Conditions for Using Negotiation Two or more parties Conflict of interest such that what one party wants is not what the other party wants Both willing to negotiate for a good outcome Preference to work together rather than fight, give in, break off contact, or take the dispute to a higher authority

Choose the Best Conflict- Handling Style Collaborate if: issues are important to both parties power is fairly equal and candor is possible there is potential for mutual benefits you have adequate time to fully discuss the details * most likely to maximize everyone’s outcomes * Accommodate or Compromise if: you lack time or ability to collaborate * can have positive or negative consequences * Force/Compete or Avoid if: other options aren’t feasible * can create negative feelings *

The Two Types of Bargaining Strategies Characteristics Distributive Bargaining Integrative Bargaining Available Resources Primary Motivations Primary Interests Focus of Relationships Fixed Amount I Win, You Lose Opposed Short-Term Variable Amount I Win, You Win Congruent Long-Term Two negotiation methods are distributive bargaining and integrative bargaining. When negotiating the price of a used car, the buyer and seller are engaged in distributive bargaining. This type of bargaining is a zero-sum game: any gain that one party makes comes at the expense of the other party. So, the essence is negotiating over who gets what share of a fixed pie. The next technique assumes that more than one “win-win” settlement exists. Generally preferable to distributive bargaining, integrative bargaining builds long-term relationships because each negotiator can leave the table feeling victorious. For integrative bargaining to succeed, negotiators must be open, candid, sensitive, trusting, and flexible. All things being equal, integrative bargaining is preferable to distributive bargaining. The former builds long-term relationships and facilitates future cooperation. The latter, on the other hand, leaves one party a loser; so it can build animosities and deepen divisions when people have to work together on an ongoing basis. Prentice Hall, 1999 Chapter 12

Preconditions for Integrative Negotiation Common goal Faith in one’s own problem-solving ability Belief in validity of other party’s position Motivation to work together Mutual trust Clear communication

Decision-Making Biases That Impede Negotiations Escalation of commitment The mythical fixed pie Anchoring and adjustments Framing negotiations Availability of information The winner’s curse Overconfidence Irrational escalation of commitment occurs when people continue a previously selected course of action beyond what rational analysis would recommend. Such misdirected persistence can waste a great deal of time, energy, and cash. The mythical fixed pie. Bargainers assume that their gain must come at the expense of the other party. By assuming a “zero-sum game” they exclude any opportunities for finding “win-win” solutions. Anchoring and adjustments. People often anchor their judgments on irrelevant information, such as initial offers. Effective negotiators do not let an initial anchor minimize the amount of information and depth of analysis they use to evaluate a situation. Framing negotiations. People are affected by the way information is presented to them. Availability of information. Negotiators often rely too much on information that is readily available while ignoring more relevant data. They should learn to distinguish between what is familiar and what is reliable and relevant. The winner’s curse is the regret one feels after negotiation. Since your offer was accepted by your opponent, you become concerned that you offered too much. You can reduce the “curse” by getting as much information as possible and putting yourself in your opponent’s shoes. Overconfidence. When people hold certain beliefs and expectations, they tend to ignore any information that contradicts them. The result is that negotiators tend to be overconfident, which can lessen the incentive to compromise. Prentice Hall, 1999 Chapter 12

Ugli Oranges What will you do? What price will you offer? To whom and how will the oranges be delivered?

Ugli Oranges Info sharing Assess “orange options” Guarantee trust