Saturday, January 30, 2010

Study Material: Ch- 5

Ch.5- Perception and Cognition

I.       Framing

A frame is the subjective mechanism through which people evaluate and make sense out of situations, leading them to pursue or avoid subsequent actions

A.    Types of Frames

1.      Substantive - what the conflict is about. Parties taking a substantive frame have a particular disposition about the key issue or concern in the conflict.
2.      Outcome—a party’s predisposition to achieving a specific result or outcome from the negotiation.
3.      Aspiration—a predisposition toward satisfying a broader set of interests or needs in negotiation.
4.      Process—how the parties will go about resolving their dispute.
5.      Identity—how the parties define “who they are.”
6.      Characterization—how the parties define the other parties.
7.      Loss–gain—how the parties define the risk or reward associated with particular outcomes.

B.     How frames work in negotiation

1.      It is difficult to know what frame a party is using unless the party tells you
2.      Frames of those who hear or interpret communication may create biases of their own.
3.      Linguistic analyses of negotiation transcripts provides insight into how parties define a negotiation, and how frames are used in the process:
a.       Negotiators can use more than one frame.
b.      Mismatches in frames between parties are sources of conflict.
c.       Particular types of frames may lead to particular types of agreements
d.      Specific frames may be likely to be used with certain types of issues
e.       Parties are likely to assume a particular frame because of various factors.

C.     Another approach to frames: Interest, rights, and power

1.      Ury, Brett, and Goldberg (1988) proposed an approach to framing disputes that view parties in conflict as using one of three frames:
a.       Interests - People are often concerned about what they need, desire, or want. People talk about their “positions,” but often what is at stake is their underlying interests.
b.      Rights - People may also be concerned about who is “right”—that is, who has legitimacy, who is correct, or what is fair.
c.       Power - Negotiations resolved by power are sometimes based on who is physically stronger or is able to coerce the other, but more often, it is about imposing other types of costs— economic pressures, expertise, legitimate authority, and so on.
2.      The different frames are likely to lead to very different discussions between parties.
3.      The way a party approaches the problem will likely influence how the other party responds.

D.    The frame of an issue changes as the negotiation evolves

1.      The issue development approach focuses on the patterns of change (transformation) that occur in the issues as parties communicate with each other.

a.       Several factors shape a frame, the negotiation context clearly affects the way both sides define the issue and conversations that the parties have with each other about the issues in the bargaining mix.
b.      At least four factors can affect how the conversation is shaped:
a)      Negotiators tend to argue for stock issues, or concerns that are raised every time the parties negotiate.
b)      Each party attempts to make the best possible case for his or her preferred position or perspective.
c)      In a more “macro” sense, frames may also define major shifts and transitions in the overall negotiation.
d)     Multiple agenda items operate to shape the issue development frames.

II.     Cognitive Biases in Negotiation

A.    Irrational escalation of commitment

1.      An “escalation of commitment”  is the tendency for an individual to make decisions that stick with a failing course of action
2.      Escalation of commitment is due in part to biases in individual perception and judgment. 

B.     Mythical fixed-pie beliefs

1.      Many negotiators assume that all negotiations involve a fixed pie
2.      Those who believe in the mythical fixed pie assume there is no possibility for integrative settlements and mutually beneficial trade-offs, and they suppress efforts to search for them.

C.     Anchoring and adjustment

1.      Anchoring and adjustment are related to the effect of the standard (or anchor) against which subsequent adjustments are made during negotiation.
2.      Once the anchor is defined, parties tend to treat it as a real, valid benchmark by which to adjust other judgments, such as the size of one side’s opening offer.

D.    Issue framing and risk

1.      A frame is a perspective or point of view that people use when they gather information and solve problems.
2.      The way an issue is framed influences how negotiators perceive risk and behave in relation to it.
3.      The tendency to either seek or avoid risk may be based on the reference point against which offers and concessions are judged.
4.      Two things to keep in mind about the effect of frames on risk in negotiation are
a.       negotiators are not usually indifferent to risk, but
b.      they should not necessarily trust their intuitions regarding it.

E.     Availability of information

1.      The availability bias operates when information that is presented in vivid, colorful, or attention-getting ways becomes easy to recall, and thus also becomes central and critical in evaluating events and options.
2.      The availability of information also affects negotiation through the use of established search patterns.

F.      The winner’s curse

1.      The winner’s curse refers to the tendency of negotiators, particularly in an auction setting, to settle quickly on an item and then subsequently feel discomfort about a negotiation win that comes too easily.
2.      Recent research suggests that the winner’s curse stems, in part, from counterfactual thought processes that involve entertaining the possibility of “what might have been” if the offer hadn’t been accepted.

G.    Overconfidence

1.      Overconfidence is the tendency of negotiators to believe that their ability to be correct or accurate is greater than is actually true.
2.      Overconfidence has a double-edged effect:
a.       It can solidify the degree to which negotiators support positions or options that are incorrect or inappropriate, and
b.      It can lead negotiators to discount the worth or validity of the judgments of others, in effect shutting down other parties as sources of information, interests, and options necessary for a successful integrative negotiation.

H.    The law of small numbers

1.      The law of small numbers refers to the tendency of people to draw conclusions from small sample sizes.
2.      This tendency leads to a self-fulfilling prophecy - people who expect to be treated in a distributive manner will:
a.       Be more likely to perceive the other party’s behaviors as distributive
b.      Treat the other party in a more distributive manner.

I.       Self-serving biases

1.      People often explain another person’s behavior by making attributions, either to the person or the situation. 
2.      Fundamental attribution error - the tendency is to overestimate the causal role of personal or internal factors and underestimate the causal role of situational or external factors. 
3.      Self-serving biases effect the negotiation process in a number of ways, for example:
a.       Perception of greater use of constructive tactics than the other party
b.      Less accurate in estimating the other’s preferred outcomes
c.       Influences perception of fairness in a negotiation context.

J.       Endowment effect

1.      The endowment effect is the tendency to overvalue something you own or believe you possess.
2.      The endowment effect can lead to inflated estimations of value that interfere with reaching a good deal.

K.    Ignoring others’ cognitions

1.      Failure to consider others’ cognitions allows negotiators to simplify their thinking about otherwise complex processes; this usually leads to a more distributive strategy and causes a failure to recognize the contingent nature of both sides’ behaviors and responses.

L.     Reactive devaluation

1.      Reactive devaluation is the process of devaluing the other party’s concessions simply because the other party made them.
2.      Reactive devaluation leads negotiators to:
a.       Minimize the magnitude of a concession made by a disliked other
b.      Reduce their willingness to respond with a concession of equal size, or
c.       Seek even more from the other party once a concession has been made

M.   Managing misperceptions and cognitive biases in negotiation

1.      Misperceptions and cognitive biases typically arise out of conscious awareness as negotiators gather and process information.
2.      How best to manage the negative consequences of misperception
a.       Be aware that they occur
b.      Tell people about a perceptual or cognitive bias - discuss them in a structured manner within the team and with the party’s counterparts.

N.    Reframing

1.      Reframing might involve any of a number of approaches.
a.       Rather than perceiving a particular outcome as a loss, the negotiator might reframe it as an opportunity to gain.
b.      Trying to perceive or understand the situation in a different way or from a different perspective

Because reframing requires negotiators to be flexible during the negotiation itself, they should anticipate—during planning—that multiple contingencies may arise during negotiations.

Wednesday, January 27, 2010

Study Material: Ch- 4

QUIZ 1: Ch 1- Ch 4

Ch.4- Negotiation: Strategy and Planning

XVI. Goals – The Focus That Drives a Negotiation Strategy

A. Direct effects of goals on choice of strategy

1. There are four important aspects to understand in how goals affect negotiations:

a. Wishes are not goals, especially in negotiation.

b. Goals are often linked to the other party’s goals.

c. There are boundaries or limits to what goals can be.

d. Effective goals must be concrete, specific and measurable. If they are not, then it will be hard to:

(1) Communicate to the other party what we want

(2) Understand what the other party wants

(3) Determine whether an offer on the table satisfies our goals.

2. Goals can be tangible or procedural.

The criteria used to determine goals depend on your specific objectives and your priorities among

3. Short-term thinking affects our choice of strategy; in developing and framing our goals, we may ignore the present or future relationship with the other party in a concern for achieving a substantive outcome only.

4. Negotiation goals that are complex or difficult to define may require a sequence of negotiation episodes. In most cases, progress will be made incrementally, and may depend on establishing a relationship with the other party.

XVII. Strategy – The Overall Plan to Achieve One’s Goals

A. Strategy versus Tactics

1. A major difference between strategy and tactics is that of scale, perspective or immediacy.

2. Tactics are short-term, adaptive moves designed to enact or pursue broad strategies, which in turn provide stability, continuity, and direction for tactical behaviors.

3. Tactics are subordinate to strategy: they are structured, directed, and driven by strategic considerations.

B. Unilateral versus bilateral approaches to strategy

1. A unilateral choice is made without the active involvement of the other party.

2. Unilaterally pursued strategies can be wholly one-sided and intentionally ignorant of any information about the other negotiator.

3. Unilateral strategies should evolve into ones that fully consider the impact of the other’s strategy on one’s own.

C. The dual concerns model as a vehicle for describing negotiation strategies. This model proposes that individuals have two levels of related concerns: a concern for their own outcomes, and a level of concern for the other’s outcomes.

1. Alternative situational strategies

a. There are at least four different types of strategies when assessing the relative importance and priority of the negotiator’s substantive outcome versus the relational outcome: competitive, collaboration, accommodation, and avoidance

2. The non-engagement strategy: Avoidance

a. There are many reasons why negotiators may choose not to negotiate:

(1) If one is able to meet one’s needs without negotiating at all, it may make sense to use an avoidance strategy.

(2) It simply may not be worth the time and effort to negotiate (although there are sometimes reasons to negotiate in such situations.

(3) The decision to negotiate is closely related to the desirability of available alternatives – the outcomes that can be achieved if negotiations don’t work out.

3. Active-engagement strategies: Competition, collaboration, and accommodation

a. Competition is distributive win-lose bargaining.

b. Collaboration is integrative or win-win negotiation.

c. Accommodation is as much a win-lose strategy as competition, although it has a decidedly different image it involves an imbalance of outcomes, but in the opposite direction.

d. There are drawbacks to these strategies if applied blindly, thoughtlessly or inflexibly:

(1) Distributive strategies tend to create “we-they” or “superiority-inferiority” patterns, which may result in a distortion of the other side’s contributions, as well as their values, needs and positions.

(2) If a negotiator pursues an integrative strategy without regard to the other’s strategy, then the other may manipulate and exploit the collaborator and take advantage of the good faith and goodwill being demonstrated.

(3) Accommodative strategies may generate a pattern of constantly giving in to keep the other happy or to avoid a fight.

XVIII. Understanding the Flow of Negotiations: Stages and Phases

A. Phase models of negotiation:

1. Initiation

2. Problem solving

3. Resolution

B. Greenhalgh (2001) suggests that there are seven key steps to an ideal negotiation process:

1. Preparation: deciding what is important, defining goals, thinking ahead how to work together with the other party.

2. Relationship building: getting to know the other party, understanding how you and the other are similar and different, and building commitment toward achieving a mutually beneficial set of outcomes.

3. Information gathering: learning what you need to know about the issues, about the other party and their needs, about the feasibility of possible settlements, and about what might happen if you fail to reach agreement with the other side.

4. Information using: at this stage, negotiators assemble the case they want to make for their preferred outcomes and settlement, one that will maximize the negotiator’s own needs.

5. Bidding: the process of making moves from one’s initial, ideal position to the actual outcome.

6. Closing the deal: the objective here is to build commitment to the agreement achieved in the previous phase.

7. Implementing the agreement: determining who needs to do what once hands are shaken and the documents signed.

XIX. Getting Ready to Implement the Strategy: The Planning Process

A. Defining the issues

1. Usually begins with an analysis of what is to be discussed in the negotiation.

2. The number of issues in a negotiation, along with the relationship between the negotiator and the other party, are often the primary determinant of whether one uses a distributive or integrative strategy.

3. In any negotiation, a complete list of the issues at stake is best derived from the following sources:

a. An analysis of all the possible issues that need to be decided.

b. Previous experience in similar negotiations.

c. Research conducted to gather information.

d. Consultation with experts in that industry.

B. Assembling the issues and defining the bargaining mix

1. The combination of lists from each side in a negotiation determines the bargaining mix.

2. There are two steps a negotiator can use to prioritize the issues on an agenda:

a. Determine which issues are most important and which are less important.

b. Determine whether the issues are linked together or are separate.

C. Defining Interests

1. Interests may be:

a. Substantive, that is, directly related to the focal issues under negotiation.

b. Process-based, that is, related to how the negotiators behave as they negotiate.

c. Relationship-based, that is, tied to the current or desired future relationship between the parties.

2. Interests may also be based on intangibles of negotiation.

D. Knowing limits and alternatives

1. Good preparation requires that you establish two clear points:

a. Resistance point – the place where you decide that you should absolutely stop the negotiation rather than continue.

b. Alternatives – other agreements negotiators could achieve and still meet their needs. Alternatives define whether the current outcome is better than another possibility.

E. Setting targets and openings

1. Two key points should be defined in this step:

a. The specific target point where one realistically expects to achieve a settlement

b. The asking price, representing the best deal one can hope to achieve.

2. Target setting requires positive thinking about one’s own objectives.

3. Target setting often requires considering how to package several issues and objectives.

4. Target setting requires an understanding of trade-offs and throwaways.

F. Assessing constituents and the social context of a negotiation

1. When people negotiate in a professional context, there may be more than two parties.

a. There may be more than two negotiators at the table. Multiple parties often lead to the formation of coalitions.

b. Negotiators also have constituents who will evaluate and critique them.

c. Negotiation occurs in a context of rules – a social system of laws, customs, common business practices, cultural norms, and political cross-pressures.

2. “Field analysis” can be used to assess all the key parties in a negotiation.

a. Who is, or should be, on the team on my side of the field?

b. Who is on the other side of the field?

c. Who is on the sidelines and can affect the play of the game? Who are the negotiation equivalents of owners and managers?

d. Who is in the stands? Who is watching the game, is interested in it, but can only indirectly affect what happens?

e. What is going on in the broader environment in which the negotiation takes place?

f. What is common and acceptable practice in the ethical system in which the deal is being done?

g. What is common and acceptable practice given the culture in which the negotiation is conducted?

G. Analyzing the other party

1. Learning the other’s issues, preferences, priorities, interests, alternatives and constraints is almost as important as determining one’s own.

2. Several key pieces of background information will be of great importance, including their:

a. The other party’s resources, issues, and bargaining mix – investigate:

(1) Other party’s business history or previous negotiations

(2) Financial data

(3) Inventories

(4) Visit or speak wt is on the other negotiator’s ability to make binding agreements.

(5) The negotiator needs to know how the other party’s organization makes decisions to support or ratify an agreement


b. Reputation and negotiation style.

(1) A negotiator’s typical style (integrative or distributive approach) is an important determinant of how to approach the other party in the negotiation.

(2) One’s impression of the other party’s reputation may be based on several factors:

(i) How the other party’s predecessors have negotiated with you in the past.

(ii) How the other party has negotiated with you in the past, either in the same or in different contexts.

(iii) How the other party has negotiated with others in the past.

c. Likely strategy and tactic

(1) Information collected about issues, objectives, reputation, style, alternatives, and authority may indicate a great deal about what strategy the other party intends to pursue.

H. Presenting issues to the other party

1. What facts support my point of view?

2. Whom may I consult or talk with to help me elaborate or clarify the facts?

3. Have these issues been negotiated before by others under similar circumstances?

4. What is the other party’s point of view likely to be?

5. How can I develop and present the facts so they are most convincing?

I. What protocol needs to be followed in this negotiation?

1. The agenda

2. The location of negotiation

3. The time period of negotiation

4. Other parties who might be involved in the negotiation

5. What might be done if negotiation fails?

6. How will we keep track of what is agreed to?

7. How do we know whether we have a good agreement?