1. N EGOTIATION R ATIONALLY : T HE POWER AND IMPACT OF THE N EGOTIATOR ’ S F RAME Juliane Arndt Sebastian Gabor Alexander Shopov

2. W HAT IS A NEGOTIATION ? How to improve negotiation skills: Effective use of information about the issue Being aware of the behaviour of the opponent Make more rational decisions

3. T IPS : Psychological forces Evaluate the opponents behaviour General goal:  Reaching good agreements, not only an agreement

4. F REQUENT PROBLEMS OF NEGOTIATORS Framing Prejudices Usage of irrelevant information Relying on readily available information Being overconfident

5. F RAMING How does it influence? Choosing the frame? Case I You are in a store about to buy a new watch, which cost $70. As you wait for the sales clerk, a friend of yours comes by and remarks that she has seen an identical watch on sale in another store two blocks away for $40. You know that the service and reliability of the other store are just as good as this one. Will you travel two blocks to save $30?

6. C ASE II You are in a store about to buy a new video camera that costs $800. As you wait for the sales clerk, a friend of yours comes by and remarks that she has seen an identical camera on sale inn another store two blocks away for $770. You know that the service and reliability of the other store are just as good as this one. Will you travel two blocks to save the $30?

7. A NALYSIS Possibilities: First scenario: 90% of the managers would travel two blocks Second scenario: only 50% would travel two blocks Reasons: $30 discount for $70 watch -> good deal ; $30 discount for $800 camera not such a good deal Case show importance of frames: we have to be aware of them in order to make good decisions

8. F RAMING OF RISKY NEGOTIATIONS Framing affects perception

9. Subjective gain from the current situation loss from the expected gain

10. E XAMPLE Employee is expecting a significant increase in salary. He frames expectations to a raise of $5000. Because of the recession he receives only $3500. However, the average salary increase was $2000. Depending on the frame: Gain : 3500 – 2000 = $1500 Loss: 5000 – 3500 = $1500

11. R EFERENT POINTS IN NEGOTIATING SALARY 1. Current salary 2. Company’s initial offer 3. The least one is willing to accept 4. The estimate of the most the company is willing to pay 5. The initial salary request

12. N EGOTIATION FRAMES One can negotiate to: Increase a gain Reduce a loss Economically they are the same. Positive negotiation leads to more closed deals!

13. T HE ENDOWMENT EFFECT Owners change the relationship of the commodity Higher value Attachment is formed

14. E XAMPLE Sellers = $7.12 Buyers = $3.12 Value of a commodity is subjective Coffee Mug

15. F RAMING Organize information What’s positive for one party may be negative for other Create positive frames – present different perspectives What the other side has to gain

16. T HANK YOU FOR YOUR ATTENTION !