MGMT 353 Exam 2
The ultimatum dilemma
One person offers an ultimatum to the other person. If win then settled, if declined then walk away Factors that determine the likelihood that the responder will accept the offer -Complete vs incomplete information -Framing -Deadlines -Feelings and emotions -Social identity
Explicit negotiations
Situations in which people seek to reach mutual agreement via binding contract
Individualism vs collectivism involves a variety of implications for the conduct of negotiations
Social networks Cooperation In-group favoritism Social loafing vs social striving Emotion and inner experience Dispositionalism vs situationalism Preferences for dispute resolution
In cultures with direct communication norms
Messages are transmitted explicitly and directly Communications are action-oriented and solution-minded Information is provided without nuance and is context free Negotiators often ask direct questions about interests and alternatives
Cost-benefit analysis (decision-making model)
Compute a cost-benefit analysis and attempt to maximize their returns
Escalation of commitment
1. Losing the small amount of money you have already invested 2. Taking additional risk by investing more money in the company, which could turn around and make a large profit or plummet even farther
Levels of analysis in a multiparty negotiation
1. Multiparty 2. Coalitions 3. Principal agent 4. Constituencies 5. Team negotiation 6. Intergroup
3 criteria for assessing the viability and usefulness of contingency contracts
1. Some degree of continued interaction between the parties 2. Enforceability of the contingency contract 3. High degree of clarity and measurability
Coalitions face 3 sets of challenges
1. The formation and size optimization of the coalition 2. Trust formation and maintenance in coalitions 3. The complex distribution of resources among members
Rational problem-solving model
1. Understand the problem 2. Devise a plan 3. Carrying out the plan 4. Looking back
Place-time model of social interaction
Based off the four modes of interaction that negotiators have when doing business from across different locations and times Richness describes the potential information-carrying capacity of a communication medium. Face-to-face communication is relatively "rich," whereas written messages are "lean."
Representativeness bias
Based on stereotypes of people, which may have a basis in reality but are frequently outdated and wrong
Negotiators may face several challenges with constituent relationships such as:
Behind the table barriers Accountability Conflicts of interest
Constituent relationships
A constituent is ostensibly on the same side as the principle negotiator, but exerts an independent influence on the outcome through the principle negotiator
Tacit negotiations
A negotiation conducted by actions and pledges, in the absence of a binding contract
The volunteer dilemma
A schema in which one person in a group must sacrifice their interests to benefit the group. Communication increases volunteering and the act of volunteering strengthens group ties. Feelings of obligation to one's group, expectation of extrinsic rewards, and identifying with one's organization all significantly increase volunteerism.
Advice for international negotiators
Acknowledge differences at the individual and societal levels Trade off differences in preferences and abilities Ask questions to ensure understanding of the other party's perspective Understand the norms and their underlying meanings Avoid arguing the inherent legitimacy of a social system Be prepared to manage bureaucratic interactions with governments
Structural strategies
Align incentives Monitor behavior Regulation Privatization Tradable permits
Advice for cross-cultural negotiations
Anticipate differences in strategy and tactics that may cause misunderstandings Cultural perspective taking Recognize that the other party may not share your views of what constitutes power Avoid attribution errors Find out how to show respect in the other culture Find out how time is perceived in the other culture Know your options for change
Just world bias
Blaming the victim attributions are defensive attributions because they enable observers to deal with perceived inequities in others' lives and maintain the belief that the world is just. People believe the world is a fair place
Characteristics of creative negotiations
Breaking single-issue negotiations into multiple issues Finding differences- looking for patterns in offers Expanding the pie Bridging- creates new alternative that meets parties underlying interests Cost cutting- a way of making the other party feel whole by reducing that party's costs Nonspecific compensation- one negotiator receives what he or she wants, and the other is compensated by some method that was initially outside the bounds of the negotiation Structuring contingencies- contingency contract, differences of opinion among negotiators concerning future events do not have to be bridge, but intend have to become the core of the agreement
Questions that home buyers should ask real estate agents
Can you represent me as a buyers agent? How will you find me homes? How can you leverage my down payment, interest rate, and monthly payment? What different points will you be able to negotiate on my behalf? How long have you been selling real estate full time? What can I expect in terms of communication? Does your contract have an "easy exit" clause? Under what conditions will you cut your commission?
Egalitarian/hierarchical power relationship implications for negotiations
Choose your representative carefully Understand the network of relationships Understand the "face" concerns Understand the proper conduct of negotiations for that culture
Strategies for improving constituent relationships
Communicate with your constituents Do not expect homogeneity of constituent views Educate your constituents on your role and limitations Help your constituents do horizon thinking
Game-playing model
Competitive bargaining strategy in which one party seeks to maximize their value by outmaneuvering the other party. Each person has his or her own interests in mind.
Information technology and its effects on social networks
Computerized interaction increased resources of low-network people Some companies need to rely on electronic models of communication for employees to form connections with each other E-mail provides alternate routes to letting people have a voice if they are low contributors in face-to-face meetings
Face-to-face communication (same time, same place)
Crucial in the initiation of relationships and collaborations Encourages cooperation in negotiators Fosters the development of interpersonal synchrony and rapport The incidence and frequency of face-to-face communication is determined by how closely people are located to one another
Aspects of a collectivist culture include
Culture rooted in social groups and individuals are viewed as members of groups People view their in-groups as fundamental parts of themselves and give priority to in-group goals People are concerned about how the results of their actions affect members of their in-group Resources are shared with in-group members Emphasis is placed on the importance of adjustment, harmony, and the sacrifice of personal needs for the greater good Legal institutions place the greater good of the collective above the rights of the individual
Direct vs indirect communication norms and their implications for negotiation
Cultures that use direct info-sharing strategies or a combination of direct and indirect strategies reach the most integrative, pie-expanding agreements In direct cultures, the process of deal-making comes first In indirect cultures the relationship comes first and provides a context for making deals In collectivist cultures, shaming is a common form of social control, in contrast American managers are more likely to choose a direct approach in response to a conflict
Condorcet paradox
Demonstrates that the winners of majority rule elections will change as a function of the order in which alternatives are proposed
Challenges of multiparty negotiations
Dividing resources Coalitions Formulating trade-offs Voting and majority rule
Partnership model
Embraced by companies and salespeople who treat their clients as partners, believe it is important to build rapport to establish a long-term relationship
Aspects of egalitarian power culture
Everyone expects to be treated equally Egalitarian power relationships do not mean that everyone is of equal status, but that status differences are easily permeated Members are empowered to resolve conflict themselves A negotiators BATNA and information are key sources of power
Challenges when negotiating interculturally
Expanding the pie Dividing the pie Sacred values and taboo trade-offs Biased punctuation of conflict Ethnocentrism Affiliation bias Faulty perceptions of conciliation and coercion Naive realism
Advantages: Principal-agent negotiations
Expertise- agents usually have more expertise in the negotiation process Substantive knowledge- agents have more info than the principal about certain areas Networks and special influence Emotional detachment Ratification- precisely because an agent does not have authority to make or accept offers Face-saving- agents can provide a face-saving buffer
Types of negotiation situations
Explicit negotiations, tacit negotiations, social dilemma
Brainstorming
Expressiveness- group members should express any idea that comes to mind no matter how strange Nonevaluation- do not criticize ideas Quantity- group members should generate as many ideas as possible Building- because all of the ideas belong to the group, members should try to modify and extend the ideas suggested by other group members when possible
Inductive reasoning
Form of hypothesis testing, or trial and error
Information technology and its effects on risk taking
Framing effect- people are risk-averse for gains and risk-seeking for losses Groups make riskier decisions than individuals, given the same choices Paradoxically, groups that communicate electronically are risk-seeking for both gains and losses
Intergroup negotiation
GRIT strategy- Gradual Reduction in Tension Announce your general intentions to de-escalate conflict and your specific intention to make an initial concession Execute your initial concession unilaterally, completely, and publicly- provide as much verification and documentation as possible Invite reciprocity from the other party- expect the other party to react to these steps with mistrust and skepticism. Consider making other concessions to overcome this. Match any reciprocal concessions made by the other party and invite more Diversify the nature of your concessions Maintain your ability to retaliate if the other party escalates conflict- retaliation should match the intensity of the other party's actions
Improvement strategies for teams
Goal and strategy alignment Preparing together for the negotiation Plan scheduled breaks Assess accountability
Aspects of a hierarchical power culture
Great deference is paid to status Status implies social power and is not easily permeated or changed Social inferiors are expected to defer to social superiors who are obligated to look out for the needs of social inferiors Conflict between members of the same social rank in hierarchical cultures is more likely to be handled by deference to a superior than by direct confrontation between social equals
Advantages of a team at the negotiation table
Increased size of negotiating pie Increased information exchange amongst negotiating parties Greater judgment accuracy about parties interests Integrative agreements are promoted
Strategies to enhance pie-expansion and pie-slicing
Initial face-to-face experience One-day videoconference/teleconference Schmoozing Humor
Why is face-to-face communication important?
It is easier and more likely to occur than other forms of communication People primarily rely on nonverbal signals to help them conduct social interaction Important behavioral, cognitive, and emotional processes are set into motion when people meet face-to-face
How to encourage cooperation in multiparty social dilemmas when the negotiating parties should not collude
Keep your strategy simple- easier for your competition to predict your behavior Signal via actions- the adage that behaviors speak louder than words is important Do not be the first to defect- it is difficult to recover from escalating spirals of defection Focus on your own payoffs, not your payoffs relative to others Be sensitive to egocentric bias- most people view their own behavior as more cooperative than that of others
Strategies to expand and slice the pie in a MULTIPARTY context
Know who will be at the table Manage the information and systematize proposal making Brainstorm options Develop and assign process roles Stay at the table Strive for equal participation Allow for some points of agreement, even if only on process Avoid the "equal shares" bias Avoid the agreement bias Avoid sequential bargaining
Culture as an iceberg
Level 1: behavior, artifacts, institutions Level 2: values, beliefs, norms Level 3: assumptions
Challenges of same-time, different-place
Loss of information communication Lost opportunity Separation of feedback Negotiation timing Place-time
If not used wisely, voting rules and the use of majority rule can thwart effective negotiations
Majority rule fails to recognize the strength of individual preferences Does not promote integrative tradeoffs among issues Groups negotiating under unanimous rule reach more efficient outcomes
How to end a spiral of defection in the prisoner's dilemma
Make promises Make situational attributions Take one step at a time Getting even and catching up Make your decisions at the same time
Interpersonal strategies for navigating coalitions and maximizing their effectiveness
Make your contacts early Seek verbal commitments Use unbiased-appearing rationale to divide the pie
Functional fixedness bias
Occurs when a problem solver bases a strategy on familiar methods
Techniques for improving the quality of negotiated agreements
Negotiation skills training, bilateral or unilateral training, feedback, learning vs. performance goals, analogical training, counterfactual reflection, incubation, rational problem-solving model, brainstorming, deductive and inductive reasoning
Learning about cultures
Negotiations across cultures are common and a requirement for effective management It is important to develop a framework for thinking about cultures and the heterogeneity within cultural groups Culture as an iceberg Distinguish stereotypes from prototypes
Different-time, different-place communication
Negotiators communicate asynchronously from different places The most ubiquitous type of different-time, different-place communication is email
Different-time, same-place communication
Negotiators interact asynchronously, but have access to the same physical document or space Example: Shift workers who pick up the task left for them by the previous shift worker
How does information technology affect negotiation performance?
Negotiators who communicate face-to-face are more likely to reach deals and avoid impasses than are e-negotiators The likelihood of reaching a mutually profitable negotiation is a function of the richness of the communication Computer-mediated negotiations were equal to or more integrative than face-to-face communications and outcomes were judged to be fairer and more equal in value
Contingency contracts allow negotiators to
Neutralize conflict and make the differences of opinion concerning future events the core of the agreement, rather than the divisive Make differences constructive Allow negotiators to test the counterpart's veracity a non-confrontational manner, allowing parties to save face and safeguard their interests Build trust and good faith between negotiators
The tit-for-tat strategy
Not envious- never aims to beat its opponent Nice- always begins interaction by cooperating Tough- conveys the message that the negotiator cannot be taken advantage of Forgiving- the negotiator's response will never be greater than what it received Simple- counterparts quickly figures out what to expect from a player who follows it
Information technology and its effects on deception
People are more likely to misrepresent themselves and deceive others when they are not face-to-face, regardless of whether they believe their lie might be discovered
In culture with indirect communication norms
People avoid direct confrontation when conflict occurs The meaning of communication is inferred rather than directly interpreted The context of the message stimulates pre-existing knowledge that is then used to gain understanding People prefer sharing information indirectly, telling stories to influence their opponents, and gleaning of information from proposals
Multiparty dilemmas
People behave more competitively in groups than in two-person situations. Why? -the costs of defection are spread out -riskier than prisoner's dilemmas -provide anonymity -people have less control over the situation The major types of approaches for maximizing cooperation in social dilemmas- Structural strategies and psychological strategies
Information technology and its effects on intergenerational negotiation
People of different generations ascribe to different norms of behavior, often unknowingly violating norms held by members of differing generations As a general principle, younger generations have grown up communicating with everyone using information technology, as a result they prefer using it over face-to-face communication
Anchoring and adjustment bias
People use reference point as an anchor and then adjust that value up or down as deemed appropriate
Personality characteristics that predict a negotiator's success in intercultural interaction
People who think in terms of conceptual complexity and broad categories Empathy Sociability Critical acceptance of stereotypes Openness to different points of view Interest in the host culture Task orientation Cultural flexibility Social orientation Willingness to communicate Patience Intercultural sensitivity Tolerance for differences among people Sense of humor Skills in collaborative conflict resolution
Set effect (negative transfer) bias
Prior experience can also have negative effects in new problem-solving situations
Deductive reasoning
Process of drawing logical conclusions
Psychological strategies
Psychological contracts and the norm of commitment Economics Communication Personalize others Social sanctions Focus on benefits of cooperation
Hindsight bias
Refers to a pervasive human tendency for people to be remarkably adept at inferring a process once the outcome is known but to be unable to predict outcomes when only the processes and precipitation events are known
Individualism vs collectivism
Refers to basic human motive concerning preservation of the self versus the collective
Direct vs indirect communication
Refers to the manner in which people exchange information and messages
Egalitarianism vs hierarchy
Refers to the means by which people influence others, either laterally or hierarchically
Overconfidence effect
Refers to unwanted levels of confidence in peoples' judgement of their abilities and the occurrence of positive events and underestimates the likelihood of negative events
Incubation
Related to intuition and insight in that it is the unconscious part of a process whereby an intuition may become validated as an insight 1. preparation 2. incubation 3. illumination 4. verification
Information technology and its affects on trust
Relative to face-to-face negotiations, people who negotiate online trust each other less before beginning the negotiation, and trust each other even less after the online interaction After negotiating online, people report less desire for future relationships, less confidence in their performance, and less overall satisfaction
Consensus agreements
Require the consent of all parties to the negotiation before an agreement is binding
A number of strategies exist for optimizing intergroup negotiations such as
Separate conflict of interest from symbolic conflict Search for common identity Avoid the out-group homogeneity bias Conditions required before contact The GRIT model strategy
Ways to avoid the escalation of commitment
Set limits Avoid decision myopia Recognize sunk costs Diversify responsibility and authority Redefine the situation
Challenges for teams
Shared versus individual identity In-group bias Extremism
Strategies for working effectively with agents
Shop around Know your BATNA Communicate your interests without revealing BATNA Capitalize on the agent's expertise Tap into your agent's sources of info Use agent networks Discuss ratification Use agent to help save face Use agent to help buffer emotions
Disadvantages: Principal-agent negotiations
Shrinking ZOPA Incompatible incentive structure Loss of control Agreement at any cost
Problem-solving model
Sit on the same side of the table and attempt to solve a puzzle together, focuses on the collaborative or cooperative aspects of the task and involves a great deal of creativity, reframing, and out of box thinking
Information technology and its effects on status and power
Status predicts domination When negotiators interact via information technology, power and status differences/cues are minimized People who would normally not approach others in person are much more likely to initiate email exchange Email acts as an equalizer because it is difficult for high-status people to dominate the discussion
Availability heuristic bias
The more prevalent a group or category is judged to be, the easier it is for people to bring instances of this group or category to mind
Creativity in negotiation
The most creative negotiations are often complex arguments that have several moving parts, the creative aspect of negotiation is often ignored or downplayed by negotiators who fixate on the competitive aspects, successful negotiation requires a great deal of creativity and problem solving
Challenges of a team negotiation
Teammate selection Number of people on the negotiating team Communication on the team Team cohesion Information processing (the common information bias)
Key biases that affect email negotiations
Temporal synchrony bias- the tendency for negotiators to behave as if they are communicating synchronously when in fact they are not Exit bias- refers to the perception that negotiation is unstable and should be terminated Flaming bias- adopt an adversarial negotiation style when communicating via email- whereas the same negotiator might use a positive emotional style in a face to face interaction Sinister attribution bias- refers to the tendency for e-communicators to ascribe diabolical intentions to the other party
Belief perseverance bias
Tendency of people to continue to believe that something is true even when it is revealed to be false or has been disproved
The trust game
The first move is made by the proposer's partner, the truster, who must decide how much of his or her initial endowment to trust the proposer with in hopes of receiving some back. Behavior in trust games involves possible deception if the partner is trusting. Factors that affect the trust game -Binding vs non binding contracts -Social networks and reputations -Relationship threat -Self-blame and regret -Restoring broken trust
Information technology and its effect on rapport
The greater the face-to-face contact and rapport between negotiators, the more integrative their outcomes are likely to be Rapport is more difficult to establish with impoverished mediums of communication Independent observers judged face-to-face negotiators to be more "in sync" with each other
Strategic voting
The problem of indeterminate group choice is further compounded by the temptation for members to strategically misrepresent their true preferences so that a preferred option is more likely to be favored by the group
The inert knowledge bias
The process of understanding by learners does not happen to that extent where the knowledge can be used for effective problem-solving in realistic situations. ... An example for inert knowledge is vocabulary of a foreign language which is available during an exam but not in a real situation of communication
The dictator game
The proposer makes a suggested split of resources for herself and the responder, responder must accept the gift. On the surface it seems that the proposer would keep everything for herself, but a striking number choose to give the responder a non-zero allocation
Aspects of an individualistic culture
The pursuit of happiness and regard for personal welfare are paramount People give priority to their personal goals, even when the goals conflict with the group Individual happiness and expression are valued more than collective and group needs People enjoy having influence and control over their world and others Individual accomplishments are rewarded by economic and social institutions Legal institutions are designed to protect individual rights
Social dilemma
The situation that results when people engage in behaviors that maximize self-interests but lead to collective disaster Examples- bidding war, negative campaigning, greenhouse gases
Situationalism
The tendency to ascribe the cause of a person's behavior to factors and forces outside of a person's control
Dispositionalism
The tendency to ascribe the cause of a person's behavior to his or her character or underlying personality
Unwarranted causation bias
The tendency to infer a causal relationship between two events is unwarranted because we do not know the direction of causality
Illusory correlation bias
The tendency to see invalid correlations between events
Haggling model
Tries to obtain the biggest share of the bargaining zone, based upon a fixed-pie perception
Information has an extremely powerful affect on several aspects of social behavior
Trust and deception Status and power Social networks Risk taking Rapport and social norms Paranoia Intergenerational negotiations
Impossibility theorem
Unstable voting outcomes of the product development team point to a larger concern
Selective attention
We selectively hear what we need and want to hear
The prisoner's dilemma
When each person in the prisoner's game pursues the course of action that is the most rational from their point of view and their individual self-interest, the result is mutual disaster. The choices that players make are either cooperation or defection.
Information technology and its effects on social norms and paranoia
When technological change creates social situations, people invent new ways of behaving When we use information technology we "talk" to other people but we do so alone As a result our messages are likely to display less social awareness ignore social boundaries, show less concern for others, disclose too much about the self, and are too blunt
