2NG3 - Midterm Prep

What is the Goal setting paradox?

Negotiators who focus on ideals do not feel as satisfied as negotiators who focus on their reservation point or BATNA

True or false: A positive bargaining zone is when negotiators' reservation points overlap

TRUE

True or false: A negative bargaining zone is when a negotiators reservation points don't overlap

TRUE

What is the amount of overlap between parties' reservation points is called?

Bargaining surplus

The positive difference between the settlement outcome and the negotiator's reservation point is called___________?

Negotiators surplus

True or false: Your BATNA is not static and can improve over time.

TRUE

True or false: Always reveal your reservation point

FALSE

True or false: Your aspiration, or target point, defines the upper limit on what you can get in a negotiation

TRUE

When negotiators make proposals that the other party considers extreme

Chilling Effect

promotion-focused negotiators

conceptualize goals as ideals and opportunities

prevention-focused negotiators

conceptualize goals as obligations and necessities

Occurs when the negotiations first offer is immediately accepted by the counterparty

Winners Curse

Makes one's first offer one's final offer

Boulwarism

5 Counter tactics when buyer makes the first offer:

1. Ignore the anchor

2. Counter anchor

3. Separate leverage from information (Info is what they want, leverage is why they are telling you)

4. Clarify

5. Reject the anchor

Predicts when and why making the first offer helps or hurts negotiators

Anchoring Information Model (AIM)

True or false: When both parties has good information, it is wise to make the first offer.

TRUE

True or false: When both parties have a lack of information, it is wise to make the first offer.

TRUE

True or false: When two parties have asymmetric information, it is wise to make the first offer.

FALSE

The first offer that falls within the bargaining zone acts as a powerful anchor point in negotiation

Anchoring Effect

refers to doing just enough to reach one's minimum goals.

Satisficing

capturing all the potential gain in a situation.

Optimizing

Intra-organizational

within the same organization

Inter-organizational

Involves two or more organizations.

Integrative Agreements (Win-Win)

Both negotiators optimize the potential joint gains.

Meaning that if parties work together, they can create more joint value than if they are purely combative

Variable sum:

when parties have incentives to cooperate as well as compete.

mixed-motive

Whatever is good for one person must ipso facto be bad for the other party. (one party's win is another party's loss)

Fixed pie (Fixed sum)

What is soft Bargaining?

They resign themselves to capitulating to the other side.

What is hard bargaining?

They prepare themselves for attack

A negotiator that sets the target point too high and refuses to make any concessions. (Too tough)

aspiring negotiator or positional negotiator

Wants what the other party does not want to give—and does not want what the other party is willing to offer.

Reactive devaluation (bias)

What does reservation point mean?

The absolute minimum point a negotiator sets for themselves.

salient numbers, figures, or values that appear to be valid but have no basis in fact.

focal point

Money that has been invested that is, for all practical purposes, irrecoverable.

Sunk costs

refers to the riskiness of the tactics that negotiators use at the bargaining table.

Strategic risk

refers to the risk associated with the willingness of the other party to honor its terms.

Contractual risk

BATNA risk

Given BATNA of equal expected value, the more risk adverse negotiator will be in a weaker bargaining position.

The value of an object should be about the same, whether we are a buyer or a seller.

Endowment effects

An important component in determining whether a person experiences regret.

Counterfactual thinking

Often the most important parties are not present at the negotiation table.

Hidden table

a transaction occurs, and no future ramifications accrue to the parties.

one-shot negotiation

are situations in which negotiators must renegotiate terms on some regular basis.

Repetitive negotiations

Money is paid for good or services.

transactional negotiations:

negotiations take place because a claim has been made by one party and has been rejected by the other party.

Disputes

In some situations, a person negotiates without any intention to reach an agreement.

False negotiations

refer to the fact that some negotiations affect other negotiations.

Linkage effect

refers to whether parties on the same side of the table are in agreement with one another concerning their interests in the negotiation. ("Of one voice")

Monolithic

considering how the counterparty thinks about the negotiation

Perspective-Taking

Note: it is more effective than negotiators who engage in empathy (i.e., How they feel)

refers to unwarranted levels of confidence in people's judgment of their abilities and the likelihood of positive events while underestimating the likelihood of negative events.

overconfidence effect

Determine a variety of different combinations of the issues that all achieve the target or aspiration point.

Multi-issue proposals

a group formed when two or more people or groups temporarily work together to achieve a common goal.

coalitions

Ratification

refers to whether a negotiating party must have a contract approved by some other body or group.

Time Horizon

the amount of time between the negotiation and the consequences or realization of negotiated agreements

When reservation points overlap.

The bargaining zone

What does ZOPA stand for?

Zone of Possible Agreement

Positive bargaining zone

negotiators' reservation points overlap

negative bargaining zone

negotiators reservation points don't overlap

The amount of overlap between parties' reservation points.

Bargaining surplus

The positive difference between the settlement outcome and the negotiator's reservation point.

negotiators surplus

argues that counterparties are influenced by both endpoints of the range as they evaluate the proposer's reservation price as well as how polite they believe an extreme counter-offer would be.

The tandem anchoring account

The reductions that a negotiator makes during the course of a negotiation.

Concessions

refers to the tendency of negotiators to reciprocate concessions.

Concession reciprocity

refers to the tendency for some negotiators to be disinclined to make concessions.

Concession aversion

Unilateral concessions

concessions made by one party

bilateral concessions

concessions made by both sides

premature concessions:

They make more than one concession in a row before the other party responds or counteroffers.

When the seller made gradual concessions, the buyer's reaction was most positive, with high satisfaction (Being tough at the beginning)

Graduated reduction in tension (GRIT) model

the arguments or persuasive rationale that often accompanies an offer.

Substantiation

critique the negotiated object or service (e.g., "It's not worth more )

disparagement rationales

refer to one's own limited resources (e.g., "I can't pay more ...")

- Constraint rationales

Note: Negotiators who highlight their own constraints are more successful than negotiators who argue down the value of an item.

also known as "blind justice", prescribes equal shares for all. Outcomes are distributed without regard to inputs, and everyone benefits (or suffers) equally.

Equality rule

also known as "proportionality of contributions principle", prescribes that distribution should be proportional to a person's contribution.

Equity rule

also known as "welfare-based allocation", states that benefits should be proportional to need.

needs-based rule

people pay themselves substantially more than they are willing to pay others for doing the same task

egocentric bias

Occurs when people believe that their interests are incompatible with the other party's interests when in fact, they are not.

False conflict (illusory conflict)

The belief that the counterparty's interests are directly and completely opposed to one's own interests.

The fixed-pie perception

Focuses on how negotiators divide resources.

Distributive negotiation

refers to reaching a middle ground between negotiators' positions

compromise

Truly integrative negotiations are ones in which all opportunities are leveraged so that no resources are left on the table.

pareto optimal:

is the set of outcomes corresponding to the entire set of agreements that leaves no portion of the total amount of resources unallocated.

The pareto efficient frontier

The strategy of trading off so as to capitalize on different strengths of preference. (making concessions on low-preference versus high-preference issues).

Logrolling

a personal need for structure.

Epistemic motivation

if you share information, the other party will often share as well.

principle of reciprocity

When negotiators believe they are revealing more than they actually are

The illusion of transparency

involves presenting the other party with at least two (and preferably more) proposals of equal value to oneself.

MESOs: Multiple Equivalent Simultaneous offers

occurs in advance of the parties undertaking full-scale negotiations and is designed to be replaced by a long-term agreement.

Pre-settlement settlements (PreSS)

Negotiators reach an initial settlement that both parties agree to, but then spend additional time attempting to improve upon

Post-settlement settlements

is a single salient coordinating concept, shared by negotiators

focal point

a departure that takes place during the course of negotiation, when the trajectory seems to change.

turning point

the beliefs held by people about personalities.

implicit theories

refers to the fact that negotiators believe they are coming on too strong, but they are not.

The line-crossing illusion

negotiators who desire to maximize the difference between their own and the other's outcomes, thereby "winning" or "beating" the other party.

Competitive Negotiator

negotiators who like to maximize joint gain and prefer to minimize differences in outcomes.

Cooperative negotiator

negotiators who prefer to maximize their own gain and is indifferent to how much the other person is getting.

Individualistic Negotiator or self-interested negotiator

refers to the negative social reaction directed at women who are seen as violating gender norms because they engage in counter-stereotypical (agentic) behaviors during negotiation.

The backlash effect

is a verbal or physical display of shock, disgust or disbelief made to an opening offer. (how to overcome angry negotiators?)

strategic flinch

refers to the ability to accept inconsistencies in behavior

Dialectical thinking

what is integral emotion?

related to the situation

What is Incidental emotion?

lacking a clear target in the situation

refers to the action-reaction cycle that results in genuine anger and diminishes trust in both the negotiator and counterpart.

blowback effect