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Distributive Negotiation

Distributive Negotiation

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Distributive Negotiation

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  1. Distributive Negotiation • Single issue • Your loss is my gain

  2. Slicing the Pie • How do you get the biggest piece? • Preparation • Offers • Alternatives • Concessions

  3. Offers • Folklore says to let the other party make the first offer • Is that a good idea? • Anchoring • People tend to focus heavily on the first offer • First offer correlates .85 with the final price

  4. Offers (continued) • What if the other party makes the first offer? • Immediate counteroffer • Take away the psychic hold of the 1st offer

  5. First Offers (continued) • How do you feel when the other party accepts your first offer? • I should have asked for more • Maybe I just got into a bad deal • Less satisfaction • Do not accept first offers • They are just that – an opener • Expectation to negotiate

  6. BATNA • Best Alternative to a Negotiated Agreement • The lowest acceptable value to an individual for a negotiated agreement • Develop alternatives so you know at what point to stop negotiating • Gives you the POWER to walk away • If we cannot receive an offer of X-amount for the house, then what will you do? • Rent it out?

  7. What’s your bottom line? • “Tell me the bare minimum you would accept and I’ll try and throw in something extra” • “Why don’t you tell me the very maximum you are willing to pay, and I’ll try and I’ll see if I can shave off a bit”

  8. Concessions • Need some cushion (Target price versus reservation price) • Make the first concession • Why? • Norm of reciprocity • Positive feelings • Magnitude of concessions • Less and less to signal you are reaching the end