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Distributive Negotiation

Distributive Negotiation. Single issue Your loss is my gain. Slicing the Pie. How do you get the biggest piece? Preparation Offers Alternatives Concessions. Offers. Folklore says to let the other party make the first offer Is that a good idea? Anchoring

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Distributive Negotiation

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Presentation Transcript

  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

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