Negotiation – Schultz & Menicucci – Fall 2013
1. Intro: negotiation vs. mediation
Flight< - negotiate \ parties control rules
| mediate—3d pty facilitator, costly, nonbinding/
| arbitrate—3d party decider, costly, binding, quick – can negotiate rules
| litigate—rights - fixed rules
-> fight – power based (lobbying)
2. Preparation
a. parties?
1. Who is our team, spokespeople?
2. Communicate with client
(Hurder)
– problem solving negotiation requires collaborative client centered interviewing and counseling
– they must learn more than the facts of the case
– they must make joint decisions about what to disclose and what to protect
– they must discuss the danger and value of using information for imaginative solutions
b. interests?
1. For wise SOLUTION, focus on INTERESTS, not POSITIONS
– Behind opposed positions lie shared and compatible interests & conflicting ones
(Susskind)
>>ASK: what is our MANDATE?
what are our real, underlying concerns and INTERESTS?
(Wheeler)
= negotiation STRATEGY, not just tactics (offer, bottom line etc)
(Fisher & Ury)
= principled negotiation
– combines substance (positions) with procedural strategy (metagame)
– 4 step method = PIOCr (“poker”): people/interests/options/criteria
X positional
1. taking sequence of positions
– prices
– company policy
2. X unwise
a. locks oneself into position NOT underlying concern
b. arbitrary multiparty blocs held hostage
c. veven reciprocal concessions lead to unwise agreements
X inefficient time consuming, dragging out, nickel and diming
X adversarial, ruins relationship
c. BATNA à ZOPA
(Susskind)
what is our BATNA? (initial calculation)
– unsentimental analysis: costs, PR, politics
(Wheeler)
– course of action not bottom line
X rigid bottom line = self-fulfilling prophecy, paints oneself into corner, limits options and solutions
– tested and shaped with dance of offer and counteroffer
(Fisher & Ury)
= what he will choose if no deal
à EVALUATE plausible alternatives:
Of all of the negotiator’s plausible alternatives, this is the one that best serves her interests
1. investigate comps in area, alternative investments
2. generate list of alternatives
– litigation alternative = settlement
3. Draft DECISION TREE
– assess with decision analysis, microeconomics
– don’t be over-optimistic on winning in litigation
Reservation Point (RP) = Walkaway/bottom line = minimum take by seller / max pay by buyer
1. determined by BATNA = Quantified BATNA
– identity and quality of BATNA is primary input to RP
2. tool or red flag to indicate:
– indifference between accepting and walking away, walkaway point
– one thing that prevents accepting terms that are too unfavorable, and walking away from terms in
would be in his interest to accept = the most basic negotiating mistake (Korobkin)
– time to negotiate more, not necessarily walk away
– provides leverage, power
X versus “bottom line” which suggests inflexibility
3. more expansive than price
FORMULA:
= FMV – market value of BATNA; first evaluate alternatives to develop BATNA
– usually requires EXPECTED VALUE calculation (Korobkin):
– weighted average of probabilistic possibilities/future states of the world
25% x $1
+ 50% x $2
+ 25% x $3
$2 BASELINE
+ other factors important to the negotiator (PREMIUM/DISCOUNT)
a. transaction costs (atty fees), extra time, energy, convenience
b. timing
– discounted Future Value x 1/(1+interest %)^years
(Susskind)
– what are GROUND RULES (behavioral and process/protocols/agenda setting)
– joint training: learn vocabulary
b. information sharing
1. acquiring
= joint factfinding before going into price
– creates ways to IMPROVE BATNA/RP, giving more confidence and power
– reduces information asymmetries that result in impasse
>>ASK:
– ask for interpretation of regulations, readings about agency’s bottom line, precedent
– discuss possibility of political sponsorship with possible mutual benefit
– clarify interests without expressing fixed position
– present “nearly final” permit application with contingent modifications
>> ASK: “What’s your basic concern in wanting X?”
“As I understand it, your interests are X. Have I understood you correctly? Do
you have other important interests?”
>> ASK: “do you feel that I have a good understanding of your concerns”
“are we giving proper consideration to how we will deal with our constituencies?”
>> SAY what our interests are, BEFORE positions
§ aggressively commit to interests, not positions
NOT self-righteous
“Correct me if I’m wrong…”
“Do you have children? How would you feel if X were happening near your home?”
“It would be terrible for all of us if a child was injured.”
“Surely you’re not saying child’s life is worth less than a fence.”
§ describe concerns specifically
NOT fixed position; illustrative specificity
“X is the kind of offer that would satisfy our interest. Something on the order of X”
