Chapter 3: Distributive Negotiation-Claiming Value

Question 1

represents the range between each party’s reservation points

Answer 1

bargaining zone (or ZOPA)

Question 2

T or F: A bargaining zone can be positive or negative.

Answer 2

True
(look at camera roll to see example of this in picture form)

Question 3

In a (positive/negative) bargaining zone, negotiators’ reservation points overlap.

Answer 3

positive

Question 4

In a (positive/negative) bargaining zone, there is no positive overlap
between the parties’ reservation points; therefore, parties
should pursue other alternatives rather than spending
fruitless hours trying to reach an agreement.

Answer 4

negative

(This creates an environment for integrative negotiation)

Question 5

T or F: With negative bargaining zones, other things will be thrown into the negotiation.

Answer 5

True

(Basketball hoop at yard sale example; throwing in a basketball, shoes, and jersey to make buyer spend 100)

Question 6

the amount of overlap between
negotiating parties’ reservation points; a measure of the value that a
negotiated agreement offers to both parties compared to the value of not reaching a settlement

Answer 6

bargaining surplus

Question 7

the positive difference between the settlement outcome and the negotiator’s reservation point

Answer 7

negotiator’s surplus (think of this as profit)
(see picture of this in camera roll)

Question 8

The total negotiator’s surplus of both parties adds up to the size of the _____ or _______ surplus.

Answer 8

ZOPA; bargaining

Question 9

T or F: You should compete for that bargaining zone surplus. You want to earn the bargaining zone surplus.

Answer 9

True

Question 10

The bargaining surplus illustrates the mixed-motive nature of negotiation: negotiators are motivated to both ______ and _______ with the other party

Answer 10

cooperate; compete

Question 11

The most commonly asked question about negotiation is:

Answer 11

How can I claim most of the bargaining surplus for myself?

Question 12

T or F: Most negotiators will not reveal their reservation point.

Answer 12

True

(and even if someone reveals their reservation point, we have no way to verify whether the information is valid or an exaggeration.)

Question 13

T or F: Negotiators should be willing to settle for outcomes that exceed their reservation point and reject offers that are worse than their reservation point.

Answer 13

True

(ex: RP is $70. Somebody offers you 71. You should accept)

Question 14

If negotiators follow these 6 basic value-claiming strategies, they can substantially increase the probability they will obtain a favorable slice of the pie:

Answer 14

1. Accurately assess your BATNA.
2. Unpack (rank) your multiple alternatives.
3. Improve your BATNA. (do this by finding other alternatives that may get ranked higher than your #2 alternative)
4. Determine your reservation point, but do not reveal it.
5. Research the counterparty’s BATNA and estimate their reservation point.
6. Set high aspirations (be realistic but optimistic) (avoid the chilling effect = when you’re too optimistic)

Question 15

Your ______ ______ defines the upper limit of what you can get in a negotiation.

Answer 15

aspiration (or target) point

Question 16

Because you will usually never get more than your first offer, your first offer represents an important _______ _______ in the negotiation.

Answer 16

anchor point

(goal is to anchor as close as possible to your offer/aspiration/target point as possible. You do this to try and bargain on your side of the bargaining zone. (ex: like playing football and wanting to be on your side of the field))

Question 17

The _______ Effect can occur when negotiators make proposals the counterparty considers extreme and can cause the counterparty to be offended and walk away

Answer 17

Chilling

Question 18

occurs when the negotiator’s first
offer is immediately accepted by the counterparty, signaling that the negotiator did not set his or her aspirations high enough

Answer 18

the winner’s curse

Question 19

making one’s first offer one’s final offer; this often unsuccessful strategy engendered hostility from the counterparty.

Answer 19

Boulwarism

(ex: Walmart does this… way to remember: think of a bull → one person kinda BULLies the other into an offer)

Question 20

KNOW THIS: refers to the fact that intuition and folklore advise negotiators to never open first, yet much scientific research argues that negotiators should always open first due to a “first mover advantage.”

Answer 20

practitioner-researcher paradox

(Basically saying, we used to think that you shouldn’t make that first offer, but research is now saying you should. Why? To get that good anchor point.)

Question 21

The Anchoring Information Model (AIM) states that first offers have two effects:
1.They serve as _______ that pull final settlements toward the initial first-offer value (anchoring).
2. They convey information about the sender’s priorities which makes the sender vulnerable to exploitation and ________ the risk of a first-mover disadvantage.

Answer 21

1. anchors
2. increases

Question 22

In the situation in which the negotiator has good information and the counterparty is believed to also have good information, it is (wise/unwise) to make the first offer.

Answer 22

wise

(you can make an assertive opening offer that operates as a psychological anchor)

Question 23

First Offers– Who should make the first offer in the following situations:
a. If you don’t have good information, and they do have good information
b. If you have good information and they don’t have good info
c. If both parties don’t have good information

Answer 23

a. let them open first
b. let them open first (why? → they may make you an outlandish offer and you are like heck yea bc that’s way more than what i was thinking)
c. you should make first offer

Question 24

T or F: The first offer that falls within the bargaining zone acts as a powerful anchor point for the counterparty’s counteroffer.

Answer 24

True
(Ideally your opening offer should not give away too much of the bargaining zone)

Question 25

Why is there a disadvantage with stating a range of offers?

Answer 25

the counterparty may focus overwhelmingly on the attractive endpoint from their point of view.

Question 26

The ______ _____ ______ argues that counterparties are influenced by both endpoints of the range as they evaluate the proposer’s reservation price as well as how polite they believe an extreme counteroffer would be.

Answer 26

tandem anchoring account

Question 27

______ offers are more potent than round number anchors because precise offers are viewed as based on more information and greater negotiator competence.

Answer 27

precise (CAREFUL THO: precise offers work when the recipient is an amateur, but can backfire when the recipient is an expert)

Question 28

(Early/late) first offers are more likely to lead to creative agreements that meet parties’ interests as compared to (early/late) first offers

Answer 28

late; early (Still want to give the first offer, but doing it within the time of appropriateness so you can make the right and appropriate researched number)

Question 29

the reductions that a negotiator makes during the course of a negotiation.

Answer 29

concessions (when you give up something in order to achieve something else.)

Question 30

Negotiators need to consider four things when formulating counteroffers and concessions:

Answer 30

1. Concession reciprocity (ex: if you give up 20 and I give up 20, we’ll be 40 closer) 2. The pattern of concessions 3. The magnitude of concessions (how much is the concession) 4. The timing of concessions (ex: takes a couple days to take place, then concessions pick up the pace → signals the end of the negotiation)

Question 31

the tendency of negotiators to reciprocate concessions

Answer 31

concession reciprocity

Question 32

the tendency for some negotiators to be disinclined to make concessions

Answer 32

concession aversion

Question 33

What is the term that matches these definitions: a. concessions made by one party b. concessions made by both sides c. when one party makes more than one concession in a row before the other party responds or counteroffers.

Answer 33

a. unilateral concessions b. bilateral concessions c. premature concessions (ex: someone makes a concession and doesn’t hear back in a week, so they send another concession. This is premature. Don’t do this.)

Question 34

Another consideration when making concessions is to determine how much to concede. * The ________ of a negotiator’s concessions is a powerful communication tool and it is unwise to make consistently greater concessions than the counterparty. * Negotiators are advised to _____ the concession magnitude of the counterparty. * Negotiators can signal they are getting near their reservation point by ________ the size of their concessions plus ________ frequency.

Answer 34

- magnitude - match - reducing; increasing

Question 35

What does GRIT stand for in the GRIT Model?

Answer 35

Graduated Reduction in Tension Model

Question 36

a conflict resolution method in which parties avoid escalating conflict to reach mutual settlement within the bargaining zone

Answer 36

GRIT Model (essentially saying if there is a standoff in a negotiation, one side is going to have to decide to concede.)

Question 37

The GRIT Model is based on the ________ principle, which calls for one party to make a concession and invites the other party to reciprocate with a concession.

Answer 37

reciprocity

Question 38

A common concession technique where one party suggests “meeting in the middle” of the offer that is currently on the table.

Answer 38

even-split ploy (meeting in the middle is bad at the beginning of a negotiation. But, it may get to a point where you should.)

Question 39

The time of concessions refers to whether they are ________, ________, or _______.

Answer 39

immediate, gradual, or delayed

Question 40

- Analysis has shown that sellers who made immediate concessions received the most (negative/positive) reactions from buyers. - In contrast, when the seller made gradual concessions, the buyer’s reaction was most (negative/positive), with (low/high) satisfaction

Answer 40

- negative - positive; high (making the other side work for it = more satisfying; kind of like the winner's curse again)

Question 41

the arguments or persuasive rationale that often accompanies an offer.

Answer 41

substantiation (Is just justifying and being able to justify why your offer is what it is.)

Question 42

Negotiators often use 2 types of rationales:

Answer 42

1. Constraint rationales 2. Disparagement rationales

Question 43

Which type of rationale does the following describe, constraint or disparagement? a. refer to one’s own limited resources (Ex: “I can’t pay more...”). b. critique the negotiated object or service (Ex: “It’s not worth more...”) Which one is the better one to use and more professional?

Answer 43

a. Constraint (better one to use) b. Disparagement

Question 44

Negotiators often use one of three fairness principles when it comes to slicing the pie:

Answer 44

1. Equality rule 2. Equity rule 3. Needs-based rule

Question 45

Match the following definitions to which fairness principle they describe: a. prescribes that distribution should be proportional to a person’s contribution. b. prescribes equal shares for all c. states that benefits should be proportional to needs.

Answer 45

a. equity rule b. equality rule c. needs-based rule

Question 46

People pay themselves substantially more than they are willing to pay others for doing the same task. This effects judgements of fairness and is known as __________.

Answer 46

egocentrism

Question 47

Egocentric judgments of fairness emerge when people select fairness rules in a self-serving fashion: - When people make minimal contributions, they often prefer (equality/equity) rather than (equality/equity). - When people’s contributions are substantial, they opt for (equality/equity) rather than (equality/equity).

Answer 47

- equality; equity - equity; equality

Question 48

_______ exists in a relationship if each person’s outcomes are proportional to his or her inputs

Answer 48

equity

Question 49

Making an irrevocable commitment such as a “final offer” should be done only when you really mean what you say and are prepared to walk away from the bargaining table. You should only walk away from the bargaining table if your _______ is more attractive than the counterparty’s offer.

Answer 49

BATNA

Question 50

the value a person places on his or her public image, reputation, and status vis-à-vis other people in the negotiation.

Answer 50

"face"

Question 51

saving your reputation. May lose the situation, but still save your reputation.

Answer 51

saving face

Question 52

When it comes to slicing the pie, the most valuable piece of information is a negotiator’s _______.

Answer 52

BATNA

Question 53

T or F: Negotiators should not reveal their reservation price and never lie about their BATNA.

Answer 53

True

Question 54

T or F: A negotiator who is well versed in the psychology of fairness is at a pie-slicing advantage.

Answer 54

True