Negotiation

Pre-Negotiation

1. Assess your BATNA

2. Calculate your Reservation Value

3. Calculate other party’s BATNA and Reservation Value

4. Calculate the Zone of Possible Agreement or ZOPA

5. Try to create value by:

a. Identifying multiple interests

b. Creating a scoring system

c. Calculating Package Reservation Value

d. Identify other party’s multiple interests

6. Identify the possible biases in you

a. Biases of mind

I. Fixed Pie Bias

II. Vividness Bias

III. Non-rational escalation of commitment

IV. Susceptibility to framing

b. Biases of Heart

I. Conflicting motivation

II. Egocentrism

III. Self-serving attribution

IV. Regret Aversion

V. Overconfidence or irrational optimism

c. Confronting the biases in you

I. Use “System 2” thinking

II. Learn through use of analogies

III. Adopt the outsider lens

d. Defending yourself against strategies of influence

a. Prepare systematically

b. Create a scoring system

e. Eliminate the following Blind Spots if possible

I. Parties away from table

II. Other Side’s Decision Rules

III. Other Side’s Information Advantage

IV. Strength of competition

V. Future

f. Smart alternatives to Lying

I. Change reality to make the truth more bearable

II. Eliminate constraints that make you lie

g. When not to negotiate

I. When time is money

II. When your BATNA is bad and everyone knows it

III. When negotiating sends the wrong signal

IV. When relationship might suffer

V. When it is culturally inappropriate

VI. When your BATNA beats their best offer

During Negotiation

h. If they make an initial offer:

a. Ignore the anchor

b. Separate Information from Influence

c. Avoid dwelling on the anchor

d. Make counteroffer then propose moderation

e. Give time for moderation without him losing face

i. If you like the initial offer:

a. Accept reluctantly

b. Haggle further more

c. Give something back

d. Think again and ask questions

j. When making an initial offer:

a. Keep entire ZOPA in play

b. Provide Justification for your offer

c. Set high but realistic aspirations

d. Consider the context and the relationship

k. Effective Haggling Strategies

a. Focus on other party’s BATNA and RV

b. Avoid making unilateral concessions

c. Be comfortable with silence

d. Label your concessions

e. Define what it means to reciprocate

f. Make contingent contracts

g. Be aware of effects of diminishing rate of concessions

l. Means of Creating Value

a. Use Log-Rolling or adding issues to increase size of pie on table

b. Try to achieve Pareto efficiency

c. Make package offers

d. Leverage differences of all types to create value

m. Confronting the biases in others

a. Incorporate consequences of their biases in your strategy

b. Help others to be less biased

c. Calibrate info provided by others

d. Use contingency contracts to resolve conflicts

e. Be aware of problem of bounded ethicality

n. Strategies to Influence the other party

a. Highlight their potential losses rather than gains

b. Break down their gains and club their losses

c. Employ “Door in Face” Technique

d. Employ “Foot in Door” Technique

e. Use the power of justification

f. Use the power of social proof

g. Make token unilateral concessions

h. Use reference points to make your offer seem reasonable

o. Defending yourself against strategies of influence

a) Use