Negotiation

Steven Guest
Steven.guest@esade.edu

1
BBA | Negotiation | 2020/2021
 Negotiation
Session 6|. Multiparty and shocks and
rumours

2
BBA | Negotiation | 2020/2021
In-Class Negotiation
Aussie Air
Slides with thanks to Jordi Quoidbach
 Aussie Air
— Instructions —
• 3 Meetings
Final agreement can only be reached in the third meeting
• Conditions for a deal:
Must DUA and ASS must agree on a share price
The government’s ownership requirements must be satisfied (automatic)
• Stakeholders
Any agreement should state these two conditions + OTHER provisions
Can choose to sign or withhold support from the agreement.
If a stakeholder does not sign, the remaining parties are free to establish
terms as they see fit.
Aussie Air
— Interests & RVs —
DUA AAS MGT UNION GOV

High if job is
Price Low High High high Low
Low if job is low

Jobs Low High High High High

Mgt Contract Low Neutral High High High

Sickout No No No Yes No

Buy from Sell at market Resign and

BATNA Sickout Delay
Bill Long price cashout

RV 450 290 500 600 400

Least Most
Important Important
Aussie Air
— Solutions —
 Strengthening coalitions

• A coalition can gain strength by

• making the value of joining clear to other parties
• making the costs of not joining even clearer (loss
aversion)
• building interpersonal relationships that go beyond the
issues being addressed (trust)
• inviting parties to join who have a reputation for keeping
commitments
 Aussie Air — Shocks and Rumors —
• New information
Fact: DUA has an improved BATNA: can buy 15% of shares from
3rd party at $6
Rumor: ASS get independent analyses valuing shares from $5.54 to
6.26 (better BATNA)
Rumor Management learns DUA is considering hiring the current
CEO of Blue Jet (more interested in the deal)
Rumor: Union learns that DUA started taking with Malaysian firm for
maintenance (higher RV)
Rumor: Government gains « credible information » about an
outsourcing maintenance deal (higher RV)
Asking Questions
— Probing vs. Open-ended—

Probing Open-ended

Are you making a deal with the What are your plans regarding
CEO of Blue Jet? management after the take-over?
Confront Build trust
Detect lies Discover interests
Speed things up Slow things down

But...Confirmation Bias But...Lies

But... Power Dynamics But... Loss of Control
 Asking Questions
— Disconfirming Questions—

Disconfirming questions can dramatically improve the

quality of information we collect
Participants played sellers.
Goal: Negotiate the price of their iPod, which had frozen
up several times in the past.
The buyers (researchers), tried three different kinds of
questions:
“What can you tell me about it?” 8%
“It doesn’t have any problems, does it?” 61%
“What problems does it have?”
89%
Aussie Air
— Shocks and Rumors —
• New information
Fact: DUA has an improved BATNA: can buy 15% of shares from 3rd party at $6
Rumor: ASS get independent analyses valuing shares from $5.54 to 6.26 (better
BATNA)
Rumor Management learns DUA is considering hiring the current CEO of Blue Jet
(more interested in the deal)
Rumor: Union learns that DUA started taking with Malaysian firm for
maintenance (higher RV)
Rumor: Government gains « credible information » about an outsourcing maintenance
deal (higher RV)

Did the new information make you question your coalition?

The role of relationship and trust-building

Did the new information make you change your strategy?

Make sure you keep some flexibility. Don’t commit too soon

The probability of new information emerging rises with time (as does the possibility of positive or
negative implications for the parties)
 The Essence of Dynamic Simulations

•New facts (including game-changing facts that we call

“shocks”),
•New understanding of the negotiators’ roles and relationships
•New understanding of the other parties’ interests or
constraints,
•New understanding of one’s own interests or constraints
Aussie air
1. the dynamic nature of the social context in most negotiation situations;
2. the need for negotiators to update their plans throughout the negotiation
process to account for these changing contextual factors (e.g.,
assumptions, interests, relationships between parties); and
3. the ways in which coalitions offer a natural environment for shifting
(dynamic) social contexts.

Max Bazerman and Michael Watkins (2004) “expected unexpectedness.”

Adaptive Thinking for “Shocks and
Rumors” in dynamic scenarios
• “RPM process”: recognition,
prioritization,
mobilization
• BUT

• Psychological Vulnerabilities. - Self serving biases and

confirmation bias, escalation of commitment, overconfidence,
status quo bias
• Organizational Vulnerabilities. - Unique information
• Political Vulnerabilities. – Networks
• SOLUTION - scenario planning and risk assessment

Predictable Surprises: The Disasters You Should Have Seen Coming (Michael D. Watkins, Max H. Bazerman)