Chapter 4

multiple, equivalent offers have an edge in five critical aspects:

(a) be more aggressive in terms of anchoring the negotiation favorably, (b) gain better information about the other party, (c) be more persistent, (d) signal their priorities more effectively, and (e) overcome concession aversion on the part of the other side.

the lose-lose effect

, a substantial number of negotiators not only failed to realize that the other party had interests that were completely compatible with their own, but they reached settlements that were less optimal for both parties than some other readily available outcome

STRATEGIES THAT DO NOT REALLY WORK

-Commitment to Reaching a Win-Win Deal -Compromise -Focusing on a Long-Term Relationship -Adopting a Cooperative Orientation -Taking Extra Time to Negotiate

Search for Postsettlement Settlements

A final strategy for expanding the pie is one in which negotiators reach an initial settlement that both agree to but spend additional time attempting to improve upon

Acceptance/Rejection Decision

At some point, negotiators may identify a set of terms that both find minimally acceptable: It exceeds both parties' reservation points and constitutes a level 1 integrative agreement. However, identification of a minimally acceptable agreement does not necessarily mean that settlement is efficient. Negotiators should continue to explore the possibilities, depending on their time costs and their subjective assessments of the likelihood of reaching a superior solution. negotiators who set specific, challenging goals are more likely to continue to search for integrative agreements than do those who do not set goals or who set easy goals

Building a relationship

Building a relationship and establishing trust comprise an important aspect of negotiation. However, people with a genuine interest in the other party may not think creatively. In fact, people who would seem to have the most interest in building a relationship with the other party (for example, husbands and wives, dating couples, and long-term partners) often fail to reach integrative agreements.

The multiple-offer strategy is threefold

Devise multiple-issue offers Devise offers that are all of equal value to yourself Make all the offers at the same time

Questions to determine negotiation potential

Does the Negotiation Contain More Than One Issue? Can Other Issues Be Brought In? Can Side Deals Be Made? Do Parties Have Different Preferences Across Negotiation Issues?

Taking Extra Time to Negotiate

Extra time does not guarantee that negotiators will reach an integrative agreement (most negotiators wait until the last few moments of a negotiation to reach an agreement)

MOST COMMON PIE-EXPANDING ERRORS

False Conflict Fixed-Pie Perception

Make Package Deals, Not Single-Issue Offers

First and foremost, negotiating each issue separately does not allow negotiators to make trade-offs between issues. To capitalize on different strengths of preference, negotiators need to compare and contrast issues and trade them off. Second, it may mean that impasse is more likely, especially if the bargaining zone is narrow and trade-offs are necessary to reach a mutually profitable outcome.

Why are these questions diagnostic with respect to increasing the likelihood of win-win agreements?

First, such questions help negotiators discover where the value is. Second, diagnostic questions do not tempt the other party to lie or to misrepresent himself or herself.

What should negotiators do to avoid lose-lose agreements?

First, they should be aware of the fixed-pie perception and not assume that their interests are opposed to the other party. Second, negotiators should avoid making premature concessions to the other party. Third, negotiators should develop an accurate understanding of the other party's interests

Do Parties Have Different Preferences Across Negotiation Issues?

If parties have different strengths of preference across the negotiation issues, then a win-win negotiation is possible.

Can Side Deals Be Made?

In many situations, people are strictly cautioned not to make side deals or side payments. In contrast, the ability to bring other people into negotiations to make side deals may increase the size of the bargaining pie.

Can Other Issues Be Brought In?

In short, the more moving parts, the better the potential deal.

Offers and Trade-Offs

In this phase, parties should consider several potential trade-offs among valuations, forecasts, risks, time preferences, and capabilities, and eliminate those dominated by other alternatives. Parties should focus on issues that are of high value to one party and of low cost for the other party to provide. It makes no sense to pursue a trade-off unless what you are offering is more valuable to the other party than what it costs you to provide.

TELLTALE SIGNS OF WIN-WIN POTENTIAL

Integrative potential exists in just about every negotiation situation. However, people often fail to see it because they do not believe that win-win is possible.

Commitment to Reaching a Win-Win Deal

Many negotiators approach the negotiation table committed to reaching a win-win deal. However, commitment to reaching a win-win deal does not guarantee that negotiators will reach a win-win agreement.

Does the Negotiation Contain More Than One Issue?

Most negotiations begin as single-issue negotiations. By definition, single-issue negotiations are not win-win because whatever one party gains, the other party loses. However, it is usually possible to identify more than one issue. The probability that negotiators will have identical preferences across all issues is small, and, it is differences in preferences, beliefs, and capacities that may be profitably traded off to create joint gain .

Compromise

Negotiators often mistake win-win negotiations for equal-concession negotiations. Equal concessions or "splitting the difference" does not really ensure that a win-win negotiation has been reached. Compromise pertains to slicing the pie, not expanding the pie.

Assessment of Differences

Once the issue mix is identified, we should focus on assessing their differences in valuation, probability assessment, risk preferences, time constraints, and capabilities.

Unbundle the Issues

One reason negotiations fail is because negotiators haggle over a single issue, such as price

EFFECTIVE PIE-EXPANDING STRATEGIES

Perspective-Taking Ask Questions About Interests and Priorities Provide Information About Your Interests and Priorities Unbundle the Issues Make Package Deals, Not Single-Issue Offers Make Multiple Offers of Equivalent Value Simultaneously

Satisfaction

Satisfaction is no guarantee that money and resources have not been wasted; in fact, many "happy" negotiators do not expand the pie.

DO NOT FORGET ABOUT CLAIMING

Sometimes, when negotiators learn about integrative agreements and expanding the pie, they forget about the distributive (pie-slicing) element of negotiation. It is not an effective negotiation strategy to focus exclusively on expanding the pie; the negotiator must simultaneously focus on claiming resources.

lose-lose agreement

The failure to capitalize on compatible interests

illusion of transparency

The illusion of transparency occurs when negotiators believe they are revealing more than they actually are

Provide Information About Your Interests and Priorities

The information that negotiators need to share is not information about their BATNAs but, rather, information about their preferences and priorities across the negotiation issues.

CONCLUSION

The successful creation of win-win negotiation deals involves perspective-taking; asking questions about interests and priorities; providing the counterparty with information about your priorities and preferences (not your BATNA!); unbundling issues; making package deals (not single-issue offers); making multiple offers simultaneously; structuring contingency contracts that capitalize on differences in negotiators' beliefs, expectations, and attitudes, and using pre- and postsettlement settlement strategies. In their attempts to expand the pie, negotiators should not forget about claiming resources.

old-fashioned negotiator

This type of negotiator comes from the old school of bargaining and believes that one must adopt a tough, hard stance to negotiate successfully

A PYRAMID MODEL

Truly integrative agreements leave no resources underutilized. We distinguish three "levels" of integrative, or win-win, agreements. Beginning at the base, each successive level subsumes the properties of the levels below it. Ideally, negotiators should always strive to reach level 3 integrative agreements. Higher levels are progressively more difficult for negotiators to achieve, but they are more beneficial to negotiators.

Prolonging Negotiation and Renegotiation

Two feedback loops emanate from the decision stage: the decision to prolong negotiations and the decision to renegotiate. Negotiators should prolong negotiations when the best agreement on the bargaining table fails to meet both parties' reservation points. Negotiators should reassess the resources by unpacking the initial set of issues and breaking them down into smaller issues that may be traded off.

Win-win negotiation really means

all creative opportunities are leveraged and no resources are left on the table. We call these outcomes integrative negotiations

False Conflict

also known as illusory conflict, occurs when people believe that their interests are incompatible with the other party's interests when, in fact, they are not.

substantiation

arguments for one's own position or against the other's position. interferes the most with win-win agreements.

Level 2 integrative agreements

better for both parties than are other feasible negotiated agreements. In other words, negotiators create value with respect to a given negotiated outcome by finding another outcome that all prefer. The existence of such agreements, by definition, implies that the bargaining situation is not purely fixed-sum

Make Multiple Offers of Equivalent Value Simultaneously

can be effective even with the most uncooperative of negotiators. The strategy involves presenting the other party with at least two (and preferably more) proposals of equal value to oneself

Win-win is not:

compromise, even split, satisfaction, building a relationship

Focusing on a Long-Term Relationship

establishing a long-term relationship does not guarantee a win-win outcome. Rather, it means that negotiators should have an easier time working to reach win-win.

Level 1 integrative agreements

exceed parties' no-agreement possibilities, or reservation points. Reaching an agreement that exceeds parties' no-agreement possibilities creates value relative to their best alternative. Negotiators create value by reaching settlements that are better than their reservation points, or disagreement alternatives.

decisionmaking model of integrative negotiation

five major components: resource assessment, assessment of differences, construction of offers and trade-offs, acceptance/rejection of a decision, and renegotiation.

Presettlement Settlements (PreSS)

have three characteristics: They are formal, in that they encompass specific, binding obligations; initial, because they are intended to be replaced by a formal agreement; and partial, in that the parties do not address or resolve all outstanding issues

Even split

like compromises, refer to how the bargaining zone is divided among the negotiators

One of the first realizations negotiators should make

negotiation is not a purely competitive situation. Rather, most negotiation situations are mixed-motive in nature, meaning that parties' interests are imperfectly correlated with one another. The gains of one party do not represent equal sacrifices by the other.

Perspective-Taking

negotiators who take the perspective of the counterparty are more successful in terms of a number of social enterprises, such as coordinating with others. 8 Perspective-taking ability also enhances negotiators' ability to claim resources and react effectively to the anchoring attempts of the counterparty.

Adopting a Cooperative Orientation

negotiators' intentions to cooperate often keep them from focusing on the right information at the right time.

d three stages in the evolution of the integrative negotiator

old-fashioned negotiator flower child negotiator enlightened negotiator

flower child negotiator

one who gets "turned on" to win-win negotiations and is so busy expanding the pie that he or she forgets to claim resources

Ask Questions About Interests and Priorities

only two are truly helpful types of questions to ask in terms of expanding the pie—questions about underlying interests and questions about priorities. 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.

compromise

reaching a middle ground between negotiators' positions. Win-win negotiation does not pertain to how the pie is divided

Level 3 integrative agreements

settlements that lie along the Pareto-optimal frontier of agreement, meaning that no other feasible agreement exists that would improve one party's outcome while simultaneously not hurting the other party's outcome. Therefore, any agreement reached by negotiators in a purely fixed-sum situation is level 3, leaving no way to improve any negotiator's outcome without making the other party worse off.

Fixed-Pie Perception

the belief that the other party's interests are directly and completely opposed to one's own interests.

Resource Assessment

the identification of the bargaining issues and alternatives. Later stages of resource assessment move beyond the mere identification of issues and alternatives to more sophisticated processes, namely, the unbundling of issues and alternatives and the addition of new issues and alternatives.

Intangibles

things that cannot be realized or defined but still very important

enlightened negotiator

who realizes that negotiation has a pie-expanding aspect but at the same time does not forget to claim resources.