Monday, April 25, 2005

4 23

Roloff - 4 23

Distributive Bargaining – A zero-sum game, if I get what I want, I get it at your expense. More is better, for me.

Goals - Utility Schedule – More than just the dollar figure, a range of possible dollar figures (not an interest negotiation, only dollar range is considered, not what the dollars can buy). Status quo point - the value of what I currently have. Minimum necessary share or resistance point is the minimum amount over which I will have to benefit or I will not negotiate (could be at point at which losses are cut). The resistance point is usually not flexible; people set it and stick with it. Level of aspiration – goal toward which negotiation is oriented, a best estimate of what you will get. When the negotiation begins, level of aspiration can be modified. Initial Offer – amount it should exceed level of aspiration varies, e.g. not a standard 10%, but should start higher than l.o.a. NU cost study showed that the value of an NU education was better regarded when tuition costs were greater, though a middle-class student suffered when tuition rose. Experts in negotiation use utility schedules (a range) rather than a target, whereas non-professional negotiators use targets.

3 Strategies for Distributive Bargaining:

Bargaining (detail in 4 15 notes) – exchange of offers and counter offers.
1. Tough Bargaining – level of aspiration theory – beat down the opponent’s level of aspiration. How? A. Start with high opening offer. B. Make very few concessions, “make the other side work”, C. Make those concessions you do give small. D. Make a take it or leave it offer, or the Final Clear Chance offer E. Protect own level of aspiration. The other side is likely to mirror this strategy, and makes negotiation a game of chicken, a first-to-blink proposition. Requires a crazy look, strong resolve (When playing chicken, show up drunk, throw out the steering wheel and cut the brake line). If you reach an agreement as a tough negotiator, the tougher you are, the better the deal. Tough negotiation works best when one side owns a scarce resource the other side wants. Downsides of tough negotiation: It destroys the relationship with the other party, likely they won’t negotiate with you again. When you get a reputation as a tough bargainer, people become tougher with you, and increases the likelihood that no agreement will be reached.
Moderately Tough Bargaining – 1. Fair bargaining – price set at market value, and doesn’t move - a fair offer. Used by people who don’t like to negotiate. Data indicates that this method doesn’t work; people were more likely to accept an offer after negotiating than the same offer made first and not negotiated. Fair offer has an intuitive appeal, but people would rather play the negotiation game. 2. Reciprocity Approach – do what the other side does,. Downside: a. It requires negotiators to be aware of the progress of the negotiation 3. Reinforcement Approach – Reward opponent for making concessions. The primary reinforcer is a slightly larger concession; if your opponent makes a concession, you make a slightly larger concession. This method depends on being able to accurately predict where the negotiation is likely to end up, not a difficult thing to do according to Roloff. The only circumstances under which concessions are given are when the other side makes a concession; otherwise stand firm. 4. Commitment Approach – Brakes negotiation into two phases 1. Sham bargaining – “true concessions are made just before the deadline”, determines two things – resistance point (the least you are willing to take) and deadline of the other party. Right before the deadline, a take-it-or-leave-it offer is made, at a level just above the resistance point. 2. Offer. Dangers are misjudging the other party’s resistance point. De-commitment strategies, like the claim of new information or an initial offer with flexibility that gives the appearance of not standing firm, or claim that the other party is someone you like or appreciate, don’t work. Another danger is the other party making a commitment first; poking fun at the hard line attitude or pretending not to hear the commitment are ways to resist the other party’s commitment. (The first one to blink loses credibility).
Soft Bargaining – Pacifist Strategy – 1. Ideologically driven 2. Risk taking – stand to make an offer without reciprocity, take a chance by being vulnerable 3. Non-coercive. Studies suggest that pacifists are duped and taken advantage of because their beliefs drive their behavior, and makes them vulnerable. Why are soft bargainers exploited? The expectation is that the pacifism is an act, so the other party acts defensively (When Michiavellians negotiate with pacifists, they see a Trojan horse, then take advantage of them when they realize the pacifists are honest). All evidence suggests that soft bargaining should be avoided.

b. Argumentation Strategies – Donahue - Focused on rationales, reason-giving for a position. Naïve people pose arguments they find strong, experienced negotiators use arguments the other side will find strong. According to this strategy, the most argumentative party will win. Refuting the other side’s claims, and refuting what the other side says about your claims achieves relative advantage (Negotiation as debate strategy). Downsides to the argumentation strategy are that reciprocal argument can lead to deadlock, and Donahue ignores other factors, assumes that power is established during negotiation; power/authority trumps argumentative ability. Inexperienced negotiators engage in sequential planning (a script) while experienced negotiators come in with clustered planning (contingencies, no script). Inexperienced negotiators present too many arguments, professionals present only what they need to win. Dilution effect – a weak argument, even when presented with a strong one, will be attacked, at the expense of the strong one.

c. Power and Coercion - The use of power. Face/credibility issues are at stake – “don’t make a threat you won’t carry out.” A last resort. How to threaten well? Tedeschi – when someone is threatened, they will either ask themselves whether the threat will hurt (Most of the time, the imagined harm is worse than the actual harm). “Graveyards are full on indespensible people.”

Threat-credibility depends on two things: 1) The history of following-through on threats 2) Threat believability – could anyone carry out the threat, how possible is it to exercise the threat.

Face issues are at stake when threats are made, compliance means an admission of weakness, succumbing to threats is humiliating, and face-saving can lead to irrational behavior. Tedeschi says that threats must be used in ways that won’t create face issues. One way is to apologize for having to make the threat. Another is to recount what has been done up to the time the threat was made, that every other possible course was tried. Another is to tie the threat to a higher principle, elevate the principle to a non-negotiable rationale for the threat. Another is to say that threats are normative, it is done by others. Issuing a promise instead of a threat, rephrasing the threat as a promise, e.g. “people who show up on time get raises.” Another is to use a deterrent threat instead of a compellant threat; compellant requires behavior, deterrent prohibits behavior; people are angrier when they are forced to do something than when they are prohibited from doing something. People react less negatively to a contingent threat than a non-contingent threat; a contingent threat gives options, circumstances under which punishment can be avoided, non-contingent threat is just a promise of punishment. Using a warning instead of a threat is a way to avoid face issues, e.g. surgeon general’s cigarette warning. Implied threat is another way, making the threat imminent, but not direct (Interviewed prof from Penn who flew to Evanston from California, implied threat of accepting an offer from Stanford).


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