Chapter 3 Distributive bargaining
book notes/powerpoints on chapter1- 5 of Bagaining and Negotiation by Hames
Terms in this set (200)
What is distributive Bargaining?
competitive process for determining how to dispute or allocate scare resources.
When is distributive bargaining Important?
when the parties' goal are in conflict, resources are fixed or limited your goal is to maximize your share of these scarce resources, and securing favorable substantive term is more important to you than your relationship with the other party.
What should you do when you start distributive bargaining?
- first, estimate the other person's bottom line
-second, strengthen your BATNA
Why keep the climate positive if you are employing distributive bargaining techniques?
separate people from the problem.
Who should make the first offer?
they make the first offer
Should you ever take the other persons's first offer? Why?
don't accept it
this means you can do better because its highly unlikely the person is opening at his or her resistance point.
- it will also help the other party avoid the winners curse- the inevitable dissatisfaction that accompanies the realization that he or she unwillingly dropped on anchor that was too low or too high.
- this dissatisfaction may cause him or her to fight much harder for issues, some of which may be more important for you.
how should a person use explanations?
for their positions
should you share deadlines if you have one?
yes share deadlines
when is distributive bargaining appropriate?
buying houses,cars, haggle in open market, make other deals, settle disputes, or make team decisions.
When should you use Distributive Bargaining?
this strategy to use when you want to claim value for yourself but you are not concerned about the relationship or the other's party outcome.
typically adopt a position such as your opening offer and then try to persuade the other side to accept it.
reservation price (resistance points)
they are the worst acceptable outcome for each issue, they define the settlement range or ZOPA- you must settle between your resistant point and the other party's
important determinants of final outcomes.
they set limits
What is the goal in distributive bargaining?
to maximize your share of fixed resources, you want to settle as close to the other party's resistance points as possible.
what you realistically hope to achieve for each issue.
- they define your objective for each issue
What do distributive bargainers make?
make offers and counteroffers between their opening offers and their reservation price.
a closing tactic in which one party offers multiple choices to the other party
- they define your resistance points and your power- your ability to walk away.
-important source of power
-a good one helps you move the other party toward his or her resistance points.
- it also helps you resist his or her efforts to move toward your own.
strongest alternative- not needing the thing you need.
How to improve you BATNA?
-pursue another job opportunity in hopes of being offered a better employment package
- find a different contractor who performs high quality work for comparable price
- consider buying a different object
What if you reveal your BATNA to early?
- he or she is likely to make less demanding offers
- disclose more truthful information
-settle for less than if you do not disclose it.
What can a good BATNA do?
enhance your ability to achieve a favorable outcome.
What do optimistic opening offers do?
inform the other party that he or she has underestimated your resolve and that making more concessions than were orginally intended will be necessary.
What does the give and take of bargaining enable you to do?
learn more about the other party's wants,needs and prioritiesby observing any patterns in how his or her demands change over time.
What do opening offers establish?
important anchor points.
What is the final outcome of any negotiation?
typically the midpoint between the first two offers that fall within the ZOPA.
What can outrageous opening offers cause?
the other negotiator to simply walk away because your offer is so extreme that it leads him or her to believe that you are not serious about reaching an agreement.
Why should you let the other person make the first offer?
doing so enables you to learn more about his or her expectations before you make a move.
What does evidence say about party's who make the first offer?
usually secures a better final outcome.
What do first offers do?
they anchor the negotiation and these anchors are strongly correlated with final outcomes.
how are your chances of winning greater?
if you adjust from your anchor rather than the other negotiator's anchor because yours is favorable and his or hers is not.
each party makes an opening offer and then makes adjustments or reductions in their demands.
- get what they want and nothing else to give
why are concessions important?
they reflect the expected give and take of distributive bargaining and signal that the parties are willing to adjust their differences to reach an agreement.
- you acknowledge the other party and recognize the legitimacy of his or her position
Why doe sit hurt to hide deadlines?
we focus on the deadline's consequences for ourselves more so than the other party.
about feigning shock or surprise when the other party extends an offer.
pressure negotiators into doing things they otherwise would not normally do.
involves pretending that an issue is very important even though it is not.
how to counter a bogey tactic?
estimate how the other side prioritized his or her issues and test this assumption when you prepare.
intimidation and other aggressive behaviors
tactics that negotiators use to make themselves appear more powerful so they can impose their offer on the other party.
begin with extreme high or low opening offer to convince the other negotiator to
temper his or her demands.
-calling attention to the other negotiator's use of unproductive tactics.
ask for small concession on an issue that has not yet discussed to close the deal.
inudating the other party with so much information that it is not possible to determine what is accurate or relevant.
selective presentation, deceiving, bluffing,concealing, and distorted information
purpose of these tactics is to gather information about other party or to manipulate the other party's perception of what is possible.
they are common distributive techniques
strong position combined with a pledge of specific course of action.
power statements that limit the other party's choices.
Why are commitments made?
they reduce ambiguity
they are used to gain advantage
they make the other party responsible for making the deal happen.
What do negotiations involved?
interest, rights and power
you want to solve problem in way that works for both sides, not merely for yourself.
What are four myths to integrative bargaining?
1. they maintain or improve relationship
2. aggressiveness is not inappropriate when negotiating integrative.
3. nor is integrative negotiating about compromising.
4. the value assumption of a fixed pie.
What are a primary focus of integrative negotiators?
interest (interest based bargaining)
when you negotiate interest what do you do?
you identify your own interest and those of the other party, adn then try to invent solutions that satisfy all of them.
What is the one way to satisfy an interest?
you get it or you do not.
separate the person from the problem
strikes some people as being warm and fuzzy because its central tenets include " be soft on the other person" and " attack the problem not the person."
What do negative emotions cause?
pay less attention to the other party's interest
diminish accuracy of their judgments about these interest
lead to the use of less cooperative strategies and the creation of less favorable outcomes, and less compliance with the terms of the agreement that are reached.
What do negative emotions make?
negotiators less interested in having future interactions with the other party.
pertain to the tangible issues being negotiated, the relationship,the process or principles.
pertain to the nature of the relationship you want to have with the other party.
interest pertaining to how a deal is made or how a dispute is settled.
strongly held beliefs for example, what is right or wrong?
you value or need something in or itself
you value or need something because it will help you in the future,
what are the common problems of integrative bargaining?
separating the inventing and evaluating functions
tendency to prematurely criticize or evaluate options when they are invented, perhaps because they seem workable or too outrageous.
separating the inventing and evaluation functions
essential because creating and critiquing requires different skills, and latter inhibits the former.
integrative negotiation is about what?
maximizing join gain.
multiple equivalent offers
a closing tact in which one party offers more than one choice to the other party,a and all the offers are nearly equivalent.
-extending multiple equivalent offers simultaneously may help you overcome the other party's uncooperativeness, reluctant to share information, or unwillingness to even seriously consider your proposal.
have confident positive expectations regarding another's conduct.
talk and share information, non verbally mirror the other party.
build rapport for 5 to 10 minutes you expect:
- share more information
- fewer threats
- have more trust and or respect for you
ongoing interactions must be honest and trustworthy.
meet other's expectations and honor your promises, this builds credibility; if promises must be broken,find ways to minimize the harm done to the victim.
explicitly stress the benefit of creating and maintain trust.
sharing information and making concessions create a sense of indebtedness that induces the other to reciprocate-this builds trust.
do not attribute situationally determined behaviors to others.
when trust is violated, early apologies are better than no apologies; they are most effective when made after the other party has been given a chance to feel heard and understood; feeling heard suggest the conflict is ready to be managed.
apologies and simple explanations are effective at restoring trust.
taking penalties is more effective for restoring mutual cooperation than only offering explanations; Accepting penalties that imply acceptance of responsibility for the trust violation are effective.
apologies with internal attributions are more effective than apologies with external attributions because of the willingness to take responsibility rather than shift blame elsewhere; mere excuses compromise the credibility and character of the offender.
sincerity magnifies the benefits of the apologies
a low probability of future trust violations increase victims willingness to reconcile; especially for minor violations; The probability of future violations is less relevant following serious violations because victims rely more on the quality of the past relationship when deciding whether to reconcile/
trust can be restored if untrustworthy behavior is not accompanied by deception; trust harmed by deception never fully recovers.
assuming the close of terms before both parties have explicitly agreed to it.
alternative dispute resolution
a third-party method of resolving differenes that does not involve the legal system.
assumping the close
a closing tactic in which one party assumes the other party has agreed to the deal, even though the other party has not done so.
balance sheet (cost benefits) closing tactic
one party lists the benefits of their own proposal on one side of a piece of paper and then ask the other party to list their cost on the other side in order to demonstrate that the first party's benefits outweigh the second party's costs.
tactics that negotiation party use to persuade the other party to say yes.
comparison closing tactic
one negotiating party delineates and compares the benefits and/ or cost that the other party will derive from different proposals in order to demonstrate the advantages of the desired proposal.
compromise (split the difference) closing tactic
the parties divide in half the difference between each of their last offers.
people are more concerned about the risk of change than the benefits of changing, so proposal persuade people to say yes if they preserve the status quo and do not require them to change.
a closing tactic that uses a sequence of questions which begins with a question that is sure to elicit a yes response and continues with questions that lead logically and incrementally from the first question.
status quo bias
people are more concerned about the risk of change than the benefits of changing, so proposals persuade people to say yes if they preserve the status quo and do not require them to change.
sweeteners (sweetening the deal)
a closing tactic which one party offers a final concession if the other party accepts their offer.
what you want to accomplish, and what you think the other party wants to accomplish.
substantive and relationship goals
help determine which strategy and tactics are more appropriate.
the issue to be negotiated.
the ability to bring about desired outcomes.
Best Alternative to a Negotiated Agreement
the best alternative outcome available to you without the other negotiator.
dilemma of honesty
the other party may take advantage of you of you share too much information, but you may not be able to reach an agreement if you share to little.
dilemma of trust
the other party may take advantage of you if you believe too much of what he or she tells you, but you may not be able to reach an agreement if you believe too little.
the motives underlying your positions your reasons for wanting them or the purpose they will serve for you.
the specific components or dimensions of the situation that must be addressed.
commonly an offer or counteroffer,it is one possible outcome.
reservation price (resistance point or walk away price)
you breakeven point or the worst acceptable outcome for each issue. you would rather walk away without an agreement if you cannot achieve terms that are better than or equal to this point.
the pan or process by which negotiators attempt to achieve their goals.
the specific, short-term actions that serve to implement the broader strategy.
one that satisfies your interest and perhaps , the other party's.
zone of possible agreement
the range between your resistance points.
accommodation approach to negotiation
negotiating party cares more about preserving the relationship with the other party than winning.
adoption of a lose-win strategy because the substantive terms of the deal.
adoption of a competitive or individualistic strategy in which one or both parties cares more about winning than preserving the relationship
a strategy that negotiators use to capture applicable synergies and thereby overcome non-productive negotiation tactics and irrelevant issues.
a hands-off approach to conflict
Collaborative approach to negotiation( integrative, principled, interest based, mutual gains and win-win approach)
substantial importance is attached to both the relationship and the substantive terms of the outcome for both parties.
competitive approach to negotiation
adoption of a win-lose strategy because the substantive terms of the outcome are more important than the relationship.
a negotiation outcome in which both parties get something they want but neither is fill satisfied with the result.
dual concerns model
posits five approaches for handing conflict and negotiation competition, accommodation, avoidance, compromising, and collaboration.
final stage of negotiation
typically includes agreements as intended.
inital stag eof negotiation
typically includes pre-negotiation, preparation, rapport building and additional information gathering (testing assumptions)
integrative approach to negotiation ( collaborative, principled, interest-based, mutual gains or win-win approach)
a collaboration process for creating value to help the parties satisfy their interest.
interest based approach to negotiation (collaborative, integrative, principled, mutual gains, or win-win approach)
substantial importance is attached to both the relationship and the substantive terms of the outcome for both parties.
middle stage of negotiation
typically formulating arguments and counterarguments, exchanging offers and counter offers and closing the deal.
negotiators must cooperate enough to reach an agreement and compete enough to claim sufficient value for themselves.
mutual gains approach to negotiation ( win-win approach)
a collaborative process for creating value to help the parties satisfy their interest.
social process which interdependent people with conflicting interest determine how they will allocate resources or work together in the future.
a collaborate process for creating value to help the parties satisfy their interest.
the subtle games negotiators play that underlie the substantive aspects of the negotiation, including the strategic movies, strategic turns and appreciative moves.
tactics that persuade the other party to come to the bargaining table and to give your interest and arguments a fair hearing.
tactics that help reframe the negotiation when it moves in a unproductive direction.
substantive negotiation terms
the tangible items you negotiate.
good cop-bad cop
a hardball negotation tactic in which two negotiators in the same party pretend to take different approaches one opens with a very tough position and the other follows this by playing nice.
hard ball tactics
aggressive distributing bargaining tactics in which one party pressures the opposing party into doing something it otherwise would not do.
a loss of image or status in the eyes of others.
getting what you want too easily and being unhappy with it
a form of aggressive behavior, such as anger, guilt, threats, insults, attacks,pushiness,impatience, intransigence and hard-nosed demands, used to make the negotiator appear more powerful in order to impose their position on the other party.
an integrative solution that abridges the gap between incompatible positions.
expanding the pool of available resources by creating solutions that satisfy all parties' interest.
cutting the cost for compliance
one partys cost are minimized in return for agreeing to allow the other party to satisfy its interests.
creating solutions that help you make deals is unnecessary.
fixed or limited resources
something a negotiating party needs or values because it will help him or her in the future.
a solution process in which parities maximize joint gain by finding trades that capitalize on their differences.
a solution in which one party is paid off for allowing the other to satisfy its interest.
intangible interest that pertain to strongly held beliefs ( what is right and wrong?)
interest pertaining to the nature of the relationship you want to have with the other party.
expanding the pie
allow both parties to create value and satisfy their needs.
something a negotiator needs or values because it will help him or her now.
myths about integrative bargaining
1. you need to improve the relationship
2. you cannot be aggressive
3. you should compromise
4. there is a fixed pie.
in integrative bargaining what are we concerned about?
your outcome and their outcomes and or relationship.
What is most important in integrative bargaining?
interest and relationships
negatives emotions make you do what?
1.pay less attention to problem.
2. diminish accuracy of judgement
3. less cooperative
4. less likely to honor the aggreement
Tactics: Engage in perspective taking
This means you need to see other's perspective.
try these ideas!
- ask other people
-ask individual you work with
- try out of body experience
- fix your communication
Tactics: Fix your communication
-be more specific
-ask for give feedback
-be ok with miss communication
-be ok with over communication
Tactics: Focus on Interest
the most important question is why or why not.
-they represent actual needs, concern and fears.
-focus on motives fives you flexibility in meeting their needs.
-how should you act- like you care help people see you appreciate their needs.
- you should share interest
Three commons Problems
-Thinking their problem is my problem
- premature judgement- pass judgement before people.
- searching for single answer.
log rolling- trade issues of importance
nonspecific compensation- pay people off
multiple equivalent offers- 2 of 3 offers similar and different details.
how much efforts should be directed to research?
What are some general things to look for? ( preparation)
- nature of interaction
- other negotiations
- obligations to negotiate
- relative power
-others who are infected
In setting goals what are the three types?
1. Substitive goals- tangible outcome/contract language.
2. relationship goals- treat/treated by process matters.
3. process goals- conducting/ engaging neg
If you focus on substitive goals and not relationship you are going to negotiate in his manner?
if your focus on substitive and relational you are going to negotiate in this manner?
if stakes are high and you are unable to prepare you should postpone and cancel why?
- bad deal
- do not do research
- think your entitled to more then you are not.
What are some questions to ask?
What do you want?
What do they want?
What the alternatives are?
What are their alternatives?
What is the envelope?
What is their envelope?
When to negotiate?
-advantages of home turf
-advantages of an away game.
What kind of brain do we have?
reptillian brain (oldest)
When is the reptillain brain activated?
self- determination theory suggest that we have three basic needs.
1. autonomy- free from imposition
2. competence- smart/capable
3. connectedness- connections with others.
What is persuasion?
get someone to do something by convincing its right thing to do.
what is negotiation?
ways to get someone to do something by giving them concessions
- social process where we interact with others.
-make worth their while.
What is the difference between persuasion and negotiation?
how to not hose
- do not take advantage of people
- do not lie to people
- when you win win modestly
Whats the most important thing you can do?
make sure to give concessions to people.
in reality is it ever ok to hose someone?
it might be ok sometimes.
Why can't Americans negotiate
we don't have to negotiate
choice we have
we shop around for better deal.
Why do we give concessions?
other side needs feel autonomous and competent.
How do we give concessions?
ensure their needs are met
start higher than were you want to finish.
6 basic rules are
1. NO free gifts
2. Start high
3. have a concession plan
6. only make aggreements in totality
#1 NO free gifts
trade to get something back always say yes If or Yes but examples below:
I'll agree to X... If I get Y.
I'll agree to X...
I can't do X but I can do Z if you agree to y.
I can't do X but.. I can do Y but I cannot do Z.
no to concessions= no deal
#1 No free gifts continued
When someone wants something from you.. see it as opportunity not a problem.
if the other side rejects your " If, they reject the concession they want too.
Look for interesting "Ifs" ex. salary,car
do not say NO instead say YES IF.
change it to a " yes if"- the author calls it a " japanese No"
ex. buying a suit
- can I get a free tie if I buy the suit
- yes. if you buy another suit I can throw in a new tie.
- make it so extreme they say no.
Do not make the if so bad they won't do it.. just bad enough to be worth your time.
- can I get a free tie if I buy the suit
- yes, if you buy two more shirts
happy either way= Bolkan no
Have a concession plan
envelope- all prices inbetween
opening price-highest, do not have to equal target price.
target price- price you like to pay
bottom line- least amount of money you willing to take.
-getting down to target big to small
-halfs steeply tapered concession
rules-never make concessions longer
opening offer use rule of halves
- make small concessions make them hard to get.
zone of possible aggrement
if envelope overlaps somewhere should always agree.
the single most important moment.
- temptation to give them another offer resist this.
- if they open high insist on getting a legitimate offer before you continue start making your own concessions.
- if they open low do not accept it.
more alternatives = power
stronger envelope= alternatives
more alternatives = power
stronger envelope= alternatives
when someone give you an offer, instead of giving them a counter offer ask for a better offer.
-if someone says " I'll give you 70k a year for 4 years" you say:
-keep doing it until...
-If you get krunched just ask for better price.
ex of krunches- Whats cash price?
-Alittle out of my budget
-have to make a little profit
- not on the same page.
- force you- give them a concession
-steal concessions before you give one.
-concession you earn
a small concession gained at very end of a negotiation, right before the deal is closed.
they work because:
- sometimes feel sense of relief, happy
how to: act as if your close on the deal.
how to defend against it: Yes if does not have to happen.
#6 only make agreements in Totality
- never settle issues individually
- instead, tell people. " we are good on that if we can agree on other things too"
- allowing to have leverage throughout the negotiation process.
common myths about negotiation
- negotiators interest are incompatible
- negotiation should include sequential issue settlement
- negotiation is competitive
- creating impasse will eventually lead to agreement.
Who do we negotiate?
- on employment packages- job,salary, roles, responsibility.
- group/teams - roles/duties
- managers working with employees
We tend to negotiate when we?
1. need someone to do something
2. get more out of working out of others while working with them and without them.
why do we need to study negotiation?
we need to understand principles to do it well.
we need to study and learn how is been done.
if you never learn about negotation
people have done it
need to do it right.
leads five different approaches
care alot about my concerns but don't care about your outcomes- competitive .
- put alot of concern about your outcomes but not how I feel- accommodation
-little concern for anyone's outcomes- avoidance ( lose-lose)
- moderately concerned with both your outcomes and others outcome- compromise
- highly concerned - collaboration (win-win)
- creating values both feel good about interaction- integrative
hard bargaining tactics
extreme openers: open way to high or low, insist on a fair offer.
commitment: get you to commit to certain action.
Feather ruffling: insult you make you feel bad
Belittling alternatives: say all bad things.
closing the deal
although it is important to get what you want people say yes because their needs are met.
but: objects to your proposal.
- have not walked away yet
- objections still in the game.
1. lack of ownership
- not likely to happen in simple exchanges
People need a sense of justice in dealing with others.
- distributive justice- get out of the agreement. What I put in it.
- interactional justice- treat with respect
- procedural justice- make impact on their negative outcome in decisions and behaviors.
- ask for opinions
- options sense of choice.
Affinity seeking strategies
1.Altruism- help others without expecting in return.
2. Assume Equality- others treated with respect.
3.Comfortable Self- relaxed overlooked situational announces.
4.Concede Control- allow others to make decisions.
5. Dynamism- enthusiastic
6. Elicit Others Disclosures- self- disclosure ask other about.
7. Influence Perceptions of Closeness
8. Openness- be willing to disclose to others.
9. Optimism- positive frame of mind
10. Self-Concept Confirmation- self image of others like who they are compliments
2. unmet interest
- show people how their outcomes will be better with your deal this is called relative advantage.
What are some advantages?
- Social Prestige
Objections # 3
3. the other party is losing face- fundamental needs
They feel: forced to do something
When they feel: dumb
When they feel: unliked/ disliked.
4. complexity: the degree to which negotiation is perceived as being difficult to understand.
- simple is betters
- Innovations that do not require new understanding are better
ex. dvorak keyboard - hard to do less likely to do it.
5. It seems expensive
- people might not see value in it yet.
how to overcome?
- cost of not doing what your asking
- saving people enjoy instead of upfront cost
- cost per unit instead of overall cost.
-observability - plan actually works.
Objection # 6
6. they need more time
- it is no good for you.
how to overcome?
- ask them why they need more time?
- ask them how more time will help them make a better decision?
- make people an offer this sweeter now than after ex. buy now contingent to leave now.
-The ask: ask someone if their willing to agree.
-The coin flip: can't bridge the gap
-Multiple Equivalent offers: few options and ask if they like to pick one to settle now
-The sweetener: one last concession if they say yes.
-Assume the close: act is if your ready to make the deal.
- exploding offer- create a deadline that last only a certain time.
- sequential questions- series of questions
situation- whats going on with you car?
problems- problems of care
Implications- influence life negative -how?
-how car affects someones life
Needs- get buyer to state their needs and you must meet those needs.
a decrease in the number of objections
- if the person acknowledges that the proposal has merit.
positive comments (good sign you are getting ready to make the deal)such as
-I like the trim, and size of car.
- I didn't realize you do not ship
- if the person switches from: Interest to how things work- operational
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