1. Multi-Party Negotiations
Roman Sheremeta, Ph.D.
Professor, Weatherhead School of Management
Case Western Reserve University

2. Multi-Party Negotiations
P – principal
C – constituency group
M – group member
A – agent

3. 1. Multi-Party Negotiations
Multi-party negotiations – a group of three or more individuals, each representing his or her own interests, attempts to resolve perceived differences of interest

4. 2. Coalitions
Coalition – a (sub)group of two or more individuals who join together in using their resources to affect the outcome of a decision in a mixed-motive situation

5. 3. Principal-Agent Negotiation
Principal-Agent negotiation – is a negotiation between a principal and an agent

6. 4. Constituents
Constituent – the party whom the principal represents

7. 5. Team Negotiation
Team – a group of people who are joint together on one side of the bargaining table

8. 6. Intergroup Negotiation
Intergroup negotiation – is a negotiation between teams

9. Challenges of Multi-Party Negotiations
Building a team
Picking your teammates
Choosing how many members should be on the team
Role assignment and accountability
Voting
Majority rule (ignores individual preferences)
Unanimity rule (time-consuming)
Strategic voting (strategic misrepresentation of preferences)
Stereotyping
Groups identify with their organization and often hold negative impressions about others

10. Negotiation Biases
Cognitive biases are mental errors caused by our simplified information processing strategies
Examples of negotiation biases:
Overconfidence
Agreement bias
Anchoring bias
Incompatibility bias
Fixed-pie bias
Confirmation bias
Self-serving bias
In-group bias
Exaggeration of conflict bias

11. “In-Group Bias” “In-group bias” (“In-group favoritism”)
The tendency to favor in-group members over out-group members
Example: Democrats versus Republicans
Rationality behind the “in-group bias”
Parochial altruism
Competition for resources
Social identity (categorization and self-esteem)
Potential solutions
Shield group members from knowing the identity of others in the group
Look for commonalities between opposing groups
Put yourself in the place of the outgroup member

12. Challenges of Multi-Party Negotiations
Formulating trade-offs between parties
Reciprocal logrolling (mutual exchange of issues) versus circular logrolling (one member offers another member a concession on one issue, while receiving a concession from another member on a different issue)
Dealing with coalitions
Coalitions are not stable
Changing identities: People identify with many different social groups at the same time
How to split the pie?
Core solution (no coalition has the power and desire to overthrow it)
Shapley solution (based on pivotal power of each member to change a loosing coalition into a winning coalition)
Raiffa’s solution (hybrid model between the Shapley and Core solutions)

13. Strategies for Multi-Party Negotiation
Building a team
Pick your teammates using relevant criteria: (1) negotiation expertise, (2) technical expertise, and (3) interpersonal skills
Have a moderate size team (larger groups have the problem of coordination, peaking at about five)
Set joint goals (the higher the level of team identification, the lower the level of conflict within the team)
Develop and assign process roles: (1) timekeeper, (2) process manager and (3) recorder of information
Decide who is responsible for what

14. Research on Teams
Teams are better than individuals in making strategic calculative decisions (Charness and Sutter, 2012)
(1) Teams are more cognitively sophisticated: “two heads are better than one”)
(2) Teams are better at anticipating the actions of other parties: teams are more likely to make “rational” choices that follow standard game-theoretic predictions
(3) Teams are more self-interested: teams are more likely to emphasize monetary payoffs over alternative concerns, such as fairness or reciprocity towards another party
Individuals are better than teams at generating ideas
Implication: use brainstorming wisely by letting group members individually brainstorm ideas and then share them with the rest of the group

15. Worksheet for Effective Team Negotiation
Step 1: Individual preparation
• Identify what you think the other party’s priorities are
• Identify the issues
• Identify what information you need from the other party
• Identify your BATNA
• Determine what you believe to be your team’s “worst-case” scenario
• Determine your BATNA
• What do you know about the other party’s BATNA?
• Determine what you believe to be your team’s “best-case” scenario
• Identify your worst-case scenario (reservation price)
• Identify your best-case scenario (target)
• Write these scenarios down and be prepared to share them with the members of your team
• As you complete the preceding tasks, make a list of questions to research
• Identify information that is too sensitive to reveal at any point under any condition (get clarification and closure within the team on this point)
Step 2: As a team, decide on your procedures for running the preparation meeting
• Identify information that you are willing to share with the other team if they inquire (get clarification and closure within the team on this point)
• Who is going to run the meeting (i.e., who is going to summarize, synthesize, etc.)?
• What materials do you need to be effective (calculator, flipcharts, computer, etc.), and who is bringing them?
Step 4: Strategy
• What is your timeline, and who will enforce it so that the team arrives at the negotiation table prepared and refreshed?
• As a team, plan your OPENING OFFER
• Choose a lead negotiator (speaker)
• Choose a lead strategist (listener and strategic watchdog)
Step 3: As a team, clarify facts and information
• Choose an accountant to run the numbers
• Choose a scribe to keep track of offers
• Develop a “Positions and Interests” chart
• Decide on a signal to adjourn for a private caucus
• Prioritize your issues. Understand the reasons for your priorities

16. Strategies for Multi-Party Negotiation
Make your contacts early
Because of “commitment bias” people tend to feel obligated to others with whom they have made explicit or implicit agreements, so members should try to form coalitions early on
Seek verbal commitments
Most people feel obligated to follow through with promises they make to others
Appeal to the norms of fairness
Use unbiased-appearing rationale to divide the pie: (1) equity, (2) equality, and (3) need-based
Optimal coalition size
Coalitions should contain the minimum number of parties

17. Team Contests Verkhovna Rada of Ukraine

18. Thank you! Roman Sheremeta, Ph.D.
Professor, Weatherhead School of Management
Case Western Reserve University

19. References
Thompson, L. (2004). The Mind and Heart of the Negotiator. New Jersey: Prentice Hall. (Chapter 9)
Charness, G., & Sutter, M. (2012). Groups make better self-interested decisions. Journal of Economic Perspectives, 26,