Games people play: negotiations

GAMES PEOPLE PLAY: NEGOTIATIONS

D1 D2 DISCUSSION D4 Dn D3 D5 SOLUTION

● Game simulates real life ● Includes 5 elements: Players = decision makers Strategies available Rules Outcomes Payoffs

DISTRIBUTIVE Involve win-lose, fixed-amount situations wherein one party’s gain is another party’s loss INTEGRATIVE Involve joint problem solving to achieve results benefiting both parties which can lead to win-win or lose-lose outcome

BATNA Reservation Price ZOPA Value Creation

Best Alternative to a Negotiated Agreement (BATNA) Typical example: negotiate or go to court Improving your situation Improve your BATNA Identify the other side’s BATNA Weaken the other party’s BATNA

The least favorable point at which one will accept a deal The “walk-away” Example: you are looking for larger office space. You set your BATNA at $20/SF and your Reservation Price at 30$/SF

Zone of Possible Agreement (ZOPA). The difference between the Seller’s Reservation Price and the Buyer’s Reservation Price ZOPA 250$ 275$ Seller’s Reservation Price Buyer’s Reservation Price

What will happen if we change points of buyer’s and seller’s reservation price? 250$ 275$ Seller’s Reservation Price Buyer’s Reservation Price

Create value = enlarge the pie Basic principles: Seek out shared interests Propose mutually beneficial trades Secure insecure contracts

Objectives What is involved? (+extremes) Goals of opposition NOT the costs => what is VALUABLE

confidence and power keep the negotiation in your control aim as high as you feel necessary remain flexible know your business

Write down the terms Discourage the other side from seeking further concessions Be happy =)

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