Distributive Negotiation Single issue My gain is your loss

Slicing the Pie How do you get the biggest piece? Preparation Alternatives Offers Concessions

BATNA Develop alternatives Gives you POWER (even if you are smaller, have fewer resources) If we cannot receive an offer of X-amount for the house, then what will you do? Rent it out? Best Alternative to a Negotiated Agreement Determines your reservation price: The lowest acceptable value for a negotiated agreement

Offers Folklore says to let the other party make the first offer Is that a good idea?

Anchoring People are heavily influenced by the first offer Research indicates the first offer correlates .85 with the final price

Offers (continued) What if the other party makes the first offer? Immediate counteroffer Take away the psychic hold of the 1st offer

Concession Strategy Need some cushion (Target price versus reservation price) Make the first concession Why? Norm of reciprocity Positive feelings

Concession Strategy Signaling function of concessions Magnitude (smaller and smaller) Take more time in between concessions

What’s your bottom line? “Tell me the bare minimum you would accept and I’ll try and throw in something extra” “Why don’t you tell me the very maximum you are willing to pay, and I’ll try and I’ll see if I can shave off a bit”

Reaching Agreement If you reach an agreement you like, do you still care about how the other party negotiated?