Agenda Exam Comments (posted by code) I will add 2% to exam grade Extra credit (in-class survey next week) If you don’t have a boss, I will figure something else out Negotiation Handouts American Airlines & Boeing Slides Integrate discussion of Frasier/Frasier Clip Video Stanford Guide to Negotiation Guest Speaker Next Week Group time

Distributive Negotiation Single issue Your loss is my gain

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

Offers Folklore says to let the other party make the first offer Is that a good idea? Anchoring People tend to focus heavily on the first offer 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 1 st offer

First Offers (continued) How do you feel when the other party accepts your first offer? I should have asked for more Maybe I just got into a bad deal Less satisfaction Do not accept first offers They are just that – an opener Expectation to negotiate

BATNA Best Alternative to a Negotiated Agreement The lowest acceptable value to an individual for a negotiated agreement Develop alternatives so you know at what point to stop negotiating Gives you the POWER to walk away If we cannot receive an offer of X-amount for the house, then what will you do? Rent it out?

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”

Concessions Need some cushion (Target price versus reservation price) Make the first concession Why? Norm of reciprocity Positive feelings Magnitude of concessions Less and less to signal you are reaching the end