CH-7 Power, Persuasion, and Ethics – The mind and heart of the negotiator : Chapter Notes

This document contains Chapters 7 to 9 Chapter 7 Power, Persuasion, and Ethics OVERVIEW This is a good chapter to use as a basis for discussing high-stakes negotiations, multiparty negotiations, or power-differential negotiations. Emphasize that the most important source of negotiator power is one’s BATNA. Then focus on other types of power such as information, status, social networks, and even physical appearance. Students will enjoy discussing persuasion tactics that have a rational, calculated basis, as well as a psychological basis. The instructor can use film clips to demonstrate several of the tactics or ask students to look for current examples from the newspapers. I strongly recommend spending some part of class time discussing ethical issues, as they often center on power issues in negotiation. Lecture Outline two ways to look at power and persuasion strategies As the holder of power: chapter presents options for increasing your power in negotiation Be aware that your counterparty is reading this or another book: Every strategy and tactic could (and will) be used by the counterparty in the future Remember the “fraternal twin” model your batna is your most important source of power in negotiation Negotiators must attempt to cultivate and improve upon their BATNAs prior to negotiating To fully capitalize on BATNA, use this information wisely: Keep your options open Signal your BATNA, but do not reveal it Assess the other party’s BATNA SOURCES OF POWER ANALYZING YOUR power Four vantage points Potential power Perceived power Power tactics Realized power persuasion tactics Two routes to persuasion Central route Peripheral route Central route persuasion tactics The power of agenda The power of alternatives The power of options Attitudinal structuring The power of contrast (the psychological contrast effect) Commitment and consistency (the consistency principle) Framing effects: capitalizing on the half-full or half-empty glass Fairness heuristics: capitalizing on egocentric bias Time pressure Peripheral route persuasion tactics Status Primary status characteristics Secondary status characteristics (or pseudostatus characteristics) Self-fulfilling prophecy Gender (Exhibit 7-1) Cultural stereotypes and mental roadblocks Exposing those negative stereotypes Social networks Social capital Boundary spanners Physical appearance Delayed liking To err is human Priming the pump Reciprocity versus complementarity Social proof Reactance technique Foot-in-the-door technique Door-in-the-face technique (or rejection-then-retreat tactic) That’s-not-all technique (or sweetening the deal) The effects of power on those who hold power The effects of power on those with less power negotiation Ethics (Exhibit 7-2) Lying (and its effects on negotiation issues) Positions Interests Priorities and preferences Passive misrepresentation Active misrepresentation BATNAs Reservation prices Key facts Other questionable negotiation strategies (EXHIBIT 7-3) Traditional competitive bargaining Manipulation of an opponent’s network Reneging on negotiated agreements Retracting an offer (Exhibit 7-2) Nickel-and-diming Sins of omission and commission (Exhibit 7-4) Costs of lying Under what conditions do people engage in deception? (Exhibit 7-5) Psychological bias and unethical behavior Human biases that give rise to ethical problems in negotiation Bounded ethicality Illusion of superiority Illusion of control Overconfidence How can negotiators calibrate ethical behavior? The front page test Reverse golden rule Role modeling Third-party advice Strengthen your bargaining position conclusion A larger slice of the pie can be gotten by creating a larger pie A negotiator’s BATNA is his or her most important source of power in negotiation Negotiators must continually improve upon their BATNA and signal to the other party that they have alternatives Negotiators need to be aware of persuasion tactics aimed at the rational side of human behavior (central route) as well as the emotional side (peripheral route) With all strategies, negotiators should be on the defensive and perform an “ethics check” on their own and others’ behavior Key Terms active misrepresentation A strategy in which a negotiator deliberately misleads his or her opponent. boundary spanners Individuals (and groups) able to span across organizational divides and bridge the knowledge, innovation, and best practices from different areas of the organization. central route Direct, mindful, information-based route to persuasion. consistency principle The fundamental human need to be consistent in our beliefs, feelings, and behaviors, not only to others, but also to ourselves. door-in-the-face technique or rejection-then-retreat tactic A persuasion tactic in which a person makes an initial, extreme request to another party, making it more likely that they will secure agreement to a subsequent, smaller request. foot-in-the-door technique A technique in which a person is asked to agree to a small favor and then is confronted with a larger request; people who accede to the small favor first are more likely to agree to the larger request later. list technique Making a request after the target person has been shown a list of others who have complied. nickel-and-diming A colloquialism that refers to the strategy of repeatedly asking for more favors or resources after a negotiation has presumably ended. passive misrepresentation A strategy in which a negotiator does not convey his or her true preferences and allows the other party to arrive at an erroneous conclusion. perceived power A negotiator’s assessment of each party’s potential power, which may or may not square with reality. peripheral route Using little cognitive or mindful work, and using automatic responses to subtle cues to persuade someone. potential power The underlying capacity of the negotiator to obtain benefits from one’s agreement. power tactics Refers to the behaviors designed to use or change the power relationship. primary status characteristics Indicators of legitimate authority that are relevant to accomplishing a specific task; e.g., rank, title, previous experience, etc. psychological contrast effect Inventing irrelevant alternatives for the counterparty to consider. reactance technique A negotiation strategy also known popularly as “reverse psychology,” wherein a negotiator plays on the opponent’s innate need to assert his or her individual freedom when it is threatened or controlled. realized power The extent to which negotiators have claimed benefits from the interaction. reference point A focal amount of the pertinent outcome, at which smaller amounts are considered losses and larger amounts considered gains. secondary status characteristics or pseudostatus characteristics Highly visible personal qualities (such as sex, age, or ethnicity) that have little to do with a person’s authority, legitimacy, or ability, but are often treated as though they do. self-fulfilling prophecy A situation that occurs when the beliefs held by a perceiver elicit behavior from a target person in a manner that confirms the perceiver’s expectations. social capital The value a manager adds to his or her team and organization through his or her coordination of, and ties to, other people and organizations. social proof principle A situation in which we look to the behavior of others to determine what is desirable, appropriate, or correct. that’s-not-all technique or sweetening the deal A technique in which negotiators will offer to add more to a negotiated package or deal in order to persuade the other party to accept it. unconscious priming The process by which subtle cues and information in the environment can impact our behavior (at a level below our conscious awareness). Suggested Exercises and other materials EXERCISE: Bullard Houses by Ron Karp; revised by Mox Tan, David Gold, Andrew Clarkson, Paul Cramer, Douglas Stone, and Bruce M. Patton This DRRC version of a Harvard Program on Negotiation (PON) case is excellent for raising issues of ethics in negotiation. It is a one-on-one, qualitative negotiation between agents over a piece of prime real estate. It emphasizes the role of agents, lying, misrepresentation, and trust. Preparation: 60 min. Negotiation: 60 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Brookside Community Hospital vs. Black Computer Systems, Inc. by Stephen B. Goldberg and Jeanne M. Brett This is a dispute between a hospital and a software and hardware supplier. It is similar in structure to Rapid versus Scott. It can also be used by management or law students alone or working in teams. It can be used to teach interests, rights, and power approaches to dispute resolution as well as advanced dispute resolution concepts like linked BATNAs and redirection of negotiations from rights or power to interests. Preparation: 60 min. or more. Negotiation: 75-90 min. Available from the Dispute Re¬solution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Chestnut Drive by Mark N. Gordon and Bruce M. Patton This DRRC version of a Harvard Program on Negotiation (PON) case is a dispute between a group of neighbors and the company that is building a condominium development at the end of their street. The exercise provides a good opportunity to introduce dispute resolution concepts of interests, rights, and power. It is also a vehicle for discussing credible threats. Preparation: 60 min. Negotiation: 60 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: The Drug Testing Program by Leonard Greenhalgh This three-party exercise involves a personnel manager, an employee assistance program coordinator, and an MBA-trained employee who has tested positive for marijuana. The exercise introduces issues of coalition formation, responsibility to the corporation, precedent, evidence, and corporate policies. Preparation: 40 min. Negotiation: 30 min. Available from Creative Consensus, Inc., P.O. Box 5054, Hanover, NH 03755. Phone/fax: (603) 643-0331. EXERCISE: Incidents in Negotiation Questionnaire and Negotiation Tactic categories forming 30-item questionnaire by R. J. Robinson, R. J. Lewicki, and E. M. Donahue This questionnaire is part of a research study on how negotiators decide when a particular strategy is ethical in negotiations. Available from Robinson, R. J., Lewicki, R. J., and Donahue, E. M. (2000). Extend¬ing and testing a five-factor model of ethical and unethical bargaining tactics: Introducing the SINS scale. Journal of Organizational Behavior, 21(6), 649-664. EXERCISE: Star by Stephen B. Goldberg This is a two-party, qualitative negotiation with integrative potential. The negotiation occurs between representatives of two record companies about which company is going to produce the first new record of a once-popular rock group that has reunited after 13 years apart. Preparation: 60 min. Negotiation: 90 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Tipal Dam by Peter Wheelan and Jeanne M. Brett This is a transactional negotiation between a construction company and a foreign government. Tipal Dam is useful for teaching negotiation ethics in a cross-cultural context. Preparation: 60 min. Negotiation: 60 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: The Ultimatum Game by J. Keith Murnighan This is a market exercise for medium or large groups that is played twice, with discussion between and after the two plays. One party is given information and power; the other party must deal with a position of relative weakness. Discussion raises issues of fairness, the use of strategic power, equality, and justice. Preparation: 5-10 min. Negotiation: 10 min. each. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Where’s Alvin? A Case of Lost Ethics by Holly Schroth, Margaret Calonico, and Robert Inchausti Where’s Alvin? is a two-party negotiation between a manager and an employee that poses an ethical problem. The employee has stolen company property. The manager has some culpability in that he/she did not follow company policy re: security checks in hiring the employee. As a further complication, the manager and employee are (or at least were) friends. Preparation: 15-20 min. Negotiation: 40 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. MULTIPLE-CHOICE QUESTIONS When it comes to how to best leverage your BATNA in a negotiation, all the following strategies are effective, except: keep your options open, meaning continue to attempt to improve your existing BATNA slowly increase the value of your BATNA during the negotiation so as to display firm resolve to the other party signal to the other party that you have attractive options, without revealing the exact value of the BATNA do as much research as possible to assess the other party’s BATNA With regard to gender and power in negotiation, which statement is most true? There are no known gender differences between male and female negotiators Gender differences are due to “nature” (i.e., fundamental sex differences that are not caused by environmental factors) Men claim a larger share of the bargaining surplus, however women are able to perform better when negative cultural stereotypes are exposed Men claim a larger share of the bargaining surplus than do women because they do not want to lose to a woman In negotiation, the reactance principle is the tendency for people to want to do the opposite of what someone asks them to do if they feel they are being forced speak before they have actually heard the other party quickly re-anchor when the other party makes an opening offer, especially an extreme one reciprocate power moves with another power move, such as a threat With regard to lying about one’s BATNA in negotiation, which of the following is true? Lying about one’s BATNA is only advisable if the negotiator is prepared to have the other party walk away from the table Lying about one’s BATNA is sometimes permissible, but lying about one’s reservation price is never permissible Lies about BATNAs are not permissible, but lying about the other party’s BATNA is strategically advisable Lies about BATNAs are equivalent to lying about material facts, and therefore, the lying party could be sued In terms of ethics and negotiation behavior, which of the following is generally true? Negotiators judge others more harshly than they judge themselves Negotiators judge themselves more harshly than they judge others, which creates a social comparison effect Negotiators regard traditional, competitive bargaining (i.e, making outrageous demands) to be particularly unacceptable Lying about one’s position is viewed as more unethical than lying about one’s interest The “costs” of lying include all of the following, except: personal costs in terms of a person having to remember what he or she lied about social costs in terms of creating a society in which rules have to be created to deal with liars environmental costs in terms of people being less cognizant about their effect on natural resources social costs in terms of people being suspicious about others If a negotiator wants to induce risk aversion or conservatism in their counterparty, he or she should present options as gains relative to a reference point losses relative to a reference point gains relative to a reservation price losses relative to a reservation price The two routes to persuasion are the central route and the peripheral route. The central route refers to ___________ whereas the peripheral route refers to ______________ short-term persuasion; long-term persuasion direct, mindful and information-based; automatic and emotional information processing first-hand persuasion attempts; second-hand (e.g., role modeling) persuasion attempts ethical persuasion attempts; unethical persuasion attempts The foot-in-the-door persuasion strategy refers to having the counterparty to agree to a modest request making small offers then increasing feeling obligated to go along with large requests causing rejection then making a real offer Primary status refers to _____________; secondary (pseudo) status cues refer to _____________ factors that are not real indicators of authority, such as age, gender and race; legitimate authority legitimate authority; factors that are not real indicators of authority, such as age, gender, and race age-based authority; race-based authority the CEO or president; the person or persons who report to him/her Answer key: 1.B; 2.C; 3.A; 4.D; 5.A; 6.C; 7.A; 8.B; 9.B; 10.B. Discussion Questions Why is a negotiator’s BATNA the most important source of power in negotiation? Why should a negotiator constantly cultivate and improve his or her BATNA prior to negotiating? What are some behaviors that are generally regarded to be unethical in negotiation? Under what conditions do people usually engage in this kind of behavior? Identify the two routes to persuasion in negotiation. How are these two routes similar to the “mind and heart” distinction made in this book? How are they similar to the routes to trust building detailed in Chapter 6? What are some of the effects of status on the conduct of bargaining? What are some of the disadvantages to paying attention to secondary status characteristics in negotiation? Why is it so difficult to pinpoint “ethical” or “unethical” behavior? How does this relate to the concept of determining “fairness” (discussed in Chapter 3)? What are some strategies a negotiator can use to determine whether a given behavior is ethical? Suggested answers Negotiators can hold out for a greater share of resources if they are not willing to settle for less than the value of their BATNA. Additionally, a negotiator can signal to the other party that he/she has alternative courses of action. Negotiators who have prepared adequately will not need to lie about his/her BATNA and will be able to express an “opinion” based on the facts. Lying is considered an unethical behavior in negotiation. People may engage in deception because of the lure of temptation, uncertainty, powerlessness, and anonymity of victims. The more negotiators have to gain economically by lying or the more uncertainty negotiators have about material factors, the more likely they are to lie. The most common reason for lying is when we think the other party is lying. The two routes to persuasion (that appeal to the mind and heart, respectively) are the central route that is direct, mindful, and information-based, and the peripheral route that involves a seemingly automatic response to various cues such as a person’s prestige, credibility, or likability. These routes are similar to rational and psychological strategies to trust building described in Chapter 6. Two types of status are primary and secondary status characteristics. The impact of status can be enormous: High-status individuals talk more, generally control when he or she speaks in a conversation; furthermore, a low-status person will defer to the high-status person in terms of turn-taking in the conversation that can affect pie-slicing. When primary status cues are absent, people pay attention to secondary status or pseudostatus characteristics that have little to do with ability, but people act as if they do. Paying attention to secondary status characteristics can lead to the formation of a mental roadblock in the negotiations. Fairness and ethical behavior are subjective, meaning that a variety of norms exist, and negotiators usually focus on norms that serve their own interests. For evaluating ethical behavior, consider the front-page test that poses the following question: Would you be completely comfortable if your actions and statements were printed in full on the front page of the local newspaper or were reported on the TV news? If not, then your behavior or strategies in question may be regarded as unethical. Chapter 8 Creativity and Problem Solving in Negotiations OVERVIEW This is a fun chapter that I believe works best if students are given the “creativity test” in Exhibit 8–1 sometime prior to reading this chapter. (The instructor can assign it during the first week and then put it aside until this week.) The chapter has three major sections: (1) creative negotiation tactics, (2) factors that threaten creativity, and (3) general strategies for increasing personal creativity. I spend quite a bit of time covering contingency contracts, since they are so important; give examples in business and in everyday relationships. Students can be asked to diagnose their own “mental model” of negotiation and how that affects their creativity. Lecture Outline creativity in negotiation Creative aspect of negotiation is often ignored or downplayed by negotiators, who fixate on the competitive aspect (fixed-pie perception) Successful negotiation requires a great deal of creativity and problem solving Test your own creativity (Exhibits 8-1 and 8-10) what is your mental model of negotiation? Negotiators’ mental models shape their behavior Five distinct mental models of negotiation Haggling model Cost-benefit analysis (Decision-making model) Game-playing model (Exhibit 8-2) Partnership model Problem-solving model Creative negotiation agreements Fractionating problems into solvable parts Integrative possibilities Problem representation Finding differences: Issue alignment and realignment Aligning and trading off independent issues Expanding the pie Bridging Understanding the counterparty’s interests Avoiding positional bargaining Cost cutting Nonspecific compensation Structuring contingencies Contingency contracts (Exhibit 8-2) Some degree of continued interaction between parties Enforceability Clarity and measurability threats to effective problem solving and creativity The inert knowledge problem (Exhibits 8-3 and 8-4) Dissociation between what is most accessible in our memories and what is most useful in problem solving and reasoning Ability of managers to transfer knowledge from one context to another is limited Surface-level transfer Deep transfer Decreasing inert knowledge problem involves making an explicit comparison between two or more relevant cases Availability heuristic The more prevalent a category is judged to be, the easier it is to bring it to mind False consensus effect Representativeness Making judgments on the following basis: The more similar a person is to a group stereotype, the more likely he/she is to belong to that group Base rate fallacy Gambler’s fallacy Anchoring and adjustment Anchors are often arbitrary and selected on the basis of temporal proximity, not relevance Negotiators tend to make insufficient adjustments away from the anchor Unwarranted causation Belief perseverance Illusory correlation Just world Blaming-the-victim attributions Defensive attributions enable observers to deal with perceived inequities and maintain belief in a just world Hindsight bias “I knew it all along” effect: solutions seem obvious in retrospect Creeping determinism Functional fixedness Set effect (negative transfer) Selective attention Overconfidence effect The limits of short-term memory (“seven plus or minus two” rule) creative negotiation strategies Analogical Training Feedback (Exhibit 8-5) Incubation Incubation (Exhibit 8-6) is one step in a process of problem solving Preparation Incubation Illumination Verification Rational problem-solving model Understanding the problem Devising a plan Carrying out the plan Looking back Fluency, flexibility, and originality Fluency: ability to generate many solutions to a conflict Flexibility: ability to change approaches to a problem Originality: ability to generate unusual and unique solutions Brainstorming (Exhibit 8-7) Convergent versus divergent thinking Convergent thinking proceeds towards a single answer Divergent thinking moves outward from a problem in many directions Deductive reasoning (Exhibit 8-8) People violate rules of logic on a regular basis Agreement with a conclusion Cognitive consistency Confirmation bias Inductive reasoning (Exhibit 8-9) Flow (autotelic experience) Experience that is so engrossing and enjoyable it becomes worth doing, even if it has no consequences beyond its own context Anxiety, or choking Conclusion Effective negotiation requires creative thinking, which is in turn affected by a negotiator’s mental model of negotiation Five common mental models: Haggling, cost-benefit analysis, game-playing, relationship-building, and problem-solving Creative negotiations include fractionating problems into simpler parts; finding differences to exploit; expanding the pie; bridging, cost cutting, non-specific compensation; and structuring contingency contracts Several biggest threats to creativity include the inert knowledge problem, availability bias, representativeness, anchoring and adjustment, unwarranted causation, illusory correlation, hindsight bias, functional fixedness, selective attention, and overconfidence Strategies for rethinking negotiation problems include feedback, incubation, creativity templates, brainstorming, divergent thinking, inductive and deductive reasoning, and psychological flow Key Terms availability heuristic The principle stating that the more prevalent a group or category is judged to be, the easier it is for people to bring instances of this group or category to mind. base rates The frequency with which some event or pattern occurs in a general population. base rate fallacy The tendency for people to discount perfectly valid information and instead rely on a single, vivid data point. blaming-the-victim attributions Unwarranted negative impressions of others who suffer misfortunes that enable observers to deal with the perceived inequities in others’ lives and maintain belief that the world is just. brainstorming A technique used to stimulate creativity in groups, in which the goal is to increase the quality and quantity of group ideas by encouraging free exchange and by removing criticism. bridging A type of integrative solution in which a new option is created that satisfies both parties’ vital interests. causal relationship An empirical relationship in which changes in event A are predicted to produce subsequent changes in event B. choking Intense anxiety that results when a person’s abilities do not match opportunities for action. contingency contracts Agreements wherein negotiators make bets based upon their differences in beliefs, forecasts, risk profiles, and interests. convergent thinking A method of thinking about a problem that proceeds toward a single answer. cost cutting A tactic to make the other party feel whole by reducing their costs. creeping determinism A phenomenon in which, once we know the outcome of an event, we perceive the outcome to be an inevitable consequence of the factors leading up to it. See hindsight bias. deductive reasoning The process of drawing logical conclusions from given information. deep level transfer When a person applies solutions and strategies that have meaningful similarities, rather than superficial ones. divergent thinking A method of thinking about a problem that moves outward from the problem in many possible directions and involves thinking without boundaries, flexibility of categories, and originality of thought. diversifying the use of categories A key way to enhance creativity. false consensus effect The belief that others are more similar to ourselves in attitudes and behaviors than is actually the case. fixed-pie perception The belief that the other party’s interests are directly and completely opposed to one’s own. flow or autotelic experience A particular kind of activity that is so engrossing and enjoyable that it becomes worth doing, even if it has no consequences beyond its own context. functional fixedness Phenomenon that occurs when a problem solver bases a strategy on familiar methods and cannot readily switch to another method. gambler’s fallacy The tendency for people to treat chance events as though they have a built-in, evening-out mechanism when, in fact, each event is independently determined. haggling model When each negotiator tries to obtain the biggest share of the bargaining zone. hindsight bias Human tendency to be remarkably adept at inferring a process once the outcome is known but be unable to predict outcomes when only the processes and precipitating events are known. illusory correlation The tendency to see invalid correlations between events. inductive reasoning The process of hypothesis testing or trial and error from given information. inert knowledge problem Inaccessibility of knowledge in one’s own mind because of initial encoding. mental models The ways in which people understand social and physical systems. non-specific compensation An agreement where one negotiator receives what he or she wants, and the other is compensated (or paid) by some method that was initially outside the bounds of negotiation. overconfidence effect Unwarranted levels of confidence in people’s judgment of their abilities and the occurrence of positive events and underestimates of the likelihood of negative events. partnership model Negotiators who build rapport to nurture long-term relationships and often make sacrifices to uphold the relationship. perseverance effect The tendency of people to continue to believe that something is true even when it is revealed to be false or has been disproved. problem representation Defining, rather than solving, a problem; i.e., searching for differences in a negotiation that will lead to creative trade-offs. representativeness A heuristic based on stereotypes; i.e., the more a person looks like the stereotype of a member of a certain group, the more we are inclined to stereotype them as belonging to that group. set effect or negative transfer The negative effect of prior experience on a negotiator’s ability to develop strategies that are of sufficient breadth and generality in a problem-solving situation. short-term memory A proposed intermediate memory system in which information resides on its journey from sensory memory to long-term memory. surface level transfer When a person attempts to transfer a solution from one context to a superficially similar context. transfer The ability to apply a strategy or idea learned in one situation to solve a problem in a different, but relevant, situation. Suggested Exercises and other materials EXERCISE: Blue Buggy Buyer by Gaylen D. Paulson This is a two-party deal making exercise with a negative bargaining zone. Nevertheless 15%-20% of negotiators reach agreement illustrating irrationality and agreement biases. Another 15%-20% generate creative agreements that illustrate the limitations of the frames and assumptions negotiators bring to the table. Preparation: 10 min. Negotiation: 15 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Brainstorming by Robert Sutton and Holly A. Schroth This exercise can be used to teach group creativity and group process, including norms, roles, status, and power. Preparation: 20-25 min. Negotiation: 40 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu.. EXERCISE: Bullard Houses by Ron Karp; revised by Mox Tan, David Gold, Andrew Clarkson, Paul Cramer, Douglas Stone, and Bruce M. Patton DRRC’s version of this Harvard Program on Negotiation (PON) exercise is excellent for raising issues of ethics in negotiation. It is a one-on-one, qualitative negotiation between agents over a piece of prime real estate. It emphasizes the role of agents, lying, misrepresentation, and trust. Pre¬pa¬ra¬tion: 60 min. Negotiation: 60 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Cascade Manor by Susan Brodt and Leigh Thompson This is a team-on-team quantified negotiation exercise with integrative potential. It contains distributive, compatible, and logrolling issues. It also deals with common and uncommon knowledge, as teammates do not have all the same information. This exercise provides an excellent opportunity to discuss the management of a negotiation team. Preparation: 30 min. Negotiation: 45 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Commodities Brokers by Leigh Thompson and Leaf Van Boven This is a set of three negotiations between two brokers. It is a multiple-time-period, two-party integrative negotiation between two brokers trading four commodities, in which there is risk in¬volved. Participants are randomly assigned to the role of Broker Jones or Broker Smith in the trading of various quantities and grades of wheat, rice, copper, and crude oil. This is an excellent negotiation exercise for illustrating the impact of risk and uncertainty on behavior and performance over time. Preparation: 15 min. Negotiation: 30 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Computron Pharmaceuticals by Leigh Thompson, Victoria Medvec, Wendi Adair, Peter Kim, Kathleen O’Connor, and Janice Nadler This exercise is a two-party negotiation requiring multiple skills to reach fully integrative agreements. Parties include a potential hiree and hiring officer for a pharmaceutical engineering company. One party’s BATNA is uncertain. Excellent negotiation for teaching advanced negotia¬tion skills, including logrolling (trade-offs), compatible issues, contingency contracts, etc. Pre¬paration: 45 min. Negotiation: 60 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: El-Tek by Max H. Bazerman and Jeanne M. Brett This is a two-party, quantified negotiation between two divisions of a large, decentralized organi¬za¬tion. The negotiation concerns the potential transfer of a product from the division that developed it, and plans to use it as a component in its own products, to the division that has lower-cost ma¬n¬u¬fac¬t¬u¬ring and the corporate charter to market such a product. This case is very good for helping students vis¬ualize a pareto-optimal frontier. Preparation: 60 min. Negotiation: 90 min. Available from the Disp¬ute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Energetics Meets Generex by W. Trexler Proffitt, Jr. This is a two-party distributive negotiation based on a real California wind energy farm transaction in 2002. It is good for illustrating biases including anchoring and availability. There is the option to provide an outside offer during the negotiation that illustrates the power of BATNA. Preparation: 10 min. Negotiation: 30 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: MAPO by Mark N. Gordon, Tim Reiser, Elizabeth Gray, Lynn Gerber, Bruce M. Patton, and Valerie A. Sanchez DRRC’s version of this Harvard University Program on Negotiation (PON) case is a multi-issue union management contract negotiation, with integrative potential. It comes with numerous exhibits that provide an opportunity to discuss using fairness standards, while negotiating distributive agreements. There is also a compatible issue that negotiators often do not discover, but is interesting to discuss. Preparation: 60 min. Negotiation: 120 min. Available from the Dispute Resolution Re¬search Center at the Kellogg School of Management, Northwestern University, 2001 She¬ridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu.. EXERCISE: Moms.com by Ann E. Tenbrunsel and Max H. Bazerman This exercise replaces the popular Working Women exercise. (Please do not continue to use Working Women.) This is a two-party, quantified, deal making negotiation between a film company and a T.V. station over the syndication rights for a T.V. series, Moms.com. The exercise provides a good opportunity to introduce the concept of pareto-optimality. The teaching notes point out the slight differences between the numbers in the old Working Women exercise and this one. Preparation: 60 min. Negotiation: 90 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: New Car by Leigh Thompson A two-party, multi-issue negotiation task, between a buyer and a seller of a new Toyota Camry, which challenges students’ integrative and distributive negotiation skills. Participants are randomly assigned to the buyer and seller roles and provided with information about the various issues, options, and alternatives (e.g., color, financing, warranty, extras, etc.). The goal of each negotiator is to maximize his or her profits. Preparation: 15-20 min. Negotiation: 30-45 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern Uni¬ver-sity, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: New Recruit by Margaret A. Neale This is a two-party, multi-issue, quantified negotiation over an employment contract. It illustrates pareto-optimality and the differences between compatible, trade-off (or integrative) and distributive issues. Preparation: 15 min. Negotiation: 30 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Oceania! by Leigh Thompson Oceania! is a complex two-party negotiation between a theater manager and a New York production company. There are several issues to be negotiated, and reaching an integrative agreement requires several different kinds of skills. Preparation: 60-90 min. Negotiation: 60-90 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Salary Negotiation by Holly Schroth, Gina Ney, Michael Roedter, Adi Rosen, and Michael Tiedman This is a qualitative, two-party salary negotiation that can be used to teach packaging issues, strategic use of compatible issues, and use of objective criteria. Preparation: 10-20 min. Negotiation: 30-40 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Star by Stephen B. Goldberg This is a two-party, qualitative negotiation with integrative potential. The negotiation occurs between representatives of two record companies about which company is going to produce the first new record of a once-popular rock group that has reunited after 13 years apart. Preparation: 60 min. Negotiation: 90 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Strategic Alliances: Selling to the Pentagon by Leonard Greenhalgh This exercise involves a series of negotiations between three teams over a pot of money, created by contributions from each participant. Learning points include multilateral communication, group process (intra-group negotiation), group decision-making, contracts, and intergroup and interpersonal relationships. Exercise: 60 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Texoil by Stephen B. Goldberg This is a qualitative negotiation over the sale of some property. The case has no overlapping bargaining zone unless the parties uncover some of each other’s interests. It is a very good case for teaching about interests, what information should and should not be shared, and creativity in ne¬go¬ti¬a¬tions. Preparation: 30 min. Negotiation: 60 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheri¬dan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Virtual Victorian by Wendi Adair, Gaylen D. Paulson, and W. Trexler Proffitt, Jr. Virtual Victorian is a distributive, house buying negotiation that is carried out through agents and via e-mail. There are four parties: the buyer, the buyer's agent, the seller, and the seller's agent. Pre¬pa¬ra¬tion: 60 min. Negotiation: one week (e-mail). Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 She¬ri¬dan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. MULTIPLE-CHOICE QUESTIONS Which of the following refers to a cost-cutting solution? adding a string of benefits to a small initial offer one party getting their choice in exchange for the costs to the counterparty being reduced or eliminated reducing the size of concessions each party lowering their aspirations on issues that are of less interest to them Which of the following refers to non-specific compensation? compensating on a variety of low-priority issues neither party gets its initial specific demands but an alternative option is developed one side getting what it wants and the other is compensated by some method on new issue trading low priority issues for higher priority issues In negotiation, the inert knowledge problem refers to applying irrelevant knowledge instructions outside of the context of real problems subconsciously evaluating the issue and its inferences the inability to access relevant knowledge when we most need it Some CEOs agreeing to tie their salary to a company’s stock price is an example of speculative agreement contingency contract compromise contract integrative agreement Which of the following refers to the availability heuristic? doing something for the counterparty, the counterparty immediately reciprocating correlating the frequency of an event with how easily an example can be brought to mind describing some occurrence in vivid detail, even if it is an exceptional occurrence examining other available procedures or alternatives With regard to receiving feedback in negotiation to improve one’s negotiation ability, which of the following statements is most true? Lecture or didactive feedback results in best performance Observational learning and analogical learning both lead to improved performance Delaying feedback for a short period of time results in improved performance Qualitative feedback is superior to quantitative feedback for improving performance To be effective, contingent contracts should include all of the following, except: amount of future interaction between the parties strict terms about the enforceability of the contract compromise solution about future events measures concerning how the contract will be evaluated Which of the following is an example of the representativeness heuristic? assuming commonality between objects of similar appearance relying on one representative piece of information when making decisions creating meaning from what we experience about the world around us assumption that a small sample is representative of a large population According to Osborn, all of the following are part of the rules for brainstorming, except: quantity selection expressiveness nonevaluation The fixed pie perception is the belief that one’s BATNA can never improve the counterparty’s BATNA is more attractive than it actually is the counterparty’s interests are directly opposed to one’s own creativity will not yield a better outcome in a negotiation Answer key: 1.B; 2.C; 3.D; 4.B; 5.B; 6.B; 7.C; 8.A; 9.B; 10.C. Discussion Questions Why is creativity often downplayed or ignored in the process of negotiation? In what ways do different types and methods of feedback affect the performance of negotiators on subsequent negotiations? What are some of the advantages of creating contingency contracts? What are some of the characteristics that ensure the viability and usefulness of contingency contracts? What is your mental mode of negotiation? What are the indices by which creativity is measured? What are some of the methods by which to enhance your own creativity (along these indices)? Suggested answers 1. Agreements are often reached based upon power or on the competitive aspect of negotiation. This tendency is largely driven by the fixed-pie perception because negotiators frequently believe that “expanding the pie” is the same as compromising. Integrative bargaining requires creativity and problem solving, and the process of slicing the pie can be a lot easier when the pie has been enlarged via creative and insightful problem-solving strategies jointly agreed to by the parties. 2. No one can get better without feedback. A study demonstrated that nearly everything is better than no feedback at all and that nearly anything is better than traditional, classroom-style, didactic learning. When it comes to learning, the type and method of feedback matter. In one investigation, negotiators who received the negative-ability feedback were the least competitive and achieved the worst individual performance. Negotiators who received the negative-ethicality feedback were the most honest. Negotiators who received the positive-ethicality feedback were the most cooperative. 3. With contingency contracts, differences of opinion about future events become the core of the agreement—negotiators can bet on the future rather than argue about it or change one party’s point of view, or worse yet, reach an impasse. Bazerman and Gillespie suggest three key criteria for assessing the viability and usefulness of contingency contracts: some degree of continued interaction between the parties; the enforceability of the contract; and a high degree of clarity and measurability. 4. Determining one's mental mode of negotiation is pivotal in understanding how individuals approach problem-solving and creativity in negotiations. Here's a framework to articulate one's mental mode: 1. Analytical Approach: • Description: Individuals with an analytical mental mode rely on data, logic, and systematic analysis to approach negotiations. They meticulously examine facts, figures, and historical trends to make informed decisions. • Characteristics: These negotiators excel in breaking down complex issues into manageable components, conducting thorough research, and evaluating options objectively. They prioritize precision and accuracy in their assessments. • Strengths: The analytical approach fosters clarity of thought, informed decision-making, and risk assessment. It allows negotiators to identify patterns, anticipate outcomes, and develop strategic plans effectively. • Weaknesses: However, an over-reliance on data and logic may lead to overlooking emotional or qualitative factors that influence negotiations. These negotiators may struggle with ambiguity or uncertainty and may appear rigid in their approach. 2. Intuitive Approach: • Description: Negotiators with an intuitive mental mode rely on gut instincts, intuition, and improvisation to navigate negotiations. They trust their intuition to guide decision-making, often drawing upon past experiences and tacit knowledge. • Characteristics: Intuitive negotiators are adaptable, innovative, and adept at thinking outside the box. They excel in generating creative solutions, seizing opportunities, and adapting to dynamic or unpredictable situations. • Strengths: The intuitive approach facilitates rapid decision-making, agility, and creativity. These negotiators thrive in ambiguous or high-pressure environments, leveraging intuition to uncover hidden possibilities and capitalize on emerging trends. • Weaknesses: However, intuition can be subjective and prone to biases or misjudgments. Intuitive negotiators may struggle to articulate their decision-making process or substantiate their ideas with concrete evidence, leading to skepticism from counterparts. 3. Collaborative Approach: • Description: Negotiators with a collaborative mental mode prioritize relationship-building, teamwork, and consensus-building in negotiations. They emphasize empathy, active listening, and mutual understanding to foster cooperation and trust. • Characteristics: Collaborative negotiators excel in building rapport, finding common ground, and integrating diverse perspectives into solutions. They prioritize win-win outcomes and seek to build long-term relationships based on trust and mutual respect. • Strengths: The collaborative approach enhances communication, trust, and transparency in negotiations. These negotiators excel in resolving conflicts, building alliances, and cultivating a positive negotiation climate conducive to creative problem-solving. • Weaknesses: However, prioritizing harmony and consensus may lead to sacrificing individual interests or overlooking competitive dynamics. Collaborative negotiators may struggle with assertiveness or advocating for their needs assertively. Identifying one's mental mode of negotiation provides insights into preferred strategies, strengths, and potential blind spots, empowering negotiators to leverage their unique capabilities and adapt their approach to achieve optimal outcomes. 5. One common way of evaluating creativity is via three indexes: fluency (the ability to generate many solutions), flexibility (the ability to change approaches to a problem), and originality (the ability to generate unusual solutions). As a way of thinking about these three indexes of creativity, do the following exercise: See how many possible uses you can think of for a cardboard box. Chapter 9 Multiple Parties, Coalitions, and Teams OVERVIEW Chapter 9 contains a lot of information about all kinds of multiparty situations. In my course, we do several multiparty negotiations and therefore spend quite a bit of time in each section of the chapter. My favorite area is the coalition section, and I enjoy challenging students with a coalition game and then assigning this part of the chapter as reading to follow the exercise. If students are doing a principal-agent negotiation (e.g., house buying), I suggest assigning the reading after the exercise. Exhibit 9-12 is a summary of the several forms that multiparty negotiation can take and the key challenges and strategies of each. Lecture Outline Analyzing multiparty negotiations (Exhibit 9-1) multiparty negotiations A group of three or more individuals, each representing his or her own interests, attempts to resolve perceived differences of interest Key challenges of multiparty negotiations Dealing with coalitions Formulating trade-offs Circular logrolling Reciprocal trade-offs Voting and majority rule Problems with voting and majority rule Voting paradoxes (Exhibit 9-3) Condorcet paradox Impossibility theorem Strategic voting and misrepresentation Consensus agreements Communication breakdowns Private caucusing Biased interpretation Perspective-taking failures (the curse of knowledge) Indirect speech acts (Exhibit 9-5) Multiple audience problem Key strategies for multiparty negotiations Know who will be at the table Manage the information and systematize proposal making (tunnel vision) Use brainstorming wisely (brainwriting) Develop and assign process roles Stay at the table Strive for equal participation Allow for some points of agreement, even if only on process Avoid the “equal shares” bias Avoid the agreement bias Avoid sequential bargaining coalitions Key challenges of coalitions Optimal coalition size Trust and temptation in coalitions Status quo bias Coalitional integrity Dividing the pie (Exhibit 9-5) Getting out of the vicious circle The core solution The Shapley model and pivotal power (Exhibit 9-6) Raiffa’s hybrid model Tips for low-power players Strategies for maximizing coalitional effectiveness Make your contacts early Seek verbal commitments Use unbiased-appearing rationale to divide the pie
principal-agent negotiations Advantages to using agents Expertise Substantive knowledge Networks and special influence Emotional detachment Ratification Face-saving Disadvantages of agents Shrinking ZOPA (Exhibit 9-7) Incompatible incentive structure Communication distortion and message tuning Loss of control Agreement at any cost Strategies for effectively working with agents Shop around (Exhibit 9-8) Know your BATNA before meeting with your agent Communicate your interests to your agent without giving away your BATNA Capitalize on the agent’s expertise Tap into your agent’s sources of information Discuss ratification Use your agent to help save face Use your agent to buffer emotions constituent relationships Constituent is ostensibly on the “same side” as a principal, but exerts independent influence on the outcome through the principal Superiors Subordinates Constituencies Collateral relationships Challenges for constituent relationships Identification Accountability (second table) Decision-making vigilance Evaluation apprehension and face-saving Diffusion of responsibility Conflicts of interest Strategies for improving constituent relationships Communicate with your constituents Do not expect homogeneity of constituent views Educate your constituents on your role and your limitations Help your constituents do horizon thinking Team negotiation Presence of at least one team at the bargaining table increases the incidence of integrative agreements Team effect Team efficacy effect Team halo effect Challenges that face negotiating teams Selecting your teammates: criteria Negotiation expertise Technical expertise Interpersonal skills How many on the team? Communication on the team (information pooling) Team cohesion Common-identity groups Common-bond groups Information processing (common information bias) Strategies for improving team negotiations Goal and Strategy alignment Prepare together (Exhibit 9-9) Plan scheduled breaks Assess accountability Intergroup negotiation Challenges of intergroup negotiations Stereotyping Changing identities In-group bias and downward social comparison Extremism and naïve realism Strategies for optimizing intergroup negotiations Separate conflict of interest from symbolic conflict Search for common identity Avoid the out-group homogeneity bias Mere contact strategy: conditions for success Social and institutional support Acquaintance potential Equal status Shared goal Cross-group friendships The GRIT model (Graduated and Reciprocal Initiative in Tension Reduction (Exhibit 9-10) conclusion Multiparty negotiations require all of the pie-slicing and pie-expanding skills of two-party negotiations, and then some Key challenges of multiparty negotiations: development and management of coalitions, complexity of information management, voting rules, and communication breakdowns Several different levels of analysis involved in multiparty negotiations; all levels are necessary to fully understand and capitalize on the dynamics of multiparty negotiations Exhibit 9-11 summarizes six levels of analysis, key challenges facing the negotiator at each level, and the best strategies to surmount these challenges Key Terms agreement bias When negotiators focus on reaching common ground with the other party and are reluctant to accept differences of interest, even when such acceptance might create options for joint gain. brainwriting A brainstorming session in which group members write their ideas individually at the same time. circular logrolling In group negotiation, trade-offs that require each group member to offer another member a concession on one issue, while receiving a concession from yet another group on a different issue. coalition A (sub)group of two or more individuals who join together in using their resources to affect the outcome of a decision in a mixed-motive situation. coalitional integrity The tendency for parties to remain loyal to a coalition, even when they can obtain more resources outside of that coalition. cohesion The strength of positive relations in a group, the sum of pressures acting to keep individuals in a group, and the result of all forces acting on members to remain in a group. common information bias The tendency of members of a group to share and discuss only the information that is common to all members, as opposed to unique information. common-bond group A group composed of members who are attracted to the group because of the particular members in the group. common-identity group A group composed of members who are attracted to the group for what it represents. condorcet paradox A result of group voting that demonstrates that the winners of majority rule elections change as a function of the order in which alternatives are voted upon. constituent The party whom the principal represents. curse of knowledge The tendency for people who are privy to information and knowledge that they know others do not possess to act as if others are indeed aware of it (even when it is impossible for the receiver to have this knowledge). diffusion of responsibility In a group, the tendency for each individual to feel less responsible and become less likely to act than if he or she were alone. downward social comparison Situations in which people compare themselves to someone (or a group) who is less fortunate, able, accomplished, or lower in status. graduated and reciprocal initiative in tension reduction (GRIT) model Unilateral conciliatory actions designed to de-escalate a conflict. horizon thinking A type of thinking that involves making projections about future outcomes. impossibility theorem A theorem stating that the derivation of group preference from individual preference is indeterminate if certain conditions prevail. indirect speech acts Ways in which people ask others to perform tasks or acts that require extra cognitive steps on the part of the listener in order to understand the communicator’s intention. information pooling In group interaction, the strategy of collecting information from all members in a systematic fashion. in-group bias Positive evaluations of one’s own group relative to an out-group. intergroup negotiations Negotiations in which parties identify with their organization and interact with the other party in terms of his or her membership in other organizations. majority rule A voting principle providing that a majority (usually constituted by 50 percent plus one) of an organized group will have the power to make decisions binding on the whole group. message tuning The way in which senders tailor communication of messages to fit specific recipients. multiple-audience problem The difficulty that arises when a sender needs to communicate with a certain recipient in the presence of another person (or people) who should not be able to understand the message. multiparty negotiation When a group of three or more individuals, each representing his or her own interests, attempt to resolve perceived differences of interest. naïve realism A principle in which people expect others to hold views of the world similar to their own. pivotal power The ability to change a losing coalition into a winning coalition. reciprocal trade-offs A trade-off fashioned between two parties where each gives up one thing in exchange for making gains on another issue. second table In a group negotiation, the relationship that parties share with their constituents. sequential bargaining When you discuss one issue at a time. status quo bias A tendency in decision making and negotiation to prefer current circumstances over proposed new ones. strategic misrepresentation A situation in which a negotiator misrepresents his or her true preferences so as to gain advantage over the other party. team effect In negotiation, the tendency for parties represented by a bargaining team to reach more integrative settlements. team efficacy effect The collective perception held by individuals and/or members of a team that their efforts, decisions, and products are superior, more valued, and more worthwhile than an individual’s efforts, decisions, and products. team halo effect Refers to the fact that teams tend not to be blamed for their failures, as much as individuals do, holding constant the nature of the failure. tunnel vision The tendency for people in group negotiations to underestimate the number of feasible options and alternatives available. uneven participation One or two people do all the talking and thwarts the information exchange in the group. Suggested Exercises and other materials EXERCISE: Architectural Design Firm by Linda Palmer and Leigh Thompson Three-member, cross-functional teams negotiate the design of a house, in which a client specifies required features and a limited budget. Each negotiator is assigned a role (the structural expert, the finish expert, or the land expert) and given confidential information about pricing for various options they can include in the design plan, a confidential profit schedule (indicating how much profit they will make if their option is included in the design), and special bonus information involving in¬teg¬ra¬ti¬ve trade-offs. The main task of the group is to determine the set of options, beyond those required by the client, to be included in the design of the house. The exercise involves three dependent measures: Perceptions of group members’ competitiveness, joint profit (and integrative trade-offs), and equality of resource distribution. Preparation: 25 min. Negotiation: 60 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: The Best Stuff on Earth by Holly Schroth, Damien Dirringer, John Hudson, Nadir Hussain, Michael McLaren, Kim Roseman, and James Slipe This is a multiparty (seven people), multi-issue negotiation intended to simulate the negotiations that occur in top management teams. The exercise is based on the buyout of Snapple Beverages by Quaker Oats. Preparation: 25-30 min. Negotiation: 90-120 min. Available from the Dispute Re¬so¬lu¬tion Research Center at the Kellogg School of Management, Northwestern University, 2001 She¬ridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu.. EXERCISE: Cascade Manor by Leigh Thompson This is a team-on-team quantified negotiation exercise with integrative potential. It contains dis¬tri¬butive, compatible, and logrolling issues. It also deals with common and uncommon knowledge, as team-mates do not all have the same information. This case provides an excellent opportunity to dis¬cuss the management of a negotiation team. Preparation: 30 min. Negotiation: 45 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Commodity Purchase by Leonard Greenhalgh This simulation is best run with six participants in each group, but can be run with fewer. It involves a seller who has 100,000 pheasant eggs and up to five buyers who need the eggs for very different purposes. If the eggs are simply auctioned to the highest bidder, the seller achieves a suboptimal out¬come. Combinations of buyers can pool their purchasing power and instead of competing, collaborate to share the produce. Preparation: 15 min. Negotiation: 30-45 min. Available from Creative Consensus, Inc., P.O. Box 5054, Hanover, NH 03755. Phone/fax: (603) 643-0331. EXERCISE: The Executive Decision-Making Game by J. Keith Murnighan This is a multiparty (typically four or five people) veto game, where one party has veto power and the other parties must either band together to protect themselves or try to deal individually with the veto player. A simple but compelling analog to the formation of unions in the face of harsh treatment by an authority, this case generates a wide range of outcomes from open revolt to intense internal competition. Preparation: 10 min. Negotiation: 25 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Federated Science Fund by Elizabeth A. Mannix This is a three-person coalition exercise. The exercise manipulates the power of the players, the preferred distribution norm, and the level of expected future interaction, creating a tension between allocation based on power and distribution norms. The expectation of future interaction further complicates the choice of whether or not to form two-way or three-way coalitions. Preparation: 10 min. Negotiation: 45 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: FG&T Towers by Rand Boyers and Stephen B. Goldberg; teaching notes by Stephen B. Goldberg, Tiffany Galvin, and Jeanne M. Brett This is a multi-issue, multi-party qualitative negotiation. The parties, all law partners, must decide whether or not the partnership should purchase their office building. This exercise can be used to discuss common and specific interests in the context of negotiation. Preparation: 60 min. Negotiation: 60-90 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: The Game of 4-3-2 by J. Keith Murnighan This is a three-party coalition game, with three variations. It shows how subtle changes in the
struc¬tu¬re of the situation have marked impacts on the negotiation process. Discussion highlights the stra¬te¬¬gies to be considered in choosing between individually beneficial two-party agreements and
col¬lec¬ti¬¬vely beneficial three-party agreements. Time: three 25-min. rounds. Available from the Dispute Re¬¬solution Research Center at the Kellogg School of Management, Northwestern University, 2001 She¬¬ridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu.. EXERCISE: Gold Card by Jeanne M. Brett Gold Card is a three-party dispute resolution exercise. The dispute is between a bank and a financial ser¬vices firm over aspects of their joint venture to provide a special feature credit card to the fi¬nan¬ci¬al services firm's upscale clientele. When representatives of the two institutions cannot reach agree¬ment about implementation, they call in the financial services firm's manager who negotiated the original venture. Preparation: 20 min. Negotiation: 45 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu.. EXERCISE: Harborco by Denise Madigan and Thomas Weeks This DRRC version of a Harvard Program on Negotiation (PON) case is a multiparty, multi-issue quantified negotiation. Harborco wishes to develop a deep-water port on the eastern seaboard. Attending the meeting are representatives of the governor, unions, environment, and other parts of the federal government. Most solutions are pareto-optimal. It is useful for discussing leadership of such groups and the role of the party trying to keep the status quo. Preparation: 60 min. Ne¬go¬ti¬a¬tion: 90 min. Available from the Dispute Resolution Research Center at the Kellogg School of Manage¬ment, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Hollywood by Holly Schroth, Clarence Chen, Edward Sieh, and Patricia Yu Hollywood is designed to illustrate the role of agents in negotiation. It has two parts, a negotiation between each principal and his/her agent, and a negotiation between agents. The case is primarily dis¬tributive over salary, but there is the opportunity to add issues to the table. Preparation: 15-20 min. Negotiation: 45 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Jaguar XK8 by Leonard Greenhalgh This exercise accommodates from five to eight participants in each group (six is optimal), assuming the roles of the vice presidents involved in the decision. It is usually run as a leaderless group exercise, but the presidential role can be included. The exercise explores multiparty negotiation, group dynamics, coalition formation, consensus process, and generating commitment to a strategic direction. Preparation: 60-120 min. Negotiation: 120-180 min. Available from Creative Con¬sen¬sus, Inc., P.O. Box 5054, Hanover, NH 03755. Phone/fax: (603) 643-0331. EXERCISE: The Low-Price Promotion Program by Leonard Greenhalgh This two-group, multiround negotiation is a multitrial Prisoner’s Dilemma set in a corporate context. It works best with groups of four to seven. A messenger is required for every pair of teams. Dis¬cuss¬ion emphasizes constrained communication, group process (intragroup negotiation), trust, in-group/ out-group cognitions, groupthink, and intergroup relationships. Negotiation: 45-60 min. Available from Creative Consensus, Inc., P.O. Box 5054, Hanover, NH 03755. Phone/fax: (603) 643-0331. EXERCISE: Miti-Pet by Holly A. Schroth, Gianmario Corniola, and Marjan Voit A two-person, two-team exercise involving a customer goods company and one of its major suppliers. The purpose is to: 1) help participants learn how to manage emotions in a negotiation, 2) recognize different sources of power, and 3) work within a team environment where roles must be negotiated. Preparation: 20 min. Negotiation: 40-50 minutes. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Newport Girl Doll Company by Holly A. Schroth, Grace Chen, Christine Hamilton, Mary Lee, Monica Lin, Johnny Tong, and Jason Wu This exercise is a multiparty, multi-issue negotiation designed to simulate negotiations that occur in top management teams. It is based on the real life competition in the doll market to capture the "tween" market. Because the exercise focuses on the new "promiscuous" dolls being marketed to the tweens, it provides an opportunity to involve issues of business ethics and social responsibility. The exercise provides a basis for discussing personal ethical standards and their impact on negotiation. In addition, the exercise helps participants examine how to manage new information during a negotiation, especially when it impacts one's own interests and BATNA. Finally, it helps to illustrate the dynamics of a multiparty, multi-issue negotiation when self-interests may conflict with the goals of the organization. Negotiation: 60 min. Debrief: 45-60 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Pat Sullivan by Lynn P. Cohn This exercise illustrates agency and negotiation. There are four parties at the table, a sports star, Pat Sullivan, and Pat’s agent/attorney, a VP of Marketing, and the VP’s lawyer. The exercise illustrates the role of agent and client in developing negotiation strategy and in implementing it. Preparation: 60-90 min. Negotiation: 60-90 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: SHARC by Kimberly A. Wade-Benzoni, Max H. Bazerman, and Ann E. Tenbrunsel SHARC is a four-party social dilemma. It is based on the real-life crisis in the Northeastern fishing industry. It illustrates how asymmetry in interests and outcomes causes different interpretations of fairness. In this case, harvesting judgments are biased in an egocentric, self-serving manner. Preparation: 30 min. Negotiation: 60 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: SHARC: Competitive Decision Making Version by Kimberly A. Wade-Benzoni, Max H. Bazerman, and Ann E. Tenbrunsel The Competitive Decision Making version of SHARC is an asymmetric social dilemma. The numbers are not the same as the regular version of SHARC. There is no solution in the Competitive Decision Making version of SHARC that allows parties to cut the harvest to the sustainable level of 2,500 metric tons and to maintain their profits. This is a much harder exercise than the generic version of SHARC and we recommend it for more advanced MBA students. The teaching notes explain clearly the differences in the two versions of the exercise. Preparation: 30 min. Negotiation: 60 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Social Services by Denise Madigan DRRC’s version of this Harvard University Program on Negotiation (PON) exercise is a three-party, scoreable exercise set in the public service sector. Resources available depend on whether the parties form a two- or three-party coalition. Parties also must determine the proportion of resources each will get. Preparation: 10 min. Exercise: 45 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Strategic Alliances: Selling to the Pentagon by Leonard Greenhalgh This exercise involves a series of negotiations between three teams over a pot of money, created by con¬tributions from each participant. Learning points in¬clu¬de multilateral communication, group process (intragroup negotiation), group decision-making, con¬tracts, and intergroup and interpersonal relationships. Exercise: 60 min. Available from the Dis¬p¬u¬te Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu.. EXERCISE: Towers Market by Rebecca Beggs, Jeanne M. Brett, and Laurie Weingart This is a multiparty (four people), multi-issue (five issues), quantified negotiation. The case is useful for teaching negotiation concepts in the context of group decision-making. There are many pareto-optimal solutions and even more that are suboptimal. Preparation: 30 min. Negotiation: 60 min. Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu. EXERCISE: Virtual Victorian by Wendi Adair, Gaylen D. Paulson, and W. Trexler Proffitt, Jr. Virtual Victorian is a distributive, house buying negotiation that is carried out through agents and via e-mail. There are four parties: the buyer, the buyer's agent, the seller, and the seller's agent. Pre¬pa¬ra¬tion: 60 min. Negotiation: one week (e-mail). Available from the Dispute Resolution Research Center at the Kellogg School of Management, Northwestern University, 2001 She¬ri¬dan Road, Evanston, IL 60208. Phone: (847) 491-8068; e-mail: drrc@kellogg.northwestern.edu MULTIPLE-CHOICE QUESTIONS A key difference between two-party and group negotiations is slower information processing spontaneous social interactions less accurate judgments the potential to form a coalition Which of the following is generally a true statement with regard to coalitions? parties’ interest are perfectly aligned members of the coalition cooperate to gain advantage in the larger group, but compete with one another over the division of resources members of the coalition compete with one another to gain advantage in the larger group, but cooperate with one another when dividing resources members use circular tradeoffs with the larger group and reciprocal tradeoffs among coalition members With regard to multiparty negotiation, the impossibility theorem refers to there is not a best way to derive a group’s preference from combining individual’s preferences there is not a best way to derive individual’s preferences from analyzing a group’s overall preference groups take much longer to reach agreement than two-party negotiations groups often fail to see a positive bargaining zone when it actually exists One of the most effective strategies for enhancing coalitional effectiveness is to sign legally binding agreements obtain verbal commitments develop a surreptitious communication equally allocate resources Home selling prices are highest when the agent knows only the seller’s reservation price the buyer’s reservation price the seller’s BATNA the buyer’s BATNA By nature of the principal-agent relationship, an agent’s authority is limited with respect to making certain concessions joining professional affiliations providing a buffer zone targeting key strategies The second table in negotiation is counterparty’s bargaining team parties’ hidden interests and unexpected coalitions constituents who have authority over the agreement larger group which includes teams from both sides Strategic voting refers to members of coalitions often make individuals promise to vote a certain way members of groups take votes when the timing is right for them to prevail members of groups may not count certain votes that have been legitimately submitted members of groups may not always vote based upon their actual preferences All of the following are advantages of using agents, except: limited authority to offer price reductions emotional detachment and tactical flexibility compatible incentive structure a face-saving buffer for principals With regard to team negotiation, which statement is most true? Individual preparation is essential to ensure that everyone has put in equal hours of time Discussion of information that is held in common by all team members should be enhanced, relative to information that is only known to certain team members Larger teams outperform smaller teams Choosing team members on the basis of negotiation, technical, and interpersonal expertise is a good model Answer key: 1.D; 2.B; 3.A; 4.B; 5.B; 6.A; 7.C; 8.D; 9.C; 10.D. Discussion Questions What are some of the problems with voting—specifically with majority rule? Consider the example in Exhibit 9-4. What is the theorem underlying the problem these voters faced? What are some of the reasons communication can break down within groups? Why do more breakdowns occur in groups than in dyads? What are some strategies for maximizing coalitional effectiveness? What are the three different types of constituencies, and how do they affect negotiations? What are some of the challenges of, and strategies for improving, constituent relationships? On what types of tasks would a team outperform an individual? Why? What is the team efficacy effect, and how does it differ from the actual results of team vs. solo negotiations? Suggested answers A number of problems are associated with voting and majority rule: It fails to recognize the strength of individual preferences; it hinders the development of mutually beneficial trade-offs; it does not encourage group members to consider creative alternatives to expand the size of the pie; it may be detrimental to the attainment of efficient outcomes because it prevents logrolling; it may lead to more distributive and less integrative behavior; it may not yield a choice (even split); it does not eliminate conflicts of interest (instead, it provides a way for group members to live with them); decisions may not be stable (voting hides disagreement within groups which threatens long-term effectiveness). The unstable voting outcomes in Exhibit 9-4 point to the impossibility theorem, which states that when groups contain three or more members and are facing three or more options, no method can combine group members’ preferences in a way that guarantees group preference is maximized. Communication errors are possible at three different points: The sender may fail to send a message; an inaccurate message is sent; or, an accurate message is distorted or not received by the recipient. More breakdowns occur in groups because the complexity grows when several people are simult¬a¬ne¬ous¬ly sending and receiving messages. Communication can break down because of the indirect ways in which people address others and people being very poor at taking the perspective of others. Some strategies are obtaining verbal commitments from people with whom you want to develop trust and using unbiased-appearing rationale to divide the pie. “Fairness” is the strongest determinant of negotiators’ satisfaction with the outcome and, consequently, their willingness to follow through on their verbal commitments and not break away from the coalition. The three different types are: superiors, who have authority over principals; subordinates, who are under the authority of principals; and the party whom the principal represents. Some of the chall¬en¬ges of constituent relationships are: constituents identifying themselves/their side in a negotiation and negotiators’ accountability to their constituents. Strategies for improving relationships are: understanding constituents’ real needs and interests, and being aware of heterogeneity of views within the constituency. The presence of at least one team at the bargaining table increases the incidence of integrative agreement because exchanging more information leads to greater judgment accuracy about parties’ interests. However, in extremely competitive tasks, teams are more likely to behave in a competitive fashion. The team efficacy effect is the team’s perception that it has an advantage over individuals. Regarding distributive agreements, solos are better off negotiating with a team than with another solo player and the amount of jointly available resources is greater in the team-solo negotiation than in the solo-solo negotiation. Instructor Manual for The mind and heart of the negotiator Leigh L. Thompson 9780132543866, 9781292023199, 9780132827669, 9780135198582