Negotiation outcome controlled by what each party thinks the other party is willing to settle uponThe party’s pre-negotiation belief about the other party’s bottom line is the reason the parties attempt to signal both their true and their false bottom linesSignaling a false bottom line is an attempt to obtain a better outcomeSignaling a true bottom line is an attempt to assure agreement will occur.
INFLUCENCE OF ANCHORS AND FRAMINGWhen asked to estimate damages in a hypothetical personal injury action, one group of trial judges were first asked to decide a motion described as frivolous to dismiss the action on the ground that Plaintiff could not meet the $75,000 jurisdictional limit. The other half were provided with no materials suggesting any amount in controversy. The judges given the $75,000 “anchor” awarded nearly $400,000 less to the Plaintiff than those forced to assess damages without a suggested damage figure. Guthrie, Rachlinski and Wistrich, Inside the Judicial Mind, 86 Cornell Law Review 777 (2001)Researches have found that random numbers also effect valuations.Framing: How long was the movie?199 minutesHow short was the movie?130 minutesHow tall was the basketball player79 inchesHow short was the basketball player?69 inches
DRI Women Lawyers' Success Negotiation Seminar Part Three
Creating Value• Compatibility (identifying issues for which parties don’t have a conflict of interest)• logrolling, or trading off concessions on low- priority issues for gains on higher priority issues• Trading differential time preferences, or allocating more initial outcomes to the more impatient party and greater profits over a longer period to the more patient party• Adding issues, or adding to the agreement issues not inherent in the initial negotiation framework
Cognitive BiasesWhy do we care? Because your belief about your bargainingpartner’s bottom line and his belief about yours will exert adisproportionate degree of influence on the deal eventually negotiated.
• Judges estimating damages • People estimating The height, number,Statistics duration • Frame/spin – $$$$ – Loss/gain – Positional weaknesses/strengths – Characteristics affecting value
Are they liars, cheats and thieves or do they have hidden interests. – Personal (unrelated to you or deal) – Relational (related to you but not to deal, i.e., “face”) – Political, social, cultural
• Are they difficult or simply uninformed – Educate them about their true interests, consequences of their actions, our BATNA – Help them understand what is in their best interest – Determine whether they’ve misunderstood or ignored a crucial piece of information
Are they irrational or are they operating under hidden constraints – Institutional – Precedential – Promises to others • Hidden stakeholders – Deadlines
• Demonstrate that – you will not be victimized – You will be reasonable – You will not be driven by emotion• Solicit more information than you give• Tit for tat – Open with cooperation – Retaliate for lack of cooperation • cooperation in face of non- cooperation results in cycle of victimization • Refusal to forgive results in escalating cycle of retalitation – Be forgiving – Return to Cooperation
• Be conscious – Assume nothing – Guard vs. cognitive bias• Ask questions – Be curious – Be receptive – Be skeptical• Require cooperation – Name concessions – Demand reciprocity• Problem solve
• Reiterate terms• Or…recapture the main Close points, what’s left to resolve, and what’s needed to do so.• Set day/time to reconvene• End on hopeful note/congratulate both for progress made• Nibbling . . .