Problem 7

Question 1

When is negotiation needed/used the most ?

Answer 1

When 2 parties need to reach a joint decision but have different preferences

–> needed to reach a mutually agreeable outcome

Question 2

Game theory

Answer 2

Is a model that analyzes all the outcomes that will emerge in negotiation contexts, if all parties act rationally

–> first outline the conditions that define how decisions are made, then add all the different combinations of player moves

Question 3

Decision analytic approach

Answer 3

Focuses on how non-rational (normal) people actually behave when negotiating, rather than how we should behave

–> goal is to provide guidance for the person wanting to negotiate, by predicting the the other party’s expected behavior Based on 3 structures

1. Alternatives

–> BATNA

2. Each parties set of interests

3. Relative importance of each parties interests

Question 4

BATNA

Answer 4

Refers to our “Best alternative to a negotiated agreement”

–> provides a lower bound for determining the minimum outcome we require of a negotiated agreement

e.g.: will decline any negotiated agreement that provides less than BATNA, which in turn indicates our reservation point

Question 5

Reservation point

Answer 5

Refers to the least favorable point at which one will accept a negotiated agreement

Question 6

What are the 6 most important keys to successful negotiations / tools for Value creation ?

Answer 6

1. Building a relationship of trust to the other party
2. Asking questions + listening to new info
3. Disclosing info strategically
4. Negotiating multiple issues simultaneously
5. Making multiple offers simultaneously
6. Searching for a PSS

–> important to analyze the interests of the opposing party + determining the other parties reservation point

Question 7

Positive bargaining zone

Answer 7

Occurs when the reservation points of the 2 parties overlap

Question 8

Negative bargaining zone

Answer 8

Occurs when the reservation points of the 2 parties do not overlap

–> no resolution will occur

Question 9

In which way can contingent contracts/bets be successful in negotiations ?

Answer 9

1. Allows each side to bet on its opinion
2. Each seller will recognize their susceptibility to this effect and thus adjusts their expectations

Question 10

In which way can building trust by sharing info help the negotiation process ?

Answer 10

1. Sharing info with each other will most likely only happen when the parties trust each other due to vulnerability
2. One will be ale to understand the values the opposing party places on different issues

–> should only disclose info that is not too important

Question 11

When negotiating we tend to focus on persuading the opposing party + concentrating on what we are going to say next, which rather leads to unfavorable outcomes .

What should we rather focus on ?

Answer 11

1. On asking questions + listening actively for new info

–> this way we’ll understand the other party’s interest the best

2. Revealing info of comparatively minor importance that focuses on try trades we are willing to make

–> this might build trust + elicit reciprocity to create info sharing

Question 12

How can making multiple package offers simultaneously ameliorate the negotiation process ?

Answer 12

Allows one to come across as a flexible negotiator

–> builds a trusting relationship

Question 13

What is a Post-settlement-settlement (PSS) ?

Answer 13

A PSS process is initiated after an initial agreement is already found.

–> offers a last attempt, with limited risk to either party, to ensure that a Pareto-efficient agreement has been found, by engaging a 3. party

Question 14

Pareto efficient agreement

Answer 14

Refers to an agreement whereby every party is content with the outcome

Question 15

Are there gender differences in the ability to negotiate ?

Answer 15

Yes,

Women are less likely to initiate them and are less assertive when conducting them

Question 16

Where do the gender differences in negotiation stem from ?

Answer 16

They are due to cultural variations

ex.: matrilineal culture economically empowers women + gives them an active role in economic transaction which results in better negotiation skills

Question 17

What are the 4 most important sources of power at the bargaining table ?

Answer 17

1. Alternatives

–> having leverage

2. Information sharing

3. Status

–> reputation

4. Social capital

Question 18

What is the definition of power in negotiation ?

Answer 18

It refers to the probability that a negotiator will influence a negotiation outcome in the direction of his/her ideal outcome

–> the more power one has, the higher the probability of winning due to more confidence

Question 19

What is social capital?

In which way can it be used as a source of power in negotiating ?

Answer 19

1. It refers to ones strong social network
2. By increasing this, the negotiator increases the likelihood of improving his/her alternatives, status + capacity to acquire valuable info

Question 20

Self worth

Answer 20

Refers to a persons view of his/her value in society

–> the way a person sees himself in relation to others

Question 21

Dignity culture

Answer 21

Refer to cultures where self worth is based on individual goals + pursuit of these goals and values

–> dignity is based on ones own assessment of whether ones standards are met, not easily challenged by others

e.g.: West

Question 22

Face culture

Answer 22

Refer to cultures where self worth is based on others assessment of whether ones social role obligations are fulfilled

–> individuals do not act freely nor are autonomous

e.g.: East asia

Question 23

Honor culture

Answer 23

Cultures where self worth is based on individuals reputation + own assessment of what others think of them (Looking glass self)

–> honor means fulfilling ongoing social roles

e.g.: Middle east

Question 24

Insight (when negotiating)

Answer 24

Refers to a negotiators level of awareness of their counterparts concerns, interests + priorities

Question 25

What is an Integrative/Cooperative negotiation?

Its suiting strategy ?

Answer 25

1. Is a about cooperating to finding a win-win solution for both parties
2. The strategy consists of behaviors that convey info about the parties interests + priorities

–> type of info sharing operationalized by questions, answers, statements, recognizing trade offs

Question 26

What is a Distributive/Competitive negotiation?

Its suiting strategy ?

Answer 26

1. Is about fixed resources that are subject of the negotiation
   ex. : money
2. Refers to a strategy that consists of behaviors that try to influence the counterpart to make concessions

–> ranges from threats to appeals to sympathy

Question 27

What is negotiating like in Face/ Eastern cultures ?

Answer 27

Competitive behavior, thus value claiming

–> BUT: engage in less info sharing

Question 28

What is negotiating like in Dignity/Western cultures ?

Answer 28

Cooperative behavior, thus value creation

–> no need to outperform due to the fact that self-worth is intrinsically determined + social structures are more egalitarian

Question 29

Creating Value

Answer 29

“Increased size of the pie” , identifying the opposing party’s issues/interests, then finding trade offs across those

–> its aim is to find a solution with which both parties are better off than when they would have just compromised

Question 30

Claiming value

Answer 30

“Slicing the pie”

–> its aim it to determine the other party’s reservation point + aim for a resolution that is barely acceptable to the other party

Question 31

What are common negotiator biases/mistakes ?

Answer 31

1. Fixed pie assumption

–> related to Incompatibiltiy bias

2. Framing effects

3. Escalation of conflict

4. Overestimation of own value

5. Self serving bias

6. Anchoring

Question 32

Incompatibility bias

Answer 32

Assuming that ones interests, will always directly conflict with those of the other side

–> occurs when value claiming is too salient

e.g.: “Anything thats good for the other party, is bad for me”

Question 33

Framing effects

Answer 33

Negative framers are less likely to make concessions + reach mutually beneficial outcomes

–> depends on the perceptual anchor

Question 34

Overestimation of own value

Answer 34

Wrongly set BATNA

–> will elicit a negative bargaining zone

Question 35

Self serving bias

Answer 35

Refers to the tendency for people to define what is fair in ways that favor themselves

Question 36

Anchoring

Answer 36

Occurs when an individual depends too heavily on an initial piece of information offered when making decisions

–> thus are more biased to first offers

Question 37

Role congruity theory

Answer 37

Proposes that a group will be more positively evaluated when its characteristics are recognized as aligning with that group’s typical social roles

ex.: girl dancing ballett

Question 38

Name the main differences in negotiation across cultures.

Answer 38

1. Long term relationship vs one time deal
2. WIN negotiation vs WIN-WIN negotiation
3. Informal vs formal attitude
4. Direct vs indirect communication
5. Showing vs hiding emotions
6. Leader vs group decision

Question 39

Down-graders vs Up-graders

Answer 39

Refers to a certain communication style

Upgraders:

• “totally, completeley, absolutely”…

Downgraders:

• “partially, mayber, a little bit”..

Question 40

Fixed pie assumption

Answer 40

Devaluating everything that the opposing party offers, just because it is coming from the opposing party (no trust)