negotiation subprocesses
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Negotiation Subprocesses. By Carolina Eder Annalena Koehler Anton Hristov Vilhelm Öhrn. Negotiation. Everyone uses negotiation in day to day life. Negotiation is a process in which a group or involved parties resolve matters, by discussing and coming to an agreement. - PowerPoint PPT PresentationTRANSCRIPT
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By Carolina EderAnnalena Koehler
Anton Hristov Vilhelm Öhrn
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Everyone uses negotiation in day to day life. Negotiation is a process in which a group or
involved parties resolve matters, by discussing and coming to an agreement.
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To analyze negotiation rationally the negotiator has to understand the psychological forces which have a big impact on the negotiator´s effectiveness.
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Structure problems Processes information Frame the situation
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Situation adapted from Russo and Schoemaker
Difference between the two situations Actually for both it should be worth it to
invest the same amount of time First Scenario – Very Good deal Second Scenario – Not that attractive
◦ Frame represents percentage of discount
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Situation Richard Thaler Content In both versions, the result is the same. No negotiation with the seller Percentage of elasticity of the demand of
the product Frame – high cost is expected at hotel
High cost is considered “rip-off” in the store
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Those two examples show how importantframing is to solve problems and makeDecisions
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Framing potential gains or potential losses Framed either as “gains” or “losses”
◦ Gains of similar value – prefer certainty over lottery
◦ Losses of sim. Value – prefer lottery over certainty
Example : $3500 gain considered a loss◦ Personal goal was a $5000 increase◦ Frame based on available information
(info not known – average raise = $2000)
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Crucial in forming the Frame
◦ Basis for evaluating if option is a gain or loss
◦ Determine our willingness to accept/reject an option
◦ It is a result of our expectations
◦ Usually what we own is our automatic reference point
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“Buyer” and “Seller” have different reference points◦ Seller – personal attachment to the object he owns◦ Values this attachment, therefore puts higher value◦ Buyer is not attached, he estimates a lower value
for an object
Ex: Coffee Mug priced from $.50 to $.9.50◦ Sellers - $7.12◦ Buyer – $2.88 (closer to market value)◦ Chooser - $3.12 (get $ or mug, no buying/selling)
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Strategically manipulate framing to direct negotiation performance
Framing the options in terms of potential gain
◦ Situation perceived as more favorable
Same option Framed in terms of losses
◦ Lower chance of a favorable perception
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