1. Buying a car
2. Buying, selling a house
3. Job offer: salary and working conditions
1. BATNA: best alternative to a negotiated agreement.
Reservation point: point at which no deal is acceptable.
Bargaining zone: position between reservation points.
2. Each party's interests.
3. Relative importance of each party's interests.
1. Build trust and share information
2. Ask questions, e.g. discovery in law
3. Give away information
4. Make multiple different offers
- avoid anchoring
Mythical fixed pie.
Tendency in negotiation to assume that your interests completely conflict with the other party's interests.
Framing in negotiation.
Tendency to distort negotiation by framing in terms of gains and losses.
Nonrational escalation of conflict.
Tendency to make increasingly extreme demands on the other party rather than seeking a settlement.
Tendency to overestimate the strength of your own negotiating position.
Neglecting the cognitions of others.
Tendency to focus on your own interests and forget about the interests and plans of the other party.
1. Start with and maintain a non-prejudicial attitude and be unemotional.
2. Gather as much information as possible.
3. Analyze information carefully and thoroughly.
4. Be flexible and creative during negotiations, accommodating new information on the spot.
5. Take the advice of professional advisors who understand the negotiation and who are not so emotionally involved as you are.
(Bazerman, Judgment in Managerial Decision Making, ch. 6)
People in different contexts care about all of these, and the last 3 can swamp considerations of expected value.
1. Airplane offer: $5,000. A splits, B accepts or rejects.
What do you do if A says 4900/100?
People will reject an unfair offer even if they gain from it.
2. Compare a job where you get a good salary, but less than others.
3. People resent a hardware storethat raises prices of shovels after snowstorm.
Many people are concerned to maximize fairness, not just personal gain. People are social animals, and are capable of altruism, not just egoism.
Neglect of fairness considerations might not be considered an error tendency by individualists.
Tendency to ignore issues of fairness and concern for others.
Tendency in competitive bidding for the winner to pay too high a price.
E.g. baseball teams paying highest salaries not getting their money's worth.
Tendency for individuals in groups to produce riskier decisions than would the individuals alone.
E.g. teenagers driving crazy to impress each other.
Tragedy of the commons:
Tendency for pursuit of individual goals to lead to depletion of shared resources.
E.g. fishers depleting fish stock until everyone is out of business.
Failure to cooperate:
Tendency to maximize individual interests instead of cooperating with others.
E.g. management and union jointly running a
company into the ground.
Adversarial problem solving (APS) is problem solving that depends on dealing with an opponent.
See Thagard, P. (1992). Adversarial problem solving: Modelling an opponent using explanatory coherence. Cognitive Science, 16, 123-149.
1. military strategy: need to know the enemy
2. business: need to know what your competitors are thinking. Also negotiation.
3. games: chess, poker (e.g. bluffing)
4. other interpersonal situations
1. Construct model of O, your opponent.
2. Include O's model of you.
3. Infer O's plans.
4. Infer O's likely actions.
5. Decide, using your model of O, yourself, and the environment.
6. Try to surprise O.
7. Conceal your plans from O and use deception.
In practice, people often neglect the cognitions of their opponents.
1. Represent general information and cases about O.
2. Use rules and cases to form hypotheses about O:
inference to the best explanation, analogical reasoning
Updated March 24, 2003
Back to Phil 145.