MIDTERMS

Question 1

What are the three approaches to negotiation?

Answer 1

1) Rational
2) Psychological
3) Anthropological

Question 2

What are two major models in rational approaches?

Answer 2

1) Distributive Bargaining
2) Integrative Negotiation

Question 3

What is the synonym of “distributive bargaining”?

Answer 3

Competitive bargaining, Zero-sum game, Fixed-pie, Claiming value

Question 4

What is “distributive bargaining”?

Answer 4

• Alternative name - “competitive bargaining”
• Approach - Rational
• Negotiation items / issues - single issue stake / single interest
• Focus - claiming as much value as possible from the existing items / issues

Question 5

What is “integrative negotiation”?

Answer 5

• Also called - cooperative negotiation
• Approach - Rational
• Positive-sum game
• Strategy - win-win strategy
• Focus - create value for both parties - mutually beneficial solutions

Question 6

What are the 4 types of individual differences?

Answer 6

1) difference in interests
2) difference in risk tolerance
3) difference in time preferance
4) difference in judgements about the future

Question 7

What are the three situations when you should not agree to start a negotiation?

Answer 7

1) when you are unprepared
2) when your negotiation partner is making unethical demands
3) when your negotiation partner is acting in bad faith
4) when waiting would improve your situation

Question 8

What is BATNA? Define it in one sentence.

Answer 8

BATNA is the Best Alternative To a Negotiated Agreement

Question 9

What should be done in the post-negotiation stage?

Answer 9

1) review the contract carefully with lawyers and experts
2) be prepared to renegotiate
3) ensure the execution of the agreement as planned
4) maintain good relations with the negotiation partner

Question 10

Explain the Dual-concerns Model

Answer 10

• Framework for understanding negotiation behaviour
• TWO DIMENSIONS -
  1) Assertiveness = negotiator is concerned with their own negotiation outcomes
  2) Cooperativeness = negotiator is concerned equally with the negotiation outcomes of others
• FIVE TYPES -
  1) Problem-solving = collaborative + integrative
  2) Yielding = accommodating + obliging
  3) Inaction = avoidance
  4) Contending = competing / dominating
  5) Compromising = seeking middle-ground - balancing self-interests with others interests

Question 11

Abe is a buyer and Betty is a seller. Abe’s reservation point is $200,000 and Betty’s is $150,000.
a) Is there positive ZOPA?
b) Let’s assume that Abe does not have any idea about Betty’s reservation price. In this uncertain situation, Abe has received an offer of $180,000 from somebody else. What should Abe’s new reservation price be?

Answer 11

a) Yes, there is positive ZOPA of $50,000.
b) Abe’s new reservation price should be $180,000, because he has been guaranteed a purchase for $180,000.
- unaware of Betty’s RP -/ ^180,000
- (v) further negotiate with Betty

Question 12

If you are a buyer, which one should be higher than your target price? The initial price or the reservation price?

Answer 12

RESERVATION PRICE - more favourable to purchase closer to target price which is ideal purchase price

Question 13

The other’s resistance price should be equal to your ______________

Answer 13

Target price

Question 14

What is sunk cost?

Answer 14

• Money that a person invested that is now lost
• incurred cost that has not been recovered

Question 15

What is Boulwarism? How is it different from take-it-or-leave-it?

Answer 15

BOULWARISM - tough
- first offer = final offer
- no concessions
- AIM - convince other party that that offer is best offer
- RESULT - eliminates negotiation process

TAKE-IT-OR-LEAVE-IT - rational
- final offer in negotiation process is not very detailed
- RESULT - possibility for further negotiation

B<TILI - flexibility

Question 16

What is “anchoring effect” in negotiation?

Answer 16

• exposure to seemingly high (as opposed to low) price = “anchor”
• influences negotiator’s response to it
• tendency to adjust offer closer to anchor
• affects negotiation outcome

Question 17

When should you go first and make the initial offer?

Answer 17

1) when you are prepared and have good information
2) when you have the advantage of anchoring effect

Question 18

When should you wait and let the other person call the first price?

Answer 18

when you are unprepared and don’t have good information > give away crucial information - RP

Question 19

What are the disadvantages of making an exaggerated offer?

Answer 19

1) potential of offer being rejected by other party
2) perceived as “tough” attitude - negatively affects long-term relationships - vFuture negotiation cooperation

Question 20

What is the “White Hat/ Black Hat” strategy?

Answer 20

• begin negotiation by making generous concessions
• become tough + unyielding in later stages
• opposite BH/WH strategy - begin tough > larger concessions later

Question 21

What are the various tactics to close the deal? Explain.

Answer 21

1) provide alternatives
2) assume the close
3) split the difference
4) exploding offer
5) sweeteners
6) saving face

Question 22

At the end of a negotiation, there is a deadlock between you and your negotiation partner. You simultaneously give them multiple final offers and let them choose one. What is this tactic called?

Answer 22

providing alternatives

Question 23

In what situation are hardball tactics effective? How do you respond to them?

Answer 23

• when negotiation partner has poorly prepared negotiation
• when negotiation partner has weak BATNA

Respond
- discussing them
- ignoring them
- responding in kind
- co-opt the other party

Question 24

Explain “up-graders” in expressing their disagreement with their negotiation partners. Give names of three nations who are up-graders.

Answer 24

• exaggerate extent of disagreement
• provoke anger
• vehemently challenge coutnerpart

eg - RUS, GER, NTH

Question 25

Explain "down-graders" in expressing their disagreement with their negotiation partners

Answer 25

- soften disagreement - avoid expressing negative feelings eg - JAP, MEX, PERU, THAI

Question 26

What are four types of integrative negotiation?

Answer 26

1) different preferences for different items and issues 2) instrumental interests v/s different items and issues 3) finding a new negotiation partner for integrative bargaining 4) adding issues and bundling issues

Question 27

Explain "position-based" approach and "interest-based" approach to integrative negotiation

Answer 27

POSITION-BASED - answer "what do they want?" - window-open - false-conflict INTEREST-BASED - answers "why do they want it?" - window closed - illusionary conflict eg - EGT V/S ISR - Sinai Penninsula

Question 28

Explain why the US became a sucker when it tried to conduct integrative negotiation with North Korea in 1994.

Answer 28

- Integrative negotiation fails when you cannot trust your partner - NK - nuclear reactor - ‘cheaper power for electricity’ - US - security concerns - NK - real reason - ‘nuclear weapons’ - US - naive - light water reactor - does not give plutonium - cannot make nuclear weapons

Question 29

What is “Pareto Efficiency”?

Answer 29

- goal of creating value to push the claiming value to a point where there is no argument that would make any party better, without decreasing outcomes to the other parties.

Question 30

What are the two dilemmas in exchanging information?

Answer 30

1) Dilemma of Honest - “how honest should you be with your partner?” 2) Dilemma of Trust - “how honest do you think your negotiation partner is being with you?”

Question 31

How are “Affective Trust” and “Cognitive Trust” different?

Answer 31

- Affective Trust - subjective - based on personal liking and friendship - Cognitive Trust - objective - based on abilities

Question 32

What are three ways to build affective trust?

Answer 32

1) gift-giving 2) similarity and praise 3) reciprocity 4) fair treatment and trustworthy

Question 33

What are three ways to build cognitive trust?

Answer 33

1) expertise on items and issues of negotiation 2) expertise on negotiation itself 3) being consistent in behaviour and argument

Question 34

What is the synonym of distributive bargaining? A) win-win B) non-zero sum game C) divide a fixed-pie D) value creating

Answer 34

C

Question 35

What is a wrong description of negotiation? A) most actual negotiations are a combination of claiming and creating value process B) negotiators must be able to recognise situations that require more of one approach than the other C) negotiators must be versatile in their comfort and use of both major strategic approaches D) negotiator perceptions of situations tend to be biased towards seeing problems as more distributive or competitive than they are in reality E) none are wrong

Answer 35

E

Question 36

What is not a destructive consequence of conflict? A) competitive, win-lose goals B) misperception and bias C) emotionality D) decreased communication E) shrink the conflict

Answer 36

E

Question 37

When distributive strategies are likely to be used? A) when a negotiator wants to maximise the value obtained in a one-shot deal (no long-term relationship) B) when the relationship with the other party is not important C) when they are at the claiming-value stage of negotiation (usually in the final stage) D) when only one issue or one interest remains at stake E) all of the above

Answer 37

E

Question 38

What is usually a good way to make concessions in the US? A) make an immediate concession if the other strongly resist your offer B) make a series of concessions if the other strongly reject your offers C) make multiple concessions in a decreasing order D) none of the above is a good recommendation for making concessions

Answer 38

C

Question 39

What is a good recommendation for negotiation bargaining? A) express your glee after a successful deal B) verify the contract before signing it C) write a flexible contract to handle uncertainty D) the contract does not need to be reviewed by lawyers E) none is a good recommendation

Answer 39

B

Question 40

What is not one of the 4 steps in position v/s interest type of integrative negotiation? A) prepare the negotiation B) identify and define the problem C) surface interests and solutions D) generate alternative solutions E) evaluate and select alternative

Answer 40

A

Question 41

Which of the following should happen in identify and define the problem stage? A) understand each other’s interests B) attempt to understand the other’s real needs and objectives C) do not judge the other’s behaviour with your standards D) try to find compatible interests E) try to have information exchange

Answer 41

E

Question 42

Which of the following processes is important to achieving almost all integrative agreements? A) moderating the free flow of information to ensure that each party’s position is accurately stated B) exchanging information about each party’s position on key issues C) emphasising the commonalities between the parties D) searching for solutions that maximise the substantive outcome for both parties E) all of the above are processes that are central to achieving integrative agreements

Answer 42

E

Question 43

Which of the following statements about interests are true? A) there is only type of interest in a dispute B) parties are always in agreement about the type of interests at stake C) interests are often based in more deeply rooted human needs or values D) interests do not change during the course of an integrative negotiation E) all of the above statements about interests are true

Answer 43

C