CRAM OBS 220 Sunday, 29 August 2021
Please Note: These notes have been compiled from various academic sources and they do not
represent the ideas of the maker but rather those of the academic authors. All credit is due to
the authors of such academic material and no CRAM note maker will take credit for such
material. These materials should also not be used as a single source of study material for tests
and exams but rather as a means to make the prescribed academic work more understandable
and reasonable.
These notes were compiled from: The mind and the heart of the negotiator (sixth edition) by
leigh L. Thompson.
1 CRAM Quality Information, Quickly.
,CRAM OBS 220 Sunday, 29 August 2021
OBS220
CHAPTER 3: Distributive negotiation (slicing pie).
Negotiation dance:
Entire process of making an opening offer and then reaching a mutual agreement.
The bargaining zone:
Zone of possible agreement (ZOPA):
Aspiration base (AB):
Setting the highest achievable negotiation target level in terms of goals or objectives
to conclude a negotiation agreement (target price).
Real base (RB):
The point where negotiators should exit the negotiation (reservation price).
1. Positive bargaining zone:
- Reservation points overlap
- Least the seller is willing to accept is less than most the buyer is willing to pay.
- Mutual agreement is better than to resort to BATNA.
John Frieda John Frieda
Target price Reservation Reservation Target
2. Negative bargaining zone:
- Reservation points do not overlap
- Seller want more than buyer is willing to pay.
2 CRAM Quality Information, Quickly.
, CRAM OBS 220 Sunday, 29 August 2021
- Exercise BATNA.
John Frieda John Frieda
Target price Reservation Reservation Target
Bargaining surplus:
Amount of overlap between negotiating parties’ reservation points. Measures of
value that a negotiated agreement offers to both parties.
Negotiator surplus:
Positive difference between settlement outcome and negotiators reservation point.
Mixed motive:
Illustrated through negotiated settlements that fall somewhere in the ZOPA and each
negotiator tries to maximize his/her share of bargaining surplus.
PIE-slicing strategies:
- How can I claim most of the bargaining surplus for myself?
- Irrational behavior can be caused by cognitive or emotional biases.
1. Assess your BATNA and improve it:
Risk of not assessing one’s BATNA is that the negotiator will be unduly influenced by
the counterparty.
2. Determine your reservation point, but do not reveal it:
When should you reveal your reservation point?
- You have exhausted your time to negotiate and are about to walk out of the
negotiation without a deal.
3 CRAM Quality Information, Quickly.
Please Note: These notes have been compiled from various academic sources and they do not
represent the ideas of the maker but rather those of the academic authors. All credit is due to
the authors of such academic material and no CRAM note maker will take credit for such
material. These materials should also not be used as a single source of study material for tests
and exams but rather as a means to make the prescribed academic work more understandable
and reasonable.
These notes were compiled from: The mind and the heart of the negotiator (sixth edition) by
leigh L. Thompson.
1 CRAM Quality Information, Quickly.
,CRAM OBS 220 Sunday, 29 August 2021
OBS220
CHAPTER 3: Distributive negotiation (slicing pie).
Negotiation dance:
Entire process of making an opening offer and then reaching a mutual agreement.
The bargaining zone:
Zone of possible agreement (ZOPA):
Aspiration base (AB):
Setting the highest achievable negotiation target level in terms of goals or objectives
to conclude a negotiation agreement (target price).
Real base (RB):
The point where negotiators should exit the negotiation (reservation price).
1. Positive bargaining zone:
- Reservation points overlap
- Least the seller is willing to accept is less than most the buyer is willing to pay.
- Mutual agreement is better than to resort to BATNA.
John Frieda John Frieda
Target price Reservation Reservation Target
2. Negative bargaining zone:
- Reservation points do not overlap
- Seller want more than buyer is willing to pay.
2 CRAM Quality Information, Quickly.
, CRAM OBS 220 Sunday, 29 August 2021
- Exercise BATNA.
John Frieda John Frieda
Target price Reservation Reservation Target
Bargaining surplus:
Amount of overlap between negotiating parties’ reservation points. Measures of
value that a negotiated agreement offers to both parties.
Negotiator surplus:
Positive difference between settlement outcome and negotiators reservation point.
Mixed motive:
Illustrated through negotiated settlements that fall somewhere in the ZOPA and each
negotiator tries to maximize his/her share of bargaining surplus.
PIE-slicing strategies:
- How can I claim most of the bargaining surplus for myself?
- Irrational behavior can be caused by cognitive or emotional biases.
1. Assess your BATNA and improve it:
Risk of not assessing one’s BATNA is that the negotiator will be unduly influenced by
the counterparty.
2. Determine your reservation point, but do not reveal it:
When should you reveal your reservation point?
- You have exhausted your time to negotiate and are about to walk out of the
negotiation without a deal.
3 CRAM Quality Information, Quickly.
