• BATNAs are not wishful, they are factual. • Your BATNA is time sensitive. • Do not let the other party manipulate your
BATNA. • Negotiators should be willing to accept any set
of terms superior to their BATNA.
2-7
Self-Assessment: What Is My Reservation Point?
You can determine your reservation point, or the quantification of your BATNA, with respect to other alternatives by the following steps:
• In negotiation, immediate acceptance of a first offer by the counterparty often means a better outcome for the proposing negotiator, but the outcome is less satisfying.
People with this fixed-pie perception take one of three mindsets when preparing for a negotiation:
• Resign themselves to capitulating to the counterparty
• BATNA risk: given BATNAs of equal expected value, the more risk-averse negotiator will be in a weaker bargaining position
• Contractual risk: refers to the risk associated with the willingness of the other party to honor its terms
• Brainstorm your alternatives. • Evaluate and order each alternative’s value. • Attempt to improve your BATNA. • Determine your reservation price based on facts. • See Exhibit 2-1.
It is commonly assumed that concessions are necessary by one or both parties to reach an agreement. The fixed-pie perception is almost always wrong and often leads to an ineffective approach to negotiations.
2-12
Self-Assessment: Am I Going to Regret This?
An important component in determining whether a person experiences regret is counterfactual thinking, or “what might have been.”
2-1
Part One The Essentials of Negotiation
— Chapter 2 — Preparation:
What to Do Before Negotiation
2-2
The Fixed-Pie Perception
Most negotiators believe whatever is good for one party must be bad for the counterparty.
• The paradox of this situation is that no matter what happens, people choose to do the same thing (a.k.a., the sure thing principle).
• Violations of the sure thing principle are rooted in the reasons people use to make their decisions.
2-4
Mixed-Motive Decision-Making: A more effective and accurate model
A more accurate model of negotiation is to approach it as a mixed-motive decision-making enterprise involving both cooperation and competition.
2-11
Self-Assessment: Endowment Effects
Differences in negotiators’ reference points may lead buyers and sellers to have different valuations for the same object
2-8
Self-Assessment: Setting Up The Negotiation
When determining your reservation point, be aware and knowledgeable of the following:
• Be aware of focal points. • Beware of sunk costs. • Do not confuse your target point with your
2-10
Self-Assessment: Assess Your Risk Propensity
In any negotiation, negotiators should consider the differential impact of three sources of risk:
• Strategic risk: refers to the riskiness of the tactics that negotiators use at the bargaining table
• Prepare for hard bargaining with the counterparty
• Compromise in an attempt to reach a midpoint between opposing demands
2-3
The Fixed-Pie Perception
Effective preparation for a negotiation encompasses three general abilities:
• Self-assessment • Assessment of the counterparty • Assessment of the situation
• In the presence of uncertainty, people may be reluctant to think through the implications of each outcome.
2-14
Self-Assessment: Assessing Co about an event occurring, people are reluctant to make decisions and will delay decisions until the uncertain event is known.
• Overaspiring or positional negotiator • The grass-is-greener negotiator
2-6
Self-Assessment: What Is My BATNA?
What is my Best Alternative To a Negotiated Agreement in this situation (your BATNA)?
• Thinking about what might have been, but did not occur, may be a reference point for the psychological evaluation of actual outcomes.
2-13
Self-Assessment: Sure Thing Principle
2-5
Self-Assessment: What Do I Want?
Identifying what you want may sound straightforward, but three major problems often arise:
• Underaspiring negotiator (the Winner’s Curse)
• Someone who possesses an object has a reference point that reflects his or her current endowment, or private valuation, of the object.
• The difference between what sellers demand and what buyers are willing to pay is a manifestation of loss-aversion.