1
Q
Conflict preferences
A
- If parties’ interests are directly opposed
- When one party gains the other loses
- Bargaining situations
- Bargaining zone = Difference in WTP of involved parties
2
Q
Basic elements of bargaining situations
A
- Best Alternative to a Negotiated Agreement (BATNA) = What you will do if no agreement is reached
- Reservation Point = The worst deal you will accept without walking away (Slightly over BATNA)
- Aspiration Point = The deal you aspire to achieve
3
Q
Anchoring
A
- Strong (even unrealistic) first offer
- Effective because people rely too much on the first piece of information presented when making a decision
- Usually no big adjustments/corrections from the anchor
- Anchoring by one party has to be responded with counter-anchoring by other party
4
Q
How to use Anchoring
A
- First offer effect = Final agreements on price are strongly predicted by first offers
- Midpoint bias = Best predictor of final agreements is the midpoint between anchor and counter-anchor
5
Q
Legitimize your offer
A
- Provide external standards to support offer
- Legitimacy reduces resistance and is key to reputation and relationships
- Legit negotiations can have a sustainable effect on long-term relationships
6
Q
How to neutralize an illegitimate offer
A
- Focusing on inconsistent (external) evidence eliminates the effects of cuonterpart’s strong first offer (anchor)
- “Where does this number come from?”
7
Q
Chilling Effects
A
- Reactions that are too far past the counterpart’s reservation point can backfire
- Impasses (Sackgassen), failures to claim value
- Avoid by making strong but legitimate and well-informed offers!
8
Q
When no aggressive first offer
A
- When unfamiliar with bargaining zone
- When it is socially inappropriate to do so (e.g. job negotiations)
- When you want to find creative solution
- When there is a multi-party situation because they may form a coalition against you
- When your focus is long-termly
9
Q
BATNA or Aspirations?
A
- Always focus on aspirations because they strongly predict negotiation outcome! (Aspirations should be realistic but high)
- BATNA can weight you down (e.g. trying to beat a weak job offer)
10
Q
Both BATNAs matter
A
- Because bargaining zone is defined by alternatives of both parties
- Even if your alternatives are weak theirs may be weak as well
- Don’t undersell yourself by focusing on your weak alternatives
11
Q
Should you reveal your BATNA?
A
- Fully revealing BATNA or reservation point will lead to an offer only slightly better by the counterpart
- Giving to much specifics about BATNA weakens your position but signaling having one is good
- Reveal BATNA only towards the end or if you reach an impasse
