalitarian vs. Hierarchy

Egalitarianism

201
In egalitarian societies, where social boundaries are permeable and superior social status may be short-lived, there is no obligation to look out for the needs of social inferiors.

The egalitarian nature of the culture empowers conflicting members to resolve the conflict themselves.

Egalitarian cultures support direct, face-to-face negotiations, mediation or facilitation by a peer, and group decision making, to resolve conflict.
The Negotiator

Group Membership - Culture - Egalitarian vs. Hierarchy

The View of Power

202
1. Egalitarian. Power in negotiations in egalitarian cultures tends to be evaluated with respect to the situation under negotiation and the alternatives, if no agreement can be reached. Every negotiator has a BATNA. BATNAs are not fixed.

2. Hierarchical. In hierarchical societies interpersonal relationships are vertical. Social status confers social power and knowledge of status dictates how people will interact.
The Negotiator

Group Membership - Culture - How vs. Low Context Communications

203
High- vs low-context communication refers to the degree to which within-culture communications are indirect versus direct.
The Negotiator

Group Membership - Culture - How vs. Low Context Communications

High-context Cultures

204
In high-context cultures little information is in the message itself. Instead the contest of the communication stimulates pre-existing knowledge in the receiver. In high-context cultures meaning is inferred rather than directly interpreted from the communication.
The Negotiator

Group Membership - Culture - How vs. Low Context Communications

Low-context Cultures

205
In low-context cultures information is contained in explicit messages, and meaning is conveyed without nuance and is context free. Communication in low-context cultures is action oriented and solution minded. The implications of the information are laid out in further detailed communications.
The Negotiator

Group Membership - American vs. Foreign Negotiators

206
1. International business transactions cross political and ideological boundaries as well as cultures.
2. There are ideological differences in the areas of private investment, profit, and individual rights
3. In addition to language barriers, negotiators from different cultures may interpret the very purpose of their negotiation differently.
4. Americans are often accused of wanting to go too fast in negotiations, of pushing to close the deal in the quickest time possible.
5. On the other hand, one of the commonest complaints from American negotiators about any given international business negotiation is that the negotiations are proceeding too slowly.
The Negotiator

Group Membership - Culture and Negotiator Cognition

207
1. Judgment biases in negotiation are perpetuated by cultural values and ideals; therefore, certain judgment biases will be more prevalent in certain cultural contexts.
2. Common cognition errors
a. Judgment hat one’s own interests are diametrically opposed to one’s opponent
b. The issues that are most important to oneself are also the most important to one’s opponents
The Negotiator

Group Membership - Conclusions

208
East – West Divide – 3 main differences
a. West
i. Individualism
ii. Egalitarianism
iii. Low context comm
b. East
i. Collectivism
ii. Hierarchy
iii. High context comm

Understanding that cultural differences can affect negotiating behavior can help students of negotiation to predict differences in intracultural negotiations conducted by members of two very different cultures.
Additional Parties

Introduction

209
A fundamental feature of most legal negotiations is that the lawyers negotiate not on their own behalf but as agents acting on the behalf of principal parties.

Mediation is a process that brings a neutral third-party into the negotiation process.
Additional Parties

Principal-Agent Relationship - Introduction

210
When lawyers negotiate, they do so on behalf of their client.

No understanding of legal negotiation can be complete without considering the implications of the relationship between the principal (in legal situations, the client) and agent (the lawyer) on the process.
Additional Parties

Principal-Agent Relationship - Benefits of Lawyer-Agents

211
Lawyer agents often have the potential to help their clients achieve better results in negotiation than those clients would be likely to achieve negotiating on their own behalf.
Additional Parties

Principal-Agent Relationship - Benefits of Lawyer-Agents: Technical Expertise

212
1. Lawyers possess superior substantive knowledge that will aid in the negotiation process.
2. In dispute resolution situations, determining whether the principal’s BATNA is litigating or walking away from the dispute requires an analysis of the legal merits of the litigants’ claims, which a lawyer is usually best situated to provide.
3. Lawys are able to make predictions concerning the outcome of potential litigation.
Additional Parties

Principal-Agent Relationship - Benefits of Lawyer-Agents: Negotiation Expertise

213
1. For most lawyers, negotiation is a substantial part of their livelihood.
2. Experience alone, without feedback or careful attention to the lessons learned, is not likely to improve an agent’s ability in the art of negotiation.
3. Thus, while lawyers are often skilled in negotiation, they often are not.
Additional Parties

Principal-Agent Relationship - Benefits of Lawyer-Agents: Signaling

214
1. When a client retains a lawyer to represent him in a transaction, he sends a variety of signals to the other negotiator that are different than the ones he would send if he were to negotiate on his own: seriousness, willingness to litigate, unlikelihood of yielding to power tactics.

2. “I’m serious about reaching agreement,” or “I’m not afraid of the courthouse;” or “I’m not going to be intimidated.”
Additional Parties

Principal-Agent Relationship - Benefits of Lawyer-Agents: Dispassionate Observation

215
1. When negotiators are emotionally involved in the process, they are often less than objective in comparing the value of an agreement to their alternatives, as well as in identifying opportunities to improve the quality of agreements through integrative bargaining.
2. However, dispassionate observation may lead to a more dispassionate analysis, leading to more rational negotiating decisions.
Additional Parties

Principal-Agent Relationship - Benefits of Lawyer-Agents: Access

216
1. In some situations, particular types of agents will have access that principals lack.

2. For example, a well-connected lawyer (or other agent) may be able to arrange a business meeting or introduction that the individual could not arrange.

3. Alternatively, the agent’s access might improve the principal’s BATNA, thus creating negotiating power.
Additional Parties

Principal-Agent Relationship - Benefits of Lawyer-Agents: Strategic Advantage

217
A negotiator might be better able to make credible commitments not to accept an agreement that appears to exceed his reservation price if his settlement authority is limited by a principal who is not present during the bargaining.
Additional Parties

Principal-Agent Relationship - Benefits of Lawyer-Agents: Cost Effectiveness

218
Paying a lawyer to handle a complicated negotiation might prove cheaper in the long run.
Additional Parties

Principal-Agent Relationship - Cooperative Lawyers and the Pre-litigation Game

Three Common Assumptions

219
1. Clients disclose their choice of lawyer - and thus, whether they have chosen a cooperative lawyer – prior to the beginning of the game. In real litigation, plaintiffs must typically disclose their choice of lawyer at the outset of litigation: the lawyer’s name is the first thing on the complaint and answer.

2. If one client chooses a cooperative lawyer and her opponent does not, the client choosing a cooperative lawyer can change his/her mind without cost before the litigation game begins. (While there are costs to switching lawyers, these costs are likely to be low at the outset. The client will have expended little on her lawyer by the time the identity of her opponent’s lawyer is revealed.)

3. after the litigation game begins, clients cannot change lawyers.
6. This is due to the presence of substantial switching costs, which usually provides a reasonably proxy for a prohibition against discharging cooperative counsel once the litigation is well underway. The client’s investment in the lawyer’s knowledge is relationship-specific in the extreme; that is, it is of no value to the client if the lawyer is fired. The price of firing a lawyer is the cost of bringing another lawyer up to speed in the litigation.
Additional Parties

Principal-Agent Relationship - Characteristics of Large Commercial Litigation

220
i. There has been a dramatic increase in the amount of commercial litigation after 1970.
ii. Over the same period, commercial litigators have become increasingly uncivil.
iii. Self-Perception: Most lawyers classify themselves as cooperative lawyers; however, the increase in the uncivil nature of the litigation field indicates that cooperativeness is often misinterpreted and both sides begin employing power tactics.
iv. Echoes: Why then is there litigation conflict? Tit-for-tat only works where all parties have the same information. If one player misinterprets the action of the other, causing defection, when defection was not intended, there may be an “echoing” back and forth as the players simply repeat the initial mistake.
v. Noise: Thus, the information structure of the litigation game can explain the presence of significant conflict in litigation even though most lawyers claim to play tit-for-tat. Litigation is “noisy.” It is not always easy to know whether the other side intended to cooperate or to defect.
Additional Parties

Principal-Agent Relationship - Experimental Evidence

221
Lawyers can help solve the negotiator’s dilemma by promising in advance to “cooperate” rather than “defect” in negotiations and making that promise credible by pledging as collateral their representations as cooperators.

If lawyers can make credible commitments to cooperate, clients will choose to hire “cooperators,” so long as they can switch to “defectors” if their opponent hires a “defector.”
Additional Parties

Principal-Agent Relationship and Integrative Bargaining

222
i. Lawyer agents can make negotiations more integrative than they might otherwise be.

ii. But, some commentators indicate that many lawyers fail to communicate thoroughly with their clients because lawyers believe that asking too many questions about their client’s interests makes them look foolish and uninformed, or that lawyers believe such questions are unnecessary because they know what their client’s interests are, having practiced in a particular area for many years. Also, lawyers routinely fail to question their clients about the opponent’s interests because they assume that the client does not know or care about the opponent’s interests or because such questions might suggest disloyalty.

iii. Effective integrative bargaining requires the lawyer to pursue both lines of inquiry prior to negotiating with the opponent.
Additional Parties

Principal-Agent Relationship: The Costs of Agency - Principal-Agent Tension

223
i.Different Preferences
1. Agents are likely to have different preferences and values than their principals.

ii. Different Interests
1. Principals and agents often have conflicting interests, which can cause a principal who negotiates through an agent to achieve a less advantageous outcome.
2. Example: different financial interests (hourly fee v. contingency fee), interests in gaining a certain type of experience, or developing a certain type of reputation
3.Note: Financial interests also affect the type of settlement negotiated → contingent fee lawyers have a strong reason to concentrate on dollars
Additional Parties

Principal-Agent Relationship: Controlling & Mitigating Agency Problems

224
i. The law provides a number of mechanisms in an effort to reduce the ability of an attorney to serve her own interests to the detriment of her client’s interests.

ii. Rules of Professional Responsibility
1. Plaintiffs have ultimate decision as to whether to accept a settlement offer
2. A client always maintain the ability to discharge her attorney
3. Some rules prevent an attorney from taking action that would tempt an opposing attorney to violate professional ethics rules

iii. Sliding Contingency Fee Arrangement
1. Structure compensation to align the interests of principal and agent as much as possible

iv. Client monitoring
Additional Parties

Principal-Agent Relationship: Conflicts of Interests in Criminal Defense

225
i. More than 90% of criminal prosecutions are resolved through plea bargains.

ii. This is curious in light of the prospect theory that people tend to be risk-seeking when facing the possibility of losses from a reference point.

iii. By entering into a plea bargain that sends him to jail, a criminal defendant chooses certain loss of liberty over a chance of a greater loss of liberty (if a jury returns a guilty verdict at trial) coupled with a chance of avoiding any loss of liberty (if the jury returns a not guilty verdict).

iv. The usual explanation is that prosecutors must be offering deals that provide much less prison time than expected if one went to trial.

However, Birke believes that criminal defense attorneys overstate the risks of trial and attempt to frame plea offers as “gains” in an effort to make settlement more appealing their clients than it would otherwise. This is primarily because both prosecutor and defense attorneys have overwhelming case loads.