Third-party interventions

 Mediation
 neutral 3rd party with no decision making
authority (high control of process)
 Arbitration
 a 3rd party with the authority to dictate
agreement (high control of decision)
Negotiation

 Negotiating rationally means making the

best decisions to maximize your interest
 We negotiate all the time:
 pricing a new product
 dealing with job recruiters
 mergers and acquisitions
 buying a house
 going to a movie
Common Mistakes in
Negotiation

 #1: Irrational escalation of commitment

 continuing a previously chosen course of
action beyond what a rational analysis would
recommend
 caused by biases in perception (not processing
information properly)
 also caused by impression management motives
 negotiation example: “I want that house”
And I quote...

 “If at first you don’t succeed, then try, try

again. Then quit. There is no point being
a fool about it.”
 W.C. Fields
Mistake #2

 Belief in the Mythical Fixed-pie

 the assumption that your own interests
directly conflict with the other party
 leads to “win-lose” thinking
Negotiation
Perspectives/Strategies

 Distributive negotiations
 fixed amount of resources
 zero-sum conditions
 Integrative negotiations
 variable amount of resources
 “expand the pie”
Mistake #3

 Anchoring and Adjustment

 an anchor is a standard against which future
adjustments are measured
 very often, the choice of an anchor is based
on faulty or incomplete information

 the best way to solve the problem is to do

your homework
In a “distributive” bargaining situation,
you should:

 Act reluctant or disinterested

 Use “the flinch”
 Determine how large your first concession will
be
 Never accept a first offer
 Do your research - learn as much as you can
about the other party’s position
 Try to learn the bargaining zone
Planning and Preparation

 A Checklist…
 Define the issues
 Have an alternative (BATNA)
 Know interests, not positions
 Set goals
 Define the bargaining range
 List your supporting arguments
 Plan Before You Act!
 Distributive Negotiation
Party’s Target

Se
tt lem
en
t Ra
ng
e
Party’s
Resistance
Point

Other’s
Other’s Target
Resistance
Point
Starting to think about
integrative solutions
 Asking questions - goal is to create a free flow
of information
 Attempt to understand the other party’s real
needs and objectives
 Emphasize commonalities and minimize the
difference
 Search for solutions that meet the goals of both
sides
Integrative Strategies

 Build trust and share information

 Ask lots (and lots) of questions
 Give away some information
 Make multiple offers simultaneously
 Search for post-settlement settlements
 Search for a novel solution