Negotiation CH.4: Expanding the Pie

5 Common win-win strategies in negotiations (think 3 Cs)

-Commitment -Compromise -Cooperation -Long term rlshp -belief in effectiveness

4 misconceptions of a win-win negotiation

-Compromise -Even split -Satisfaction -Relationship building

4 questions to ask in order to ensure integrative solution (win-win)

1) # of issues 2) Other potential issues 3) Side deals 4) Issue preferences

3 reasons - Importance of Diagnostic Questions

1) Preference 2) Value 3) Doesn't put counter party in defensive state

4 common errors why win-win not achieved

1) Purely competitive (it is actually mixed motive) 2) False conflict 3) Fixed pie perception

Differences negotiator can capitalize to expand pie

1) Valuation of issues 2) Expectations of uncertain events 3)Risk attitudes 4) Time preferences 5) Differences in capabilities

1. What are some of the misperceptions about the meaning of a win-win negotiation? Why do these misperceptions contribute to leaving money on the table in negotiation situations?

1. Win-win negotiations are often erroneously equated with fair division of resources. However, win-win is not compromise. It does not pertain to how the pie is divided, but how the pie is enlarged. Negotiators may compromise, yet leave money on the table. Win-win is also not an even split or satisfaction (in fact, many "happy" negotiators do not expand the pie), or building a relationship. (p. 70)

2. What are some of the questions a negotiator should ask when attempting to assess the win-win (integrative) potential of a negotiation situation?

2. A negotiator should ask whether the negotiation contains more than one issue (as differences in preferences, beliefs, and capacities may be profitably traded off); whether other issues can be brought in; whether side deals can be made; and whether parties have different preferences across negotiation issues. (pp. 70-72)

3. What are some of the most common errors made by negotiators who are attempting to expand the pie of resources? What are some of the psychological principles underpinning these errors?

3. The biggest detriment to the attainment of integrative agreements is the faulty assumptions we make about our counterparty and the situation. Negotiation is not a purely competitive situation, but rather, most negotiation situations are mixed-motive in nature. False conflict occurs when people believe that their interests are incompatible with the other party's interests when, in fact, they are not. The fixed-pie perception is the belief that the other party's interests are directly and completely opposed to one's own interests. (pp. 72-73)

4. What strategies should a negotiator keep in mind when presenting multiple offers of equivalent value simultaneously in a negotiation? What advantages are there to using this strategy?

4. The strategy involves presenting the counterparty with at least two proposals of equal value to oneself, that is, devising multiple-issue offers, devising offers that are all of equal value to yourself; and making the offers all at the same time. In short, a negotiator presents "package deals" of offers to the other party and invites a response. Such negotiators enjoy more profitable negotiated outcomes, are evaluated more favorably by the other party, and are more satisfied at the end of the negotiation. Additionally, multiple offers increase the discovery of integrative solutions. (pp. 82-83 )

5. What "differences" can a negotiator effectively capitalize on when trying to expand the pie of resources?

5. A negotiator can capitalize on differences in the valuation of the negotiation issues, in expectations of uncertain events, in risk attitudes, in time preferences, and on differences in capabilities. (pp. 85-86)

6. What are some of the most commonly used win-win negotiation strategies?

6. The following strategies and techniques are commonly regarded by negotiators to be key in crafting win-win deals: Approaching the negotiation table committed to reaching a win-win deal, being willing to compromise, keeping the long-term relationship between the negotiation parties in mind while negotiating, adopting a cooperative orientation and a benevolent attitude, and keeping time in mind while coming to an agreement - people will often work to fill the time they are given. In the end, the actual effectiveness of these strategies is not as potent as the negotiators' belief in their effectiveness. (pp.74-75)

7. Why is it important for a negotiator to ask the counterparty diagnostic questions about their underlying interests and priorities?

7. Negotiators who ask the counterparty about their preferences are much more likely to reach integrative agreements than negotiators who do not ask the other party about his or her priorities. Diagnostic questions help negotiators discover where the value is, and such questions do not tempt the other party to lie or misrepresent themselves. Asking the other party about their BATNA or reservation price might induce him or her to exaggerate or lie, but it is not immediately clear why or how a negotiator would lie about his or her underlying needs. Thus, diagnostic questions are effective because they do not put negotiators on the defensive. (pp. 76- 78)

8. What benefits can negotiators get from using the strategy of MESO's?

8. Negotiators who make multiple offers of equivalent value simultaneously (MESO's) enjoy more profitable negotiated outcomes and are evaluated more favorably by the other party. Specifically, they are seen by the other party as being more flexible, and they are more satisfied at the end of the negotiation. MESO's increase the discovery of integrative solutions. MESO's also serve as a more "sticky" anchor than do stand-alone offers in the sense that the counterparty views MESO's to be more cooperative and legitimate as compared to single-issue offers. (p. 83)

False Conflict

A perceived difference of opinion that does not really exist.

5 Benefits of MESO

Increased likelihood of.... 1) Profitable outcomes 2) Satisfaction 3) Discovery of integrative solutions 4) Favorable evaluation by counterparty 5) More sticky anchor (seen as more legit)

MESO stand for & definition

Multiple Equivalent Simultaneous offers a negotiator presenting the other party with at least two or more proposals of equal value

Post-settlement strategy

Negotiators agree to keep current agreement, but explore other options with the goal of finding options that mutually improve outcomes

lose-lose effect

The failure to capitalize on compatible interests

Logrolling

The strategy of making concessions on low-priority issues in exchange for gains on high-priority issues

What does "issue mix" mean in a negotiation

The union of both parties issues

Inductive reasoning

a negotiator draws conclusions about the counterparty's true interests from their responses to packages of different offers, the negotiator can discover opportunities for joint gains through the process

Integrative negotiations

aka win-win negotiations -Enlarge pie (not how its divided)

contingency contract (needs to be 4 things)

bets based on different world occurrence -Enforceable -Clear -Measurable -Readily evaluated

pre-settlement settlements

commitments made by negotiating parties before negotiations begin

illusion of transparency

occurs when negotiators believe they are revealing more than they actually are

reciprocity principle

the rule that one should pay back in kind what one receives from others