NOTES FINAL EXAM NEGOTIATIONS.

CHAPTER 6: PERCEPTION, COGNITIVE BIAS IN NEGOTIATION.

WHAT IS PERCEPTION?

The process of interpreting the messages of our senses to provide order and meaning to the
environment.

Our actions are based on our interpretation of reality from our perceptual system, rather than
on reality itself.

FACTORS THAT INFLUENCE PERCEPTION.

“ WE DON’T SEE THINGS AS THEY ARE, WE SEE THINGS AS WE ARE.”

THE POWER OF CONTEXT (SITUATION):

PERCEPTION: INSIDE THE BRAIN.

●​ The goal of our perceptual system:

-​ Fast and good enough.

●​ SHORTCUTS: helpful but can lead to biases.

●​ We not only make mistakes about our visual world, we make lots of mistakes when
we.
-​ judge other people.

COGNITIVE BIASES IN NEGOTIATION.

COGNITIVE BIASES: IRRATIONAL ESCALATION OF COMMITMENT.

COGNITIVE BIASES: ANCHORING AND ADJUSTMENT.

COGNITIVE BIASES: ISSUE FRAMING AND RISK.

COGNITIVE BIASES: AVAILABILITY OF INFORMATION.

COGNITIVE BIASES: THE WINNER’S CURSE.

COGNITIVE BIASES: OVERCONFIDENCE.

COGNITIVE BIASES: SELF- SERVING BIASES.

COGNITIVE BIASES: ENDOWMENT EFFECT.

COGNITIVE BIASES: IGNORING OTHERS’ COGNITIONS.

COGNITIVE BIASES: REACTIVE DEVALUATION.

NEGOTIATION DEBRIEF.

●​ Biases often operate unconsciously.

●​ Recognizing bias is the first step to managing it.
●​ Negotiation success often depends on flexibility and awareness.

FRAMING.

Frames define a person, an event, or a process and separate it from the complex world
around it.

• These frames can change depending on perspective, or they can change over time.

FRAMES GIVE US A CLUE.

A party’s frame reflects:

• Their critical objectives.
• Outcome expectations and preferences.
• What they need to argue their case.
• Procedures to present their case.
• How they evaluate outcomes.

HOW FRAMES WORK IN NEGOTIATION.

• Negotiators can use more than one frame.

• Mismatches in frames between parties are sources of conflict.
• Parties are likely to assume a particular frame because of various factors.

TYPES OF FRAMES.
GAIN/LOSS FRAME.

• If information is framed positively (“gain frame”), it encourages conservative decisions.

• We take the sure thing over a chance at gaining more.
• If the same information is framed negatively (“loss frame”), people are likely to make a risky
decision.
• We take a chance at losing less rather than accept a sure loss.
• Why? Because the possibility of the loss is so uncomfortable, we would rather take a risk
and have the chance of not losing.
• We are loss averse – we do not want to take a sure loss.

PROSPECT THEORY.

•“Prospect theory” holds that:

• People are more risk-averse when a problem is framed as a possible gain.
• And risk-seeking when a problem is framed as a loss.
•Risk-averse negotiators may accept any offer because they are afraid of losing.
• Risk-seeking negotiators may wait for a better offer or further concessions.

Anchoring Effect.

When making judgments about something we are uncertain about, we implicitly look for
something to use to anchor our judgment, which may or may not be relevant and accurate.

Typically, people do not adjust their estimate properly because they are overly influenced by
the anchor.

CHAPTER 7: COMMUNICATION SKILLS.

Communication → The process by which information is exchanged between a sender and

a receiver.

COMMUNICATION - A NOISY PROCESS.

WHAT IS COMMUNICATED DURING NEGOTIATION?

• Verbal communication.
• Non-verbal communication.
1)​ Physical environment.
2)​ Physical experience.
3)​ Behavioural traits.
4)​ Non-verbal behaviour (Your body speaks).
-​ Dynamic movements or anything that you can observe, that communicate
without words.
-​ Examples ?

OBSERVE.

• Take notice of the background, people’s non-verbal behaviour.

• Get data about the person you are negotiating with.
• Additional data that’s always there but you may not be leveraging.

KNOW WHAT TO DO WITH THE ADDITIONAL DATA.

• What’s your strategy now that you have additional data?

• How are you using this data with this person, in this negotiation?
• Builds rapport.
• Builds relationship.

WHAT ABOUT YOURSELF?

• What messages are you sending to the other party?

• Be strategic.
• How?
• Be careful not to appear unauthentic (do not fake it!).
• Let behaviours come from inside (an expression of an internal state.

IMPROVING COMMUNICATION.

Three main techniques are available for improving communication in negotiation.

• The use of questions.
• Listening.
• Role reversal.
QUESTIONS IN NEGOTIATION.

• Asking questions strategically

• Magic question: What would it take?
• What would it take for you to come to class on time?
• It gets you to commit to whatever you answered.
• It also shows your efforts to understand the other party, to make it work together.

3 FORMS OF LISTENING.

• Passive listening receives the message while providing no feedback about accuracy.
• Acknowledgement is slightly more active than passive listening.
• Active listeners restate the sender’s message in their own [Link] listening
encourages others to speak more fully about their feelings, priorities, frames of reference,
and, by extension, the positions they are taking.

ROLE REVERSAL.

• See it from their perspective.

• Where else have we seen the benefits of role reversal?

CHAPTER 8: POWER & INFLUENCE.

How is power used in Negotiations?

• Power used to control is a power over situation.
• A way to gain advantage or to block the other party.
• Power used to work together is a power with situation.
• To balance power as a way to level the playing field.

Sources of Power—How People Acquire Power.

Informational Sources of Power.

Information power is the ability to assemble and organize data to support positions,
arguments, or desired outcomes.

Dealing With Others Who Have More Power.

1)​ Good information is always a source of power.

Example:
●​ A buyer negotiating with a supplier has done extensive market research and knows
the average price of similar products, the supplier’s competitors, and recent trends in
raw material costs.
Why does this work?

2)​ Ask diagnostic questions to gain more information.

Example: During a salary negotiation, a candidate asks:

“What’s the typical budget range for this role?”
“How does performance influence compensation here?”
“What benefits are negotiable?”
Why does this work?

3)​ Do what you can to manage the process and control the direction.

Example: A startup founder negotiating with investors sets the agenda for the meeting,
proposes a timeline for decision-making, and suggests using a term sheet they’ve prepared.
Why does this work?

Key Learning Points:

Sources of Power.
How power is used in negotiations.
How to deal with those who have more power than us.

CHAPTER 9 & 10. RELATIONSHIPS IN NEGOTIATION MULTIPARTY, COALITIONS &

TEAM.

DOES OUR UNDERSTANDING OF NEGOTIATION APPLY TO NEGOTIATING IN

LONG-TERM RELATIONSHIPS?

• Existing relationships change negotiation dynamics

• Negotiating within relationships takes place over time.
• Negotiation increases interdependence.
• Negotiating within relationships may never end.
• In some negotiations, relationship preservation is the goal.
KEY ELEMENTS IN MANAGING NEGOTIATIONS WITHIN RELATIONSHIPS.

PAIR & SHARE.

How do you define “trust”?

Trust is an individual’s belief in and willingness to act on the words, actions, and decisions of
another.

TRUST.

Generating trust is a complex, uncertain process depending in part on how the parties
behave and in part on personal characteristics.

Mistrust inhibits collaboration.

BUILDING TRUST AT THE NEGOTIATION TABLE.

• Learn what you can about your counterpart.

• Get to know the person before you formally negotiate.
• Proceed with caution on the other’s trustworthiness.
• Win the other’s trust.
• Listen to and acknowledge the other’s concerns.

WHAT WOULD YOU DO TO REPAIR TRUST?

Steps to Repair Trust:

1.​ Acknowledge the issue (Speak with JJ privately to understand what happened).
2.​ Address intent (Help JJ apologize and explain to the team and partner).
3.​ Offer reparations (JJ takes extra responsibility or updates the partner directly).
4.​ Create structural solutions (Set clearer deadlines and accountability tools).
5.​ Rebuild respect (Focus on solutions and reinforce psychological safety.
WHAT CHANGES IN A MULTIPARTY NEGOTIATION?

Information?
Procedure/process?
Strategy.

MANAGING MULTIPARTY NEGOTIATIONS.

Planning stage:
- Building coalitions.
- BATNA development.
- Agenda construction.

MANAGING MULTIPARTY NEGOTIATIONS.

Negotiation stage:
- Appointing a neutral chairperson (like a mediator).
- Payoff matrix: a spreadsheet that keeps tracks of all names of parties, issues discussed
and outcomes.
- Standing firm on your BATNA.

Agreement phase:
- Develop an action plan.
- Evaluate the process and the outcome.

TAKE NOTE!

Parties who discuss multiple issues simultaneously are more likely to achieve quality
outcomes!
(Recall to the very first negotiations we did on first day of class, Recruiter and Candidate).

Negotiators who are excluded from part of a multiparty negotiation often receive a lesser
share of the outcome!
(Don’t be left out! And don’t exclude anyone, because they may reject the final agreement!

GROUP COHESIVENESS.
• What is cohesiveness?
• The degree to which members really want to be part of the group
• E.g. close-knit.
• Cohesiveness and effectiveness:
• Cohesiveness is not the same thing as effectiveness.
• Typically, cohesive teams will be more successful.
• But, cohesiveness is not the same thing as effectiveness.

GROUP COHESIVENESS.
Which team will be more COHESIVE?

CONFLICTED ABOUT GROUP CONFLICT.

CONFLICTED ABOUT GROUP CONFLICT.

Groups generally prefer to avoid conflict.

But (task) conflict can be helpful.
How do you encourage conflict?
How do you resolve conflict?
GROUP POLARIZATION.

GROUP POLARIZATION.

Tendency of group members to shift toward more extreme positions than those they initially
held as a result of group discussion.
• Discussion of already favored ideas.
• Individuals tend to express slightly more extreme views during discussion.
• Diffusion of responsibility.

CHAPTER 11. INTERNATIONAL & CROSS-CULTURAL NEGOTIATION.

“He who speaks has no knowledge, and he who has knowledge does not speak.”
—Japanese proverb.

“Nothing done with intelligence is done without speech.”

—Greek proverb.

CULTURE.

1.​ Culture belongs to a group, personality to an individual.

2.​ Culture refers to what group members share in common, although some cultures are
tighter and some looser.
3.​ Cultures overlap more or less.
Unique character of a group:
●​ Values, beliefs, norms.
●​ Social, political, economic structures.

Functional solutions to problems of social interaction.

STEREOTYPES VS. PROTOTYPES.

Physical Distance in Greeting Behavior.

CULTURE AND TRUST IN NEGOTIATION.

Trust in negotiation is the willingness to make yourself vulnerable in the interdependent

decision-making process that is negotiation.

TEST YOUR CULTURAL KNOWLEDGE OF TRUST – WHAT REGION DOES EACH

QUOTE BELONG TO?
WHAT CAUSES CROSS - CULTURAL CONFLICT?

• We tend to interpret others’ behaviors, values, and beliefs through the lens of our own
culture.

• Differences within the culture, i.e. organization culture, team culture.

WE ALL SPEAK ENGLISH….DO WE?

In North America, is it okay to heavily salt business communications with sports analogies,
but they are often not well understood by all.

●​ “cover all the bases,”

●​ “step up to the plate,”
●​ or the need to “hit a home run”.

Being fluent in a language does not mean you will have smooth communication with others
speaking the same language.

EXAMPLE: GERMAN, ENGLISH, & FRENCH.

One sign, worded differently to reflect the degree of high/low context culture:
●​ In German, the sign read “Walking on the grass is forbidden”—a direct, unambiguous
message for this low-context country.
 ●​ The English version read “Please do not walk on the grass”—a message softened a
bit from the German to reflect the slightly higher context.
●​ Finally, the French version read “Those who respect the environment will avoid
walking on the grass”—a much higher-context message reflective of that stronger
cultural tendency in France.

HIGH/LOW CONTEXT AT WORK.

A German employee working for a French company was terminated within a year because
his performance fell short. The German was shocked, especially since “nobody told me what
they wanted me to do.”

A French employee who resigned from a German company had the opposite experience.
The French employee became fed up with being constantly told what to do by his German
boss. He felt both his pride and intelligence were threatened.

WHAT HAPPENED?

A French manager tends to be high context and would typically expect the German
employee to pick up on the message.
The low-context German employee, in contrast, would usually expect intervention and
direction by the French manager. Unfortunately, that intervention either never came or came
too late.

INTERNATIONAL NEGOTIATION: A 4-STAGE PROCESS.

STAGE 1: NON-TASK SOUNDING.

Establishing rapport
How much time should you spend on this stage?
●​ it is common for HC cultures to spend considerable time in this phase. They would
want to know about you and the company you represent in great detail. This could
happen over several meetings to days before the actual negotiation begins.
 ●​ In LC cultures, this stage usually takes much less time, perhaps happening over
breakfast on the day of the scheduled negotiation.
Who do you send as your representative to this first initial meeting?
●​ HC prefer to send/and also speak with a more senior executive, whereas LC would
prefer a equal status representative (and would even downplay status/ran.

STAGE 2: TAKE - RELATED EXCHANGE.

An exchange of needs, interests, and preferences.

In HC cultures such as some in the Middle East, long and in-depth explanations of the
parties’ initial bargaining positions should be expected.
●​ This exchange and the meetings that go along with it will be time-consuming, with
many questions directed to the other party.
In LC cultures such as America, negotiators are more likely to offer a price that is closer to
the eventual terms agreed upon by both parties.

STAGE 3: PERSUASION.

This stage involves explicit attempts to modify each other’s positions.

To LC negotiators, this is the most important step in the negotiating process . However, the
way this persuasion stage unfolds in other cultures can surprise many Americans, Finns,
and Germans (LC).
●​ LC negotiator is now ready to “lay the cards on the table”. Americans, for example,
often give and expect to receive frank information during this stage of negotiations.
●​ Americans are more likely to share information directly with negotiation partners
(e.g., “we pay suppliers $350 per subcomponent part and need to recover this cost”)
than were those from five other countries: Brazil, France, China, Japan, and Russia.
All but the Brazilians were more likely to use indirect strategies to communicate in
negotiations (e.g., “our supplier costs can be high and unpredictable”).

STAGE 4: AGREEMENT.

Following through with the agreement is what makes it an agreement! Recognizing this fact,
it is common for firms from LC cultures to insist that formal contracts be signed that bind
each party to very specific details of the agreement.

However, signing a contract is sometimes resisted in HC cultures. Or, if a contract is signed,

it is not seen as written in stone but continually negotiable.
●​ Instead, they hope that the ties that they spent so much time building and
strengthening in the earlier stages of the process will now pay off. The hope is that
the general trust established in the non-task-sounding stage will allow a much more
general agreement to be operational for each part.