What affects negotiation process

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Agenda

• What affects negotiation process outcome
• Theoretical Understanding
• Lecture on AOME Thompson Leonardelli Reading
• Practical Application
• Do Negotiation Exercise
• Discuss learning from Exercise

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Factors affecting Negotiations
Type of Relationship between parties
Type of Emotions
Negotiation
Perceptions of Parties
Ability to Invent Options
Best Alternative to Negotiated Agreement BATNA
Bargaining Style
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Type of Relationship b/w parties
Negotiation Outcome
Negotiation Process
Studies supporting the link 1. Friends are less
competitive with each other than they are with
strangers 2. Friends are more willing to
compromise fail to invent options for mutual
gain than are strangers
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Type of emotions
Negotiation Outcome
Negotiation Process
Studies supporting the link 1. Happy
negotiations are more cooperative identify
options for greater mutual gain 2. Negotiators
are less demanding and concede more with
opponents who are angry
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Perceptions of negotiating parties
Negotiation Outcome
Negotiation Process
Studies supporting the link 1. Negotiators
perceive concessions made by opponents as
benefiting opponents and therefore devalue those
concessions
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Perceptions of negotiating parties
Negotiation Outcome
Negotiation Process
Studies supporting the link 2. When
negotiators evaluate proposals not knowing that
opponents made those proposals, they are more
likely to perceive such proposals positively
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Perceptions of negotiating parties
Negotiation Outcome
Negotiation Process
Studies supporting the link 3. Perceptions that
peoples interests are directly opposed (i.e.,
gain for one is loss for the other) lead to
sub-optimal agreements prevent expansion of
the pie (or invention of multiple options)
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What you learned so far Three factors affecting
negotiation
Type of Relationship between parties
Type of Emotions
Negotiation
Perceptions of Parties
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How the three factors affect negotiation

• Type of Relationship between parties
• Friends are more conceding, less competitive,
  often resulting in less optimal mutually
  beneficial outcomes

• Type of Emotions
• Happy people are more cooperative and identify
  mutually beneficial outcomes

• Perceptions of Parties
• People have perceive negotiations as fixed pies
  and are biased in their perceptions of offers
  proposed by opponents

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Whats next3 more factors affecting negotiation
Type of Relationship between parties
Type of Emotions
Negotiation
Perceptions of Parties
Ability to Invent Options
Type of Best Alternative to Negotiated Agreement
Bargaining Style
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Factors affecting Ability to Invent Options
Fixed Pie Perceptions
Search for a single answer
Ability to Invent Options
Negotiation Outcome
Time Pressure
Expectations about other party
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What is Inventing Multiple Options

• Aka expanding the pie
• Examples of negotiation with multiple Options
• Car Sale Negotiation
• Salary Negotiation
• Union-Management Negotiation
• Using multiple options leads to win-win solutions

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Ability to invent options
Search for single answer
Negotiation Outcome

• Studies supporting the link
• When negotiators translate their interests into
  different constellations of offers where each
  offer has an equivalent value to other offers
  (i.e., multiple equivalent offers), then they are
  better able to conceive of different types of
  outcomes that would be equally acceptable and
  have improved outcomes

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Ability to invent options
Time pressure
Negotiation Outcome

• Studies supporting the link
• Under increased time pressure, negotiators tend
  to make premature judgments and commit to a
  course of action which prevents them from using
  new information, or to change behavior to yield
  mutually beneficial (win-win or integrative)
  outcomes

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What affects the ability to invent options?

• Time pressure
• Leads to commitment to a course of action or not
  reacting to new information resulting in poor
  outcomes

• Search for a single answer
• Having multiple equivalent answers results in
  better outcomes

• Expectations of other party
• Fixed pie perceptions

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Whats next How BATNA affects Negotiation
Type of Relationship between parties
Type of Emotions
Negotiation
Perceptions of Parties
Ability to Invent Options
Type of Best Alternative to Negotiated
Agreement BATNA
Bargaining Style
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What are BATNAs

• Examples of BATNAs in
• Car Sale Negotiation
• Salary Negotiation
• Union-Management Negotiation

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Negotiation Outcome
Type of BATNA
Anchor point
Satisfaction with outcome
Studies supporting the link Negotiators agree
to outcomes close to the value of their BATNAs
which affected satisfaction with their
negotiation outcomes (bec BATNAs give an anchor
point)
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Whats next How bargaining style affects
negotiation
Type of Relationship between parties
Type of Emotions
Negotiation
Perceptions of Parties
Ability to Invent Options
Type of BATNA
Bargaining Style
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Two Personality Dimensions affecting negotiation
Extraversion
Agreeableness
Negotiation Process Outcomes
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What is extraversion agreeableness

• Extraversion
• talkativeness
• assertiveness
• positive affect
• Agreeableness
• cooperative
• generous

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Extraversion Agreeableness
Negotiation Outcome
Negotiation Process

• Studies supporting the link
• Friendly, gregarious styles..
• Less likely to claim resources at table
• Were more susceptible to anchoring effects due to
  other partys extreme first offers and therefore,
• Resulted in worse outcomes

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How aspirations can modulate the impact of
personality dimensions on negotiation
Aspirations
Negotiation Outcome
Extraversion Agreeableness
Studies supporting the link 1. When extraverted
agreeable negotiators had high aspirations then
they were no longer disadvantaged
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How does bargaining style affect negotiation

• The disadvantage created by extraverted and
  agreeable styles of negotiation can be overcome
  with high aspirations

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Review
Type of Relationship between parties
Type of Emotions
Negotiation
Perceptions of Parties
Ability to Invent Options
Type of BATNA
Bargaining Style
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Applying what you learned

• What affects negotiation process outcome
• Theoretical Understanding
• Lecture on AOME Thompson Leonardelli Reading
• Practical Application
• Do Negotiation Exercise
• Discuss learning from Exercise