4-1 Win-Win Negotiation: Expanding the Pie CHAPTER 4

4-2 Faulty Perceptions of Win-Win Negotiation Compromise Even split Satisfaction Building a relationship CHAPTER 4 Instructor’s Manual with Overheads to accompanyCopyright ©2012 Pearson Education, The Mind and Heart of the Negotiator 5/e (Thompson) Inc. publishing as Prentice Hall

4-3 Telltale Signs of Win-Win Potential Does the negotiation contain more than one issue? Can other issues be brought in? Can side deals be made? Do parties have different preferences across negotiation issues? CHAPTER 4 Instructor’s Manual with Overheads to accompanyCopyright ©2012 Pearson Education, The Mind and Heart of the Negotiator 5/e (Thompson) Inc. publishing as Prentice Hall

4-4 Exhibit 4-1: A Pyramid Model of Integrative Agreements CHAPTER 4 Level 3: Pareto-optimal Level 2: Settlement demonstrably superior to other feasible settlements Level 1: Mutual settlement (positive bargaining zone) Instructor’s Manual with Overheads to accompanyCopyright ©2012 Pearson Education, The Mind and Heart of the Negotiator 5/e (Thompson) Inc. publishing as Prentice Hall

4-5 Expanding the Pie: Strategies That Do Not Work Commitment to reaching a win-win deal Compromise Focusing on a long-term relationship Adopting a “cooperative orientation” Taking extra time to negotiate CHAPTER 4 Instructor’s Manual with Overheads to accompanyCopyright ©2012 Pearson Education, The Mind and Heart of the Negotiator 5/e (Thompson) Inc. publishing as Prentice Hall

4-6 Type of Information Definition (example)Claiming ValueCreating Value BATNA (and reservation price) The alternatives a negotiator has outside of the current negotiation (e.g., “If I don’t buy your car, I can buy my uncle’s car for $2,000”) Revealing this information severely hurts ability to maximize negotiator surplus Revealing or obtaining this information does not affect ability to reach level 2 or 3 integrative agreements; might help negotiators reach level 1 integrative agreements Position (stated demand) Usually, a negotiator’s opening offer; the behavioral manifestation of his/her target point (e.g., “I will give you $1,500 for your car”) Opening with an aggressive target point significantly increases the negotiator’s surplus (share of the bargaining zone) Does not affect integrative agreements Underlying interests The underlying needs and reasons a negotiator has for a particular issue (e.g., “I need a car because I need transportation to my job site, which is 15 miles away in a rural zone”) Revealing this information generally increases likelihood of obtaining a favorable slice of the pie because negotiators who provide a rationale for their demands are more adept at realizing their targets Very important for reaching win-win deals; by (truthfully) revealing underlying interests, negotiators can discover win-win agreements (e.g., one sister tells the other that she wants the orange because she needs to make juice and has no need for rinds) PrioritiesA judgment about the relative importance of the issues to a negotiator (e.g., “I am more concerned about the down payment than I am about the financing for the car”) Increases a negotiator’s surplus indirectly, because if more value is created via sharing priorities, then the probability that a negotiator will get a larger slice of the pie increases Vitally important for maximizing the pie (e.g., the sister who said she cared more about the rinds relative to the juice created potential for integrative agreement) Key factsPertains to information that bears on the quality and the value of the to-be-negotiated issues (e.g., “The car has a rebuilt engine and has been involved in a major collision;” “The oranges are genetically modified”) This information can affect the slice of the pie the negotiator obtains in that facts either increase or decrease the value of the to-be-negotiated issues Affects the quality of win-win agreements in that failure to reveal key information may lead a negotiator to over- or undervalue a particular resource (e.g., someone who sells “fresh organic orange juice” does not want to have genetically-modified oranges as an ingredient) Substantiatio n Argument either made to support one’s own position or to attack the other party’s position (e.g., “You will get lots of dates if you buy my car because women like it”) Most dominant type of distributive tactic (24% to 27% of all statements);** can increase a negotiator’s slice of the pie because providing a rationale (even an absurd one) can often be effective in obtaining a demand A distributive tactic; does not increase win-win negotiation and may, in fact, reduce likelihood of win- win* Exhibit 4-2: Types of Information in Negotiation and How Each Affects Distributive and Integrative Agreements Pruitt, D. G., (1981). Negotiation Behavior. New York: Academic Press; Hyder, E. B., Prietula, M. J., & Weingart, L. R. (2000). Getting to best: Efficiency versus optimality in negotiation. Cognitive Science, 24(2), 169–204. ** Carnevale, P. J., & Lawler, E. J. (1986). Time pressure and the development of integrative agreements in bilateral negotiations. Journal of Conflict Resolution, 30(4), 636–659. Instructor’s Manual with Overheads to accompanyCopyright ©2012 Pearson Education, The Mind and Heart of the Negotiator 5/e (Thompson) Inc. publishing as Prentice Hall CHAPTER 4

4-7 Expanding the Pie: Strategies That Work (I) Perspective-taking Ask questions about interests and priorities Provide information about your interests and priorities Unbundle the issues Make package deals, not single-issue offers Make multiple offers of equivalent value simultaneously CHAPTER 4 Instructor’s Manual with Overheads to accompanyCopyright ©2012 Pearson Education, The Mind and Heart of the Negotiator 5/e (Thompson) Inc. publishing as Prentice Hall

4-8 Expanding the Pie: Strategies That Work (II) Structure contingency contracts by capitalizing on differences Valuation Expectations Risk attitudes Time preferences Capabilities Cautionary note on effective contingency contracts Presettlement settlements (PreSS) Postsettlement settlements CHAPTER 4 Instructor’s Manual with Overheads to accompanyCopyright ©2012 Pearson Education, The Mind and Heart of the Negotiator 5/e (Thompson) Inc. publishing as Prentice Hall

4-9 Exhibit 4-6: Decision-Making Model of Integrative Negotiation CHAPTER 4 Resource Assessment Construct Offers and Trade-Offs Assessment of Differences Current “Best” Terms Impasse Implement Agreement Postsettlement Settlements not acceptable (optimistic) not acceptable (bleak) both agree Instructor’s Manual with Overheads to accompanyCopyright ©2012 Pearson Education, The Mind and Heart of the Negotiator 5/e (Thompson) Inc. publishing as Prentice Hall

4-10 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall CHAPTER 4