Conditions for Using Negotiation Two or more parties –Conflict of interest such that what one party wants is not what the other party wants –Both willing to negotiate for a good outcome –Preference to work together rather than fight, give in, break off contact, or take the dispute to a higher authority

Choose the Best Conflict- Handling Style Collaborate if: issues are important to both parties power is fairly equal and candor is possible there is potential for mutual benefits you have adequate time to fully discuss the details * most likely to maximize everyone’s outcomes * Accommodate or Compromise if: you lack time or ability to collaborate * can have positive or negative consequences * Force/Compete or Avoid if: other options aren’t feasible * can create negative feelings *

Prentice Hall, 1999 Chapter 123 Available Resources Primary Motivations Primary Interests Focus of Relationships Fixed Amount I Win, You Lose Opposed Short-Term Variable Amount I Win, You Win Congruent Long-Term Integrative Bargaining Distributive Bargaining Characteristics The Two Types of Bargaining Strategies

Preconditions for Integrative Negotiation Common goal Faith in one’s own problem-solving ability Belief in validity of other party’s position Motivation to work together Mutual trust Clear communication

Prentice Hall, 1999 Chapter 125 Decision-Making Biases That Impede Negotiations Escalation of commitment The mythical fixed pie Anchoring and adjustments Framing negotiations Availability of information The winner’s curse Overconfidence

Ugli Oranges 1. What will you do? 2. What price will you offer? 3. To whom and how will the oranges be delivered?

Ugli Oranges Info sharing Assess “orange options” Guarantee trust

Coalition Bargaining Exercise Possible Coalitions & Their Values: Groups A & B: Coalition receives $20K Groups A & C: Coalition receives $18K Groups B & C: Coalition receives $16K

Rules for Negotiation 1.There will be 3 rounds, each proceeding as follows: Teams A & B first, A & C second, B & C third 2. All members of negotiating team may be present, but only the negotiator may speak 3. Notes may be passed to negotiators 4. A team may change its negotiator between rounds 5. At the end of the negotiations, payoffs are allocated only if a coalition has been formed 6. Only one formal coalition is permitted

Rules for Negotiation (cont.) 7. First round negotiations can take up to 5 minutes; second and third round negotiations take up to 3 minutes each 8.The team that is not currently negotiating must leave the room. 9. A coalition will be recognized only if (A) Not two teams receive the same amount of points, and (B) Neither team in the coalition receives zero 10. After the third round of negotiations, all three teams will have the opportunity to submit a written statement in the following form:

Rules (cont.) “Team X has a coalition with Team Y, whereby Team X gets ___ and Team Y gets ___.” When written statements meeting the above requirements from any two teams agree, a valid coalition has been formed.