Two party, multi-issue negotiation

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Two party, multi-issue negotiation
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The fruit example1B2O (Sam who hates banana)
vs. 1P2A (Willy who hates pear)
Increasing Value to Sam

• Minimize of disliked fruit
• Maximize of preferred fruit
• Maximize variety of fruit

1P 1A 2O
Claiming Value
P-B AO trade Willy1B 1O 1A Sam1P 1O 1A
Creating Value
Pareto Efficient Frontier
1P 2O
P- B trade
1B 2O
Increasing Value to Willy
1B 1O 2A
1P 2A
1B 2A
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Differences in Conceptions of Negotiation
Value Creators (cooperators) Value Claimers (competitors)
Win-Win Win-lose e.g., sell car for as much as you can vs. buy car for as less as you can
Communicate/Share information Conceal information
Discover joint interests and gains Sam has 1B-2O but hates B vs. Willy has1P -2A hates P Minimize other partys concessions and maximize value of own concessions
Maintain relationship Make threats, extreme commitments to own positions, argue forcefully
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• Negotiation involves BOTH value creating and
  value claiming
• e.g., Pie has to be enlarged, but it still
  divided and each piece must be claimed. If the
  pie is not enlarged, there will be less to divide
  (i.e., there is more value to be claimed if one
  has created it so dont be shy!)

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Negative Effects of Value Claiming Strategies

• Minimize other partys concessions Maximize
  value of own concessions ? misrepresent ones own
  preferences
• Make threats, extreme commitments to own
  positions ?impedes understanding of others
  interests
• Conceal informationgt leaving joint gains _at_ table
• Sours relationship, reduces trusts

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Negative Effects of Value Creating Strategies

• Can lead to tactics of claiming value
• Share Information about ones relative
  preferences is risky
• They can exploit you on an issue you care about
  even if they dont care about it
• Being creative may signal that you are willing to
  make more concessions
• Disclosing that you have shared interests ? used
  as leverage to gain concessions (e.g., child
  custody vs. alimony)

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Negotiators Dilemma (compare with Prisoners
Dilemma)
Party 2 Tactics Party 2 Tactics
Party 1 Tactics Create Value Claim Value
Party 1 Tactics Create Value Party 1Good Outcomes Party 2Good Outcomes Party 1Bad Outcomes Party 2Great Outcomes
Party 1 Tactics Claim Value Party 1Great outcomes Party 2Bad Outcomes Party 1Mediocre outcomes Party 2Mediocre Outcomes
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Negotiators Dilemma vs. Prisoners Dilemma

• Prisoners dilemma does not have communication
  between parties
• Typically single round
• Parties cannot make commitment to cooperate
  before making choices

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Managing Value Claiming vs. Value Creating
Strategies

• Do better than no-agreement
• Fruit example
• Deep understanding of own others interests and
  making tradeoffs between them
• What are interests?
• http//youtu.be/6OPzgWIAGao (until 3.00 min)
• Convert own and others interests into joint gain

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• More on the pareto efficient frontier
• http//youtu.be/6OPzgWIAGao
• Fairness vs. efficiency

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Managing Value Claiming vs. Value Creating
Strategies Contd

• Add new issue (expand pie)
• http//youtu.be/rJEOylZCUUs
• Some terms to learn
• Interests why you want what you want
• Issues what you want
• Position Your point of preference on the issue
• e.g., want 40K on salary in video example
• Interest to pay of student loan which can be
  satisfied with a different issue (i.e., signing
  bonus)

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Issues vs. Interests

• Interests can be satisfied with different issues
• Different issues can represent the same interests
• Seeing interests as perfectly aligned with
  positions on issues, makes it less likely to
  shift positions on issues and more likely to
  forgo better outcomes for themselves or mutually
  beneficial outcomes

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• Types of Interests
• Parties Can have more than one interest at a time
• Parties can have differing interests
• Interests are often based on values
• E.g., recognition, safety etc.
• Can change over time
• So
• Clarify own AND others interests
• Ask why,
• differentiate b/w intrinsic and instrumental
• Need not be to ones best advantage (objective
  vs. subjective)

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• Types of interests Intrinsic vs. Extrinsic

Interest Intrinsic Extrinsic (instrumental)
Substantive (economic or financial issues) Satisfaction of doing well Use gain or outcome for another purpose
Process (how to resolve) e.g., playing a competitive game Gain influence/voice in org
Relationship (do not want to damage relationship) Value it for itself Get positive benefits from relationship
Principle (what is fair/right) Resonates w/core values Can learn for other situations
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Single, multiple, single ? multiple
Define Issues
Research to gather info, consult with experts in
area of issues
value issues objectively
Define the Mix of issues
Connections b/w issues
Articulate the why for issues, value interests
(even intangible ones), distinguish issues from
interests
Define Interests
Types (Substantive, process related, relationship
based), intrinsic vs. extrinsic
Resistance point
Identify Limits Alternatives
BATNA (is negotiated agreement better than non
agreement than agreement with another?)
Specific, difficult but achievable,
verifiable Different ways of packaging issues
(Trade-offs)
Target point
Set targets
Opening Bid
Range
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Valuing Own Interests

• Generate assessments of intangible interests
  (order of magnitude)
• E.g., suffering vs. comforts gained in certain
  issues
• Decide the priority of intangible interests
• Use secondary priorities on interests when
  packages become equal

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Assessing Others Interests

• Remember that interests depend on subjective
  perceptions so PROBE via communication, and
  research (with third parties, previous behaviors,
  organizational information etc.)
• Issues and interests can change over the
  negotiation

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Tradeoffs

• Decide on what / how much of a tradeoff on issues
  is desirable
• Interest rate vs. purchase price example
• Specify worst vs. best outcomes on each issue,
  define possible increments
• Compare increments by thinking about interests
  and which increments are most valued
• Break increments into smaller pieces and compare
  relative evaluation
• Assess interest tradeoffs using above logic

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When to focus on Issues vs. Interests

• Focus on interests helps creativity and helps
  reformulate issues to better align with interests
• Focus on issues when the interests are based on
  conflicting values

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• When you meet the other party
• Identify Define problem together
• Identify needs/interests
• Generate alternatives/solutions to problem
• Evaluate alternatives and select best one

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• Steps in Integration Process
• Identify Define problem- together
• Mutually acceptable definition
• Make it simple (identify linked vs. separate
  issues)
• Frame as goal Outline addressable obstacles
• Separate person from issues
• Develop standards to assess quality of agreement

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• IV. Evaluate Select Alternatives
• Evaluate on Quality and Acceptability
• Decide on objective criteria before negotiation,
  periodically verify priorities
• Articulate your reason for interests
• Be aware of, and discuss intangibles
• Subgroups for complex issues

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• Things that make integrative negotiation happen!
• Sharing a common goal/objective
• Problem solving ability
• Valuing own others position
• Motivation to work together
• Trust
• Clear Accurate communication
• Understanding dynamics

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• Things that prevent integrative negotiation
• Relationship history
• Belief in resolving issue distributively
• Mixed motive features