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NEGOTIATION RATIONALLY:
THE POWER AND IMPACT OF THE NEGOTIATOR’S FRAME
Juliane ArndtSebastian GaborAlexander
Shopov
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WHAT IS A NEGOTIATION?
How to improve negotiation skills:
Effective use of information about the issue
Being aware of the behaviour of the opponent
Make more rational decisions
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TIPS:
Psychological forces
Evaluate the opponents behaviour
General goal: Reaching good agreements, not only an
agreement
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FREQUENT PROBLEMS OF NEGOTIATORS
Framing
Prejudices
Usage of irrelevant information
Relying on readily available information
Being overconfident
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FRAMING
How does it influence?
Choosing the frame?
Case I You are in a store about to buy a new watch,
which cost $70. As you wait for the sales clerk, a friend of yours comes by and remarks that she has seen an identical watch on sale in another store two blocks away for $40. You know that the service and reliability of the other store are just as good as this one. Will you travel two blocks to save $30?
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CASE II
You are in a store about to buy a new video camera that costs $800. As you wait for the sales clerk, a friend of yours comes by and remarks that she has seen an identical camera on sale inn another store two blocks away for $770. You know that the service and reliability of the other store are just as good as this one. Will you travel two blocks to save the $30?
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ANALYSIS
Possibilities: First scenario: 90% of the managers would travel
two blocks Second scenario: only 50% would travel two
blocks Reasons:
$30 discount for $70 watch -> good deal ; $30 discount for $800 camera not such a good
deal
Case show importance of frames: we have to be aware of them in order to make good decisions
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FRAMING OF RISKY NEGOTIATIONS
Framing affects perception
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Subjective
gain from the current situation loss from the expected gain
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EXAMPLE
Employee is expecting a significant increase in salary.
He frames expectations to a raise of $5000. Because of the recession he receives only
$3500. However, the average salary increase was
$2000.
Depending on the frame: Gain : 3500 – 2000 = $1500 Loss: 5000 – 3500 = $1500
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REFERENT POINTS IN NEGOTIATING SALARY
1. Current salary
2. Company’s initial offer
3. The least one is willing to accept
4. The estimate of the most the company is
willing to pay
5. The initial salary request
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NEGOTIATION FRAMES
One can negotiate to:
Increase a gain Reduce a loss
Economically they are the same.
Positive negotiation leads to more closed deals!
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THE ENDOWMENT EFFECT
Owners change the relationship of the commodity
Higher value
Attachment is
formed
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EXAMPLE
Sellers = $7.12
Buyers = $3.12
Value of a
commodity is
subjective
Coffee Mug
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FRAMING
Organize information What’s positive for one party may be
negative for other Create positive frames – present different
perspectives
What the other side has to gain
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THANK YOU FOR YOUR ATTENTION !