Games people play: negotiations

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GAMES PEOPLE PLAY: NEGOTIATIONS

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D1 D2 DISCUSSION D4 Dn D3 D5 SOLUTION

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● Game simulates real life ● Includes 5 elements: Players = decision makers Strategies available Rules Outcomes Payoffs

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DISTRIBUTIVE Involve win-lose, fixed-amount situations wherein one party’s gain is another party’s loss INTEGRATIVE Involve joint problem solving to achieve results benefiting both parties which can lead to win-win or lose-lose outcome

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BATNA Reservation Price ZOPA Value Creation

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Best Alternative to a Negotiated Agreement (BATNA) Typical example: negotiate or go to court Improving your situation Improve your BATNA Identify the other side’s BATNA Weaken the other party’s BATNA

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The least favorable point at which one will accept a deal The “walk-away” Example: you are looking for larger office space. You set your BATNA at $20/SF and your Reservation Price at 30$/SF

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Zone of Possible Agreement (ZOPA). The difference between the Seller’s Reservation Price and the Buyer’s Reservation Price ZOPA 250$ 275$ Seller’s Reservation Price Buyer’s Reservation Price

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What will happen if we change points of buyer’s and seller’s reservation price? 250$ 275$ Seller’s Reservation Price Buyer’s Reservation Price

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Create value = enlarge the pie Basic principles: Seek out shared interests Propose mutually beneficial trades Secure insecure contracts

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Objectives What is involved? (+extremes) Goals of opposition NOT the costs => what is VALUABLE

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confidence and power keep the negotiation in your control aim as high as you feel necessary remain flexible know your business

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Write down the terms Discourage the other side from seeking further concessions Be happy =)

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THANK YOU FOR YOUR ATTENTION!