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70 Cards in this Set

  • Front
  • Back
What does "fixed sum in distributive bargaining" mean?
one's gain is another's loss
conflicting interests
each party attempts to maximize its own payoff in fixed-sum game
BATNA stands for...
Best Alternative To a Negotiated Agreement
Define Reservation Price/Point.
-the bottom line
-the point of indifference between negotiated agreement and impasse
-beyond this point, the negotiator would prefer no agreement
Reservation Price is determined by...
-BATNA
-Other costs/benefits
--location and features
--linkage effects (reputation, credibility, precedent, relationships)
--ego/pride
--other intangibles
bargaining zone (or zone of possible agreement)
space between buyer's reservation point (b) and seller's reservation point (s)
If s<b, a ___ (positive/negative) bargaining zone exists.
positive
When the reservation point of the two parties overlap, there is j____ s_____ to be gained by the parties for reaching agreement
joint surplus
If b <s, a _____ (positive/negative) bargaining zone exists.
negative
When the reservation point of the two parties do NOT overlap, no resolution is possible because...
....there are no settlements acceptable to both parties.
Surplus equals...
...the agreement minus your reservation point.
Each party knows own reservation price, but only has p____ i____ about the other party's reservation price.
probabilistic information
Trades would not take place unless it were...
....advantageous to the parties concerned.
True or false: You should reveal your reservation price.
False. If known, the negotiator can push for a resolution only MARGINALLY acceptable to the other side.
Prepare, prepare, prepare by looking at...
You and your counterpart:
-interests and relative importance
-alternatives (BATNA, rp)
-sources of power
-proposals (target)
What question do you ask when it comes to figuring out your BATNA?
"What will happen tomorrow if I don't reach a deal today?"
What are "unilateral" concessions?
Bidding with yourself.
----
Offer, then wait for their counteroffer.
True or false: Dealers make much more on the extras than on the sale price.
True. This is where the money is for them.
True or false: It's not important to look at the calendar before buying a car.
False. Certain dates are more likely "hits" for you in terms of their needs.
What is a car dealership's BATNA?
They have none!

Their ideal option is you AND another buyer.

Otherwise, not you OR another buyer. (At least sell to someone.)
What's the most important rule about anchors and pricing (when dealing with a car)?
Rule #1: Don't look at the sticker, and don't talk about the sticker price at all!
Four things you should not leave home without when shopping for a car:
1. Dealer invoices from various websites
2. Multiple quotes for same automobile
3. Lists of other types/models you are interested in; pricing info for these
4. One check or a credit card (decide ahead of time on the relative merits of each system of payment)
Raiffa's Organizing Questions
- More than 2 parties? Monolithic (i.e. everyone is on the same page)?
- Linkage effects?
- More than one issue?
- Agreement required? Ratification (i.e. need to check with someone)?
- Threats possible?
- Time constraints or time-related costs?
- Contracts binding?
- Group norms?
- 3rd party intervention possible?
Position
-something you have decided upon
-be FLEXIBLE about the means to achieve your interests by continually seeking new alternatives
Interest
-what caused you to decide
-be FIRM about your ends
"I____ motivate people; they are the silent movers behind the hubbub of p_____."
Interests, positions
Be ____ about your ends (interests/goals), but _____ about the means to achieve them, continually seeking new alternatives (positions).
FIRM, FLEXIBLE
While you should never (very rarely) reveal your reservation point, you SHOULD be willing to discuss freely your:
- interests
- priorities
- goals
True or false: People make estimates by starting from an initial anchor value and sufficiently adjusting from there to yield a final answer.
False. They generally do not make sufficient adjustments.
Are final agreements more influenced by concessionary behavior or initial offers?
Initial offers
Should you make the first offer if you do not have enough information?
No, because you will probably not anchor appropriately.
- Win/Lose
- Positional
- Distributive
- Single Issue
- No future relationship
- Goal: Individual Gain

These are terms associated with ____ value.
claiming
- Win/Win
- Interest based (help each other)
- Integrative
- Multiple Issues
- Long-term relationship
- Goal: Mutual and Individual gain

These are terms associated with ___ value.
creating
Why do seller's lower their initial offer when they consider their opponents BATNA?
They psyche themselves out.
Why are people more dissatisfied when they focus on their target and receive a high outcome, versus people who focused on their BATNA but got a lower outcome?
2nd place effect: When you focus on your target, you feel dissatisfied because you're not sure what you could have gotten. So reaching a deal doesn't matter.

When you focus on your BATNA, anything is better than the alternative, even if it's not your target. So reaching a deal is more satisfactory in that regard.
Coalitions
Two or more parties who:
-agree to COOPERATE in order to achieve some mutually desirable goal
-make an explicit AGREEMENT about the division of the attained reward

Parties can be individuals, teams, organizations, or countries.
True or false: Your reservation price does not need to be related to your BATNA.
False. It should be!

If your BATNA is $0, your RP is $1.
Mixed motive situation
Two parties want to cooperate, but there is an incentive to compete.
Problems with coalitions
Inherently unstable
- optimal number is the lowest you need to get what you want (2 is the best)
- once trust is broken, stability is almost impossible to achieve
CORE solution
1. Determine shares if no deficit existed
-S: 260
-T:180
-U: 120
2. each member of coalition deduct 1/3 of deficit from their share
Shapley Model
-Order matters (i.e. who jumps in when)
- Average the values
- Pivotal power: ability to change a losing coalition into a winning coalition
RAIFFA's Hybrid Model
- combination of Core and Shapley
- adds "synergy"
Three ways to define fairness:
-Equality: everyone is the same, everyone gets the same [TURBO, UNITED]
-Equity: those who bring more should leave with more (all above models deal with equity) [STOCKMAN]
-Need: it would do the most good to give more resources to the one that needs it most, and take from those that have more [UNITED]
Unequal distributions lead to:
- more defections
- fewer integrative agreements
- greater likelihood of impasse
- more competitive behavior
If you have no resource power, there are two routes to persuasion (i.e. tactics):
-Informative Influential Tactics (IIT): central route to persuasion
-Normative influence tactics (NIT): peripheral route to persuasion
Informational Influence tactics
Think of things you can directly control...

-Power of agenda
-Power of options (what you'd like to see happen)
-Power of contrasts
-Commitment and Consistency
-Fairness Heuristics
-Time pressure

AOCCFT
Normative Influence Tactics
Think of things that affect a person's psychology and context...

- flattery
- good mood
- similarity
- delayed liking
- showing small flaws
- unconscious priming (context that you are in)
- reciprocity (give back what is given)
-reinforcement (paying attention)
- social proof (popular option)
- reactance (reverse psychology)
- foot-in-the-door
- door-in-the-face
- that's-not-all
How to get information to create integrative agreements:
If the other side is considered reasonable, you can:
- build trust
- share info
- ask questions
- give away some info

Otherwise:
-make multiple offers simultaneously (packages that are equivalent to each other - will help you learn about THEIR priorities)
-search for post-settlement settlements (e.g. Is there any way you could have given me this? After the deal is done)
Getting to integrative agreements can involve (certain tactics)...
-expanding the pie
-logrolling: "Give me more of my important thing, and I will give you yours"
-cost-cutting: making it easier for the other side to say "yes" by cutting their problems
-nonspecific compensation: bribery
-bridging: finding alternative solution that neither side is vying for (e.g. you want A, I want B, so we bridge by doing C)
Contingent Contracts (which are contract actions that are contingent on something) do what?
- turn differences into value
- diagnose deceit/bluffing
- reduce risk through risk sharing
- motivate performance
Integrative agreements build off what kinds of differences?
Differences in:
-assessment of the probability of future events
-risk preferences
-time preferences
What are the limits to contingent contracts?
1. Future events must be:
-Observable
-Measurable
-Impervious to covert manipulation
2. Require continuing interaction between parties
3. Enforceability
4. Increases perceived value but not actual value
Post-Settlement Settlements: what do they do/allow for?
- elicits INTERESTS of parties
- offers take-it-or-leave-it SOLUTIONS with both parties possessing VETO power
- DEPARTURE FROM rigid positional bargaining and ANCHORING on pre-settlement propositions
- search for more INTEGRATIVE solutions
Two main characteristics of a dispute:
1. One party makes a claim; the other party rejects it.
2. Emotion! (anger, frustration, resentment, mistrust, hostility)
What happens when emotions get the better of a dispute?
- communication channels constrained
- conflict becomes personalized
- communication characterized by focus on positions, criticism, and blame
- heightened perception of differences between parties
-as tension increases, positions become more firm
Three Approaches to Resolving Disputes:
1. Interests
2. Rights (legal)
3. Power (what you are free to collect/insist on)
When a situation exists when one side's BATNA depends on what happens with the other side...(what does it do)
...it creates added incentives to work toward integrative agreement.
When to use Rights or Power:
- when the other party will not come to to the negotiating table
- when you face impasse after trying to focus on interests
How to bring rights- and power-based negotiators back to interests:
- don't reciprocate (will lead to a power struggle - unless you have to, but add an interests-based proposal)
- don't get personal, don't take it personally
- try a process intervention (e.g. talk to someone else)

DO NOT PLAY THE BLAME GAME!
How to manage difficult negotiators:
- don't react to competitiveness, take a break
- apologize that it happened, NOT that you screwed up
- stay focused on benefits of agreement and BATNA
Hardball tactics to be aware of:
- good cop/bad cop (contrast effect, anchoring): combat by calling them out on it

- highball/lowball (extreme offers, anchoring): say it's unreasonable or ask for justification

- bogey (pretending something is important): ask for single trades, offer it, or ask why they are interested

- nibble/salami slicing (asking for one last thing): ask for something or re-open negotiation

- chicken (exchanging threats): just stop threats

- intimidation: turn it right around

- aggressive behavior: take a break

- snow job/ data dump (overwhelming technical info): either ask to explain everything, bring in a technical person, or call them out on it (i.e. you're a competent person and if they aren't explaining it correctly, it's their problem).
Study shows that if a negotiator is (number), then the outcome is (letter).

Match the following:
1. Resolute
2. Positive
3. Rational

a. they claim the largest share of the pie for themselves
b. they were rated highest on partner's desire to work with them again
c. they were faced with the highest impasse rates (more likely to walk away with nothing)
1. c
2. a
3. b
Types of mediator involvement:
-FACILITATIVE: parties can solve problem, just need help having conversation
-COLLABORATIVE: work with parties to generate ideas
-EVALUATIVE: give (legal) perspective on the situation
-AUTHORITATIVE: make decisions (like arbitration)
Why bring in a third party? (6 reasons)
-parties unable to communicate
-high level of mistrust between parties
-need controlled setting
-help identify integrative potential
-face-saving on distributive issues
-time and cost savings compared to court
Effective third parties...(do what)
- modify communication exchange
- modify issue structure
- modify disputant motivation
- create lasting solutions
Third parties modify communication exchange by:
- asking questions
-re-conceptualize the question/situation
-provide structure and time limits
-control discussion for selective information flow
Third parties modify issue structure by asking...
"What can we do from here?" (focused on future rather than past like litigators)

-highlight interests
-introduce goals
-identify innovative solutions
-point out links between issues
-propose alternative offers
Third parties modify disputant motivation by...
-allowing venting to be directed towards them
-change momentum through separations, questions, etc.
-limit loss of face
-enhance trust
-remind disputants of consequences of non-settlement
What works in third party mediation:
- allow parties to be heard by each other
- voice to each party
- engage parties for solutions
- remind parties what no agreement will yield (e.g. legal action)
What doesn't work in third party mediation:
-interrogation
-telling them what to do
-throwing resources without psychological commitment from both sides