Factors

Affecting
Negotiation
Types of Business Skills
 Decision Making &
Problem Solving
 Argumentation, critical
thinking
 Negotiation
• Planning
• Evaluating Performance
 Factors affecting Negotiations

Type of Relationship between parties

Type of Emotions

Perceptions of Parties Negotiation

Ability to Invent Options

Best Alternative to
Negotiated Agreement Bargaining Style
BATNA
 Negotiation

Ability to Invent Options

 What is Inventing Multiple Options
• Students orally give examples of negotiation
with multiple Options
– Car Sale Negotiation
– Salary Negotiation
– Union-Management Negotiation
• Expanding the pie or using multiple options
leads to win-win solutions
 Factors affecting Ability to Invent Options

Fixed Pie
Perceptions

Ability to
Pre-mature Invent Negotiation
judgments Options Outcome

Search for a
single answer
Fixed pie Ability to Negotiation
perception invent Outcome
options

What is Fixed Pie?

• Erroneous belief that negotiators’ interests are
directly opposed – gain for party A => loss for
party B
• E.g., married couple vacation plan (ski lodge or
luxury hotel)
Fixed pie Ability to Negotiation
perception invent Outcome
options

Studies supporting the link:

• When people believe that the gain made
by one party is a loss for the other party,
they are less likely to expand the pie
• E.g., salary / car sales negotiation
 Time Premature Ability to
pressure judgments invent options

Studies supporting the link:

• Premature judgments=commit to a course
of action & find it difficult to change that
course even if change could yield mutually
beneficial outcomes
• Time pressure increases premature
judgments, prevents use of new information
Search for Ability to Negotiation
single answer invent Outcome
options

Studies supporting the link:

• When negotiators translate their interests
into different constellations of offers
where each offer is equivalent to other
offers, then they are better able to
conceive of different types of outcomes
that would be equally acceptable and have
improved outcomes
 What affects the ability to invent options?

Fixed pie perceptions

• Belief that gain for one is loss for other
results in poorer joint outcomes
Time pressure
• Leads to commitment to a course of action
or not reacting to new information
resulting in poor outcomes
Search for a single answer
• Having multiple equivalent offers results in
better outcomes
 What’s next: How BATNA affects Negotiation

Ability to Invent Options

Negotiation

Type of Best Alternative to

Negotiated Agreement
BATNA
 What are BATNAs
• BATNA=best alternative to negotiated
agreement
– The alternative that negotiators can turn to if no
agreement is reached in negotiation
• Students orally give examples of BATNAs in
– Car Sale Negotiation
– Salary Negotiation
– Union-Management Negotiation
Type of Negotiation
Anchor point
BATNA Outcome

Studies supporting the link:

Negotiators agree to outcomes close to the

value of their BATNAs bec. BATNAs give
an anchor point
 Mid lecture point :
Three more factors affecting negotiation

Type of Relationship between parties

Type of Emotions

Perceptions of Parties Negotiation

Type of Negotiation Negotiation
Relationship Process Outcome
b/w parties

Studies supporting the link:

1. Friends are less competitive with each
other than they are with strangers

2. Friends are more willing to

compromise & fail to invent options for
mutual gain than are strangers
Type of Negotiation Negotiation
emotions Process Outcome

Studies supporting the link:

1. Happy negotiations are more
cooperative & identify options for greater
mutual gain

2. Negotiators are less demanding and

concede more with opponents who are
angry
Perceptions of Negotiation
Negotiation
negotiating Outcome
Process
parties

Studies supporting the link:

1. Negotiators perceive concessions made by

opponents as benefiting opponents and
therefore devalue those concessions
Perceptions of Negotiation
Negotiation
negotiating Outcome
Process
parties

Studies supporting the link:

2. When negotiators evaluate proposals not

knowing that opponents made those
proposals, they are more likely to perceive
such proposals positively
 How the three factors affect negotiation

1. Type of Relationship between parties

• Friends are more conceding, less competitive,
often resulting in less optimal mutually
beneficial outcomes
2. Type of Emotions
• Happy people are more cooperative and
identify mutually beneficial outcomes
3. Perceptions of Parties
• People ‘devalue’ offers proposed by the
‘other party’
 And finally….
How bargaining style affects negotiation
Type of Relationship between parties

Type of Emotions

Perceptions of Parties Negotiation

Ability to Invent Options

Type of BATNA
Bargaining Style
Two Personality Dimensions affecting negotiation

Extraversion Agreeableness

Negotiation Process & Outcomes

 What is extraversion & agreeableness

• Extraversion
– talkativeness
– assertiveness
– positive affect
• Agreeableness
– cooperative
– generous
Extraversion & Negotiation
Negotiation
Agreeableness Outcome
Process

Studies supporting the link:

Friendly, gregarious styles..

1. Less likely to claim resources at table
2. Were more susceptible to anchoring
effects due to other party’s extreme
first offers and therefore,
3. Obtained worse outcomes
 Recap

Type of Relationship between parties

Type of Emotions

Perceptions of Parties Negotiation

Ability to Invent Options

Type of BATNA
Bargaining Style