Managing negotiations: getting to yes
A Decision-Making Perspective to Negotiation: A Review of
the Past and a Look to the Future Tsay & Bazerman (2009)
The decision-analytic approach (how we actually behave, Human world) is an alternative to the
game-theoretic study (Econ world). Because we life in a Human world is it important to develop
accurate descriptions of opponents, rather than assuming him/ her to be fully rational.
Individual biases in negotiation
Anchoring
Framing
Availability bias
Overconfidence
Competitive biases in negotiation
Myth of fixed pie
Miss mutually beneficial trade-off opportunities.
Agreement bias
What also affects negotiations:
Social relationships: including fairness
Egocentrism: the more negotiators are the higher the chance of an impasse.
o Motivational bias = overweight views that favor themselves
o Self-serving recall bias = remembering facts that favor you better
Motivated illusions: we perceive ourselves as being better and make unrealistic positive
self-evaluations. Social costs are uncooperative and unethical bargaining tactics that will
be used to win the negotiation.
Attributional processes: negotiators play the game they perceive rather than the
objective specification of a game they get.
New directions in research and practice
Ethics (tutorial 2); critical to understand nature of negotiation game. We all have
different standards without conscious awareness.
Emotions (lecture 6 - 9): largely ignored topic.
o Positive mood > more cooperative, increased frequency of agreements that
enhance both gains.
o Negative mood > less accurate in judging opponents interests.
Intuition: many people trust that, but limits to cognitive resources shifts us toward
system 1 thinking. But some work suggested our intuitive thinking may allow us to make
better decisions.
Natural negotiator: some people are born as good negotiators is thought, which also
effects negotiations on itself.
Six habits of merely effective negotiators Sebenius (2001)
Understanding the other's interests and shaping the decision so they agree for their
own reasons is key to creating and claiming sustainable value from a negotiation.
Mistake 1: neglecting the other side's problem
, Just like you, the other also has reasons to accept or say no, so to reach an agreement you must
understand and address the others problem (from their perspective) as a means to solving your
own. If you want to change the others mind, you must first learn where that mind is. Together
than you can try to span the gulf between where the other is now and your desired end point.
This is much more effective than trying to shove the other side to your position.
Mistake: focus on your own problem exclusively
Solution: solve the other side's as the means to solving yours.
Mistake 2: letting price bulldoze other interests
Negotiators who only focus on the price turn potential cooperative deals into conflicting ones.
Price is an important factor, but rarely the only one. Most players turn down proposals under
35/40% of the total, even when larger stakes are involved, but the amount they lose is
significant. This is irrational, but people reject it because it feels unfair and try to teach the
greedy person a lesson.
People care about much more than their own economic outcome: relative results,
fairness, self-image, reputation, etc.
The four nonprice factors are:
Relationship: most people undervalue this importance, especially cross-border.
Social contract: spirit of a deal, especially important for new ventures.
The process: the process can be as important as the content. Better results are more
often reached when all parties perceive the process as respectful, personal and fair.
Interests of all players: you should not lose sight of others interests or their capacity to
affect the deal.
Wise negotiators put price in perspective and work with the nonprice factors
Mistake 3: Letting positions drive out interests
3 elements at play in a negotiation:
Issues
Positions: stands on the issue & reflect underlying interests, but need NOT to be the
same!
Interests: underlying concerns that would be affected by the resolution.
Despite the advantages of meeting interests of both, people are biased to focusing on their own
instead. Assuming that interests are incompatible implies a negotiating in which your gain is my
loss. The norm is the mythical fixed-pie: value is unknowingly left uncreated as both sides walk
away from money in the table. Getting to the full set of interests at stake required patience and
willingness to research, ask questions and listen.
Recognize and productively manage the tensions to create value and claim it. The pie
must be expanded and divided.
Mistake 4: searching too hard for common ground
We're advised to find win-win by searching for common ground, but differences drive the deal.
You must actively search for differences. If we all have the same interests, beliefs and attitudes,
there would be little to negotiate. Differences can open the door to unbundling different
elements and giving each other what they value the most.
Mistake 5: neglecting BATNA's
BATNAs set the threshold, both parties must do better then their BATNA for a successful
agreement. Thus, BATNAs define a zone of possible agreement (bargaining zone). A strong
BATNA is an important tool, the better your BATNA the more credible your threat to walk away
A Decision-Making Perspective to Negotiation: A Review of
the Past and a Look to the Future Tsay & Bazerman (2009)
The decision-analytic approach (how we actually behave, Human world) is an alternative to the
game-theoretic study (Econ world). Because we life in a Human world is it important to develop
accurate descriptions of opponents, rather than assuming him/ her to be fully rational.
Individual biases in negotiation
Anchoring
Framing
Availability bias
Overconfidence
Competitive biases in negotiation
Myth of fixed pie
Miss mutually beneficial trade-off opportunities.
Agreement bias
What also affects negotiations:
Social relationships: including fairness
Egocentrism: the more negotiators are the higher the chance of an impasse.
o Motivational bias = overweight views that favor themselves
o Self-serving recall bias = remembering facts that favor you better
Motivated illusions: we perceive ourselves as being better and make unrealistic positive
self-evaluations. Social costs are uncooperative and unethical bargaining tactics that will
be used to win the negotiation.
Attributional processes: negotiators play the game they perceive rather than the
objective specification of a game they get.
New directions in research and practice
Ethics (tutorial 2); critical to understand nature of negotiation game. We all have
different standards without conscious awareness.
Emotions (lecture 6 - 9): largely ignored topic.
o Positive mood > more cooperative, increased frequency of agreements that
enhance both gains.
o Negative mood > less accurate in judging opponents interests.
Intuition: many people trust that, but limits to cognitive resources shifts us toward
system 1 thinking. But some work suggested our intuitive thinking may allow us to make
better decisions.
Natural negotiator: some people are born as good negotiators is thought, which also
effects negotiations on itself.
Six habits of merely effective negotiators Sebenius (2001)
Understanding the other's interests and shaping the decision so they agree for their
own reasons is key to creating and claiming sustainable value from a negotiation.
Mistake 1: neglecting the other side's problem
, Just like you, the other also has reasons to accept or say no, so to reach an agreement you must
understand and address the others problem (from their perspective) as a means to solving your
own. If you want to change the others mind, you must first learn where that mind is. Together
than you can try to span the gulf between where the other is now and your desired end point.
This is much more effective than trying to shove the other side to your position.
Mistake: focus on your own problem exclusively
Solution: solve the other side's as the means to solving yours.
Mistake 2: letting price bulldoze other interests
Negotiators who only focus on the price turn potential cooperative deals into conflicting ones.
Price is an important factor, but rarely the only one. Most players turn down proposals under
35/40% of the total, even when larger stakes are involved, but the amount they lose is
significant. This is irrational, but people reject it because it feels unfair and try to teach the
greedy person a lesson.
People care about much more than their own economic outcome: relative results,
fairness, self-image, reputation, etc.
The four nonprice factors are:
Relationship: most people undervalue this importance, especially cross-border.
Social contract: spirit of a deal, especially important for new ventures.
The process: the process can be as important as the content. Better results are more
often reached when all parties perceive the process as respectful, personal and fair.
Interests of all players: you should not lose sight of others interests or their capacity to
affect the deal.
Wise negotiators put price in perspective and work with the nonprice factors
Mistake 3: Letting positions drive out interests
3 elements at play in a negotiation:
Issues
Positions: stands on the issue & reflect underlying interests, but need NOT to be the
same!
Interests: underlying concerns that would be affected by the resolution.
Despite the advantages of meeting interests of both, people are biased to focusing on their own
instead. Assuming that interests are incompatible implies a negotiating in which your gain is my
loss. The norm is the mythical fixed-pie: value is unknowingly left uncreated as both sides walk
away from money in the table. Getting to the full set of interests at stake required patience and
willingness to research, ask questions and listen.
Recognize and productively manage the tensions to create value and claim it. The pie
must be expanded and divided.
Mistake 4: searching too hard for common ground
We're advised to find win-win by searching for common ground, but differences drive the deal.
You must actively search for differences. If we all have the same interests, beliefs and attitudes,
there would be little to negotiate. Differences can open the door to unbundling different
elements and giving each other what they value the most.
Mistake 5: neglecting BATNA's
BATNAs set the threshold, both parties must do better then their BATNA for a successful
agreement. Thus, BATNAs define a zone of possible agreement (bargaining zone). A strong
BATNA is an important tool, the better your BATNA the more credible your threat to walk away
