Getting (More of) What You Want©

Creating and Claiming Value Debriefing New Recruit

Margaret A. NealeAdams Distinguished Professor of Management

April, 2018

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Structure of Negotiation• Distributive

– Win/lose– Maximize own gains– Adversarial– Short-term– Single issue

• Integrative– Win/win– Maximize joint gains– Convergent– Long-term– Multiple issues

• Congruent

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Congruent Value: Strategies and Considerations• Myth of the fixed pie.

Select goal-maximizing strategies.Maximize monetary valueMaximize relational value

• One cost of making the first offer: Losing the advantage of identifying congruent issues

Making the First Offer

So when you have the choice, do you prefer to receive the first offer or to make the first offer?

Some Folks Have Strong Opinions

“She who speaks first is lost” (Chester Karass "In business, you don't get what you deserve; you get what you negotiate...” and my real estate agent)

How Do You Decide?Two competing effects

Galinsky, A. D., & Mussweiler, T. (2001). First offers as anchors: The role of perspective-taking and negotiator focus. Journal of personality and social psychology, 81(4), 657-669.

1) Receiving: Information asymmetry Counterpart may value the issue at a much

different metric than you. Counterpart may make a mistake

2) Making: Anchoring The power of anchoring Focusing the “other” on their reservation

price

When You Make the First Offer, What Do You Want Your Counterpart to Do?

To get the most out of your first offer, you want your offer to be:a. Accepted b. Rejectedc. Countered

Galinsky, A. D., Seiden, V. L., Kim, P. H., & Medvec, V. H. (2002). The dissatisfaction of having your first offer accepted: The role of counterfactual thinking in negotiations. Personality and Social Psychology Bulletin, 28(2), 271-283.

You Certainly Don’t Want it Rejected?Where do you want your first offer to be? Just this side of crazy!

How do you know where crazy is? Preparation – from whose perspective? Justification – can you move the

boundary?

And what if you misjudge the line? Negotiating against yourself

Galinsky, A. D., Ku, G., & Mussweiler, T. (2009). To start low or to start high? the case of auctions versus negotiations. Current Directions in Psychological Science, 18(6), 357-361.

The Power and Value of a Justification

• May I use the copy machine?• May I use the copy machine because I am 

in a rush?• May I use the copy machine because I 

need to make copies?

Compliance in the Copy Line

Langer, E. J., Blank, A., & Chanowitz, B. (1978). The mindlessness of ostensibly thoughtful action: The role of placebic information in interpersonal interaction. Journal of personality and social psychology, 36(6), 635.

The Power and Value of a Justification

• Their presence is sometimes more powerful than their quality.

• More powerful the more objective they appear when scrutinized

• Mitigate a counterpart’s resistance to unexpected behaviors – explaining why helps.

• Increase the anchoring power of an offer

Do You Want Your First Offer Accepted?

Getting your first offer accepted can be a problem: How do you feel when it happens?

What do you think about your offer?

Galinsky, A. D., Seiden, V. L., Kim, P. H., & Medvec, V. H. (2002). The dissatisfaction of having your first offer accepted: The role of counterfactual thinking in negotiations. Personality and Social Psychology Bulletin, 28(2), 271-283.

How Do You Make This Decision?• Social roles often determine who makes the

first offer.• When you have the choice, figure out where

your greatest comparative advantage lies- If you are well-prepared, you may

choose to receive the first offer (small anchoring effect, large informational effect).

Neale, MA, & Lys, TZ (2015) Getting (More of) What You Want: How the secrets of economics and psychology can help you negotiate anything, in business and in life. New York: Basic Books.

If you are both well-prepared, make the first offer: you may capture whatever uncertainty exists.

When You Are Not Prepared…WHAT ARE YOU DOING NEGOTIATING AND NOT BEING PREPARED??

In this situation when you receive the first offer, you are more strongly affected by the anchor.

In this situation when you make the first offer, you are more likely to make an error that can benefit the other side.  

But if you must . . .• Make the first offer• And make it extreme 

Gunia, B.C., Swaab R.I., Sivanathan, N., & Galinsky, A.D.  (2013).  The remarkable robustness of the first‐offer effect:  Across culture, Power, and Issues.  Personality and Social Psychology  Bulletin, 1.

Feeling good or getting more?

Galinsky, A. D., Mussweiler, T., & Medvec, V. H. (2002). Disconnecting outcomes and evaluations: the role of negotiator focus. Journal of personality and social psychology, 83(5), 1131.

Reservation Prices

• Reservation price is a bright-line standard between agreement and impasse– Should you reveal your ‘bottom line’?

• When your counterpart tells you her bottom line, how do you believe her?

• Revealing your true reservation price increases the likelihood of impasse.– And it is the person to whom the reservation price is

revealed who is more likely to walk away!

White, S. B., & Neale, M. A. (1994). The role of negotiator aspirations and settlement expectancies in bargaining outcomes. Organizational Behavior and Human Decision Processes.

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Claiming Value: Strategies and Considerations

• Know your alternative and your bottom line or reservation price (RP) – and honor them.

• Set aspiration levels that are significantly and optimistically better than your RP

• Use “objective” standards to justify your positions – Watch out for the “fair” strategy

• Don’t negotiate against yourself

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Creating Value: Strategies and Considerations• Claiming value is still in play

– Analyze own & other’s RP– Know your own & other’s alternatives

• Set priorities on your interests (and other’s)• Make proposals incorporating all issues

– Avoid solving the easy issues first• Use the negotiation itself to supplement and verify your

knowledge of the other.– Ask questions

Creating Value:The Power of Packaging• Negotiating each issue separately

– Reinforces zero-sum thinking– Is perceived as easier – but is, in fact, more

difficult– Emphasizes the “midpoint” as a focal solution

• For a split-the-difference strategy to be reasonable requires– Parties value the issues identically (and

oppositely)– Parties’ offers are equally distant from their

reservation prices

Creating Value:The Power of Packaging• Make proposals incorporating all issues

– Avoid solving-the-easy-issues-first – Use if-then language to yoke

concessions across issues• If the issues were too complex or numerous,

create multi-issue chunks.– Tentatively agree to each chunk– Revisit to make sure that chunks

make sense in the aggregate.Herbst, U., Hemmerling, B., & Neale M. (in press) All in, one-at-a-time or somewhere in the middle? Leveraging the composition and size of the negotiating package. Journal of Business and Industrial Marketing.

Three Ways to Enhance Your Negotiating Fluency

• Set Expectations• Provide Justifications• Negotiate Packages

If you want to know more . . . • Babcock, L., and Laschever, S. (2009). Ask for it: How women can use the power of

negotiation to get what they really want. Random House LLC.

• Cialdini, R. B. (2009). Influence. New York: Harper Collins or more recently: Cialdini, R. (2016).Pre-suasion. New York: Simon and Schuster. Martin, Goldstein, & Cialdini(2014), The Small Big. New York: Grand Central Publishing.

• Neale, M.A. and Lys, T.Z. (2015) Getting More of What You Want: How the secrets of economics and psychology can help you negotiate anything, in business and in life. New York: Basic Books

• Explore my website gettingmoreofwhatyouwant.com for video clips, blog posts, and articles.

• More extensive negotiation training can be had at– Stanford Innovation and Entrepreneurship Certificate – Negotiation: How to Get (More of) What You Want (online course)

http://create.stanford.edu/courses/negotiating.php– Stanford LEAD: Corporate Innovation – Getting (More of) What You Want (online course) http://www.gsb.stanford.edu/exed/lead

– Influence and Negotiation Strategies Program (residential executive program) http://www.gsb.stanford.edu/exed/insp/