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Session 3,4-Salt Harbour Part A Analysis

The document discusses how anchoring, or the initial offer presented in a negotiation, has a powerful effect on the outcome as parties tend to make concessions relative to the anchor value rather than an objectively fair value. It also explores different lying tactics used in negotiations such as concealment, misdirection, and falsification of facts and the legal and reputational risks associated with using deception. Effective strategies to counter anchoring include separating information from influence and justifying offers with evidence rather than empty assertions.

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im master
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64 views27 pages

Session 3,4-Salt Harbour Part A Analysis

The document discusses how anchoring, or the initial offer presented in a negotiation, has a powerful effect on the outcome as parties tend to make concessions relative to the anchor value rather than an objectively fair value. It also explores different lying tactics used in negotiations such as concealment, misdirection, and falsification of facts and the legal and reputational risks associated with using deception. Effective strategies to counter anchoring include separating information from influence and justifying offers with evidence rather than empty assertions.

Uploaded by

im master
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Post Negotiation Poll analysis

discussions

Why some teams reached agreement as low as 100-120K


and some over 220K+ when total information for teams was identical?
Exercise

Why wide range when each Team has same info.?

People have different aspirations or targets?

Some gather more information than others?

Some are willing to risk impasse than others?

First offer influenced the outcome


Powerful effect of Anchoring (first offer) Poll FS-FO

$135K
Expert Gr estimate

$130K

$125K

$120K

$115K

$110K

$105K
A1
e1
e1 A2
e2
e2 A3
e3
e3 A4
e4
$119K $129K $139K $149K

Appropriate list price Anchor Value


Willingness to pay Source: Survey by Greg Northcraft and Margaret Neale
Poll – folding paper 50 times
Poll – folding paper 50 times

23 folds will get you to one kilometer—3,280 feet.


30 folds -Your paper will be now 100 kilometers high.
42 folds will get you to the Moon
The Two Systems

System1: Fast System2: Slow

Continuous Used only if


necessary

Fast but Efforts - solve


error prone complex
problems / Self
control
Shortcuts
Impulse Slow but
Intuition reliable

Daniel Kahneman (winner of the 2002


Nobel Memorial Prize in Economics)
Heuristic: cognitive shortcut for fast “good enough” decisions

Available Association and


information priming

Substitution
Ex: sample for Stories &
population Causes

Judgement Emotion
Ex: Confidence affect
level
SO_P Identify letter in place of “ _ “
If we are thinking about food we will fill in _ with “U” and relate to SOUP

If we are thinking about cleanliness we will fill in _ with “A” and relate to SOAP
Bias-”Error that may occur when we use heuristics for a decision”
Poll: Range of final settlement
Exercise
How do you counter Anchoring?

anchoring bias tendency to


give too much weight to the
first offer put forth in a
Negotiation

“Breath-taking isn’t it?


The seller wanted $5000
But I got it just for $4500
Extreme anchoring tactics

Buyer ZOPA range 9-11M Seller ZOPA range 10-12M

Lowballing Highballing
Some more hardball tactics..

Bogey- make non issue a issue


Intimidation- How do you deal with extreme aggressions?
175-
Expected Diminishing concessions
for subsequent offers
Price USD K

Parties may use strategy to exploit the expectation


Leveraging power of Justification
I: I believe 10% raise would be fair

II: …..because my performance over past 1 yr was exceptional

III: …because my performance over past 1yr has been exceptional.


Here are project performance reports that support my claim

Salary negotiation offer success


100

80

60

40

20

0
I. offer II. offer with Justification III. Offer with
Justification & evidence
Exercise

Strategy : Separating influence and Info.

Information Influence
Offer
X Y
Scenario 1 0 1
Scenario 2 0.5 0.5
We have spoken to other companies with whom we do
business. Hence We want you to lower price to ABC value

We have recd a better offer from company “A”. Hence We


would like you to lower your price to ABC value
Strategy : Separating influence and Info.

Information Influence
Offer
X Y
Scenario 1 0 1
Response options: Ignore offer (discuss other topic),
Aggressive counter offer-propose moderation

Scenario 2 0.5 0.5


Response options:
Re-evaluate your assumptions , seek more info.
Video Analysis Salt Harbor-Part A

3. How personalities
impacted negotiation?

4. Has any party falsified facts?

5. Other-Ex: New conflict areas


Should we Lie in Negotiation?
“Lies” Legal perspective

lie - a knowing misrepresentation of a material fact.

in an insurance fraud case, a material fact would relate to the


insurer's liability, policy, or coverage

•https://sloanreview.mit.edu/article/when-is-it-legal-to-lie-in-negotiations/
Ranbaxy Daiichi post negotiation “lie” legal battle
Negotiation “Lies” Legal perspective

No legal rule bounds the run of business interest.

No particular demand in negotiations could be termed dishonest.

It is best to walk away, not sue for “bad faith” in negotiations.

•https://sloanreview.mit.edu/article/when-is-it-legal-to-lie-in-negotiations/
Lying tactics in Negotiation

Concealment
(withhold / Hide info)

Half Concealment Tell truth falsely

Dodge -Incorrect
Misdirection inference

Falsification
(False info. As true)
Understanding deception
Which Lying technique is being used?

This is the
Is this the lowest price
lowest price we
you can sell to us?
ever sold the
product.
Buyer

Diff. views
Of data
Facial Expression
Hostile/Defensive Micro change, Don't blink
lie getting detected Look toward the door. ...

Evading Body language


Touch face/mouth/throat
•“Why you want to know?” Lie detection
•“That’s not important” Cues
Hot Spot Voice
“I am not angry” while Anxiety / nervousness
clenching jaw and raising voice change in voice pitch

Verbal content Verbal style


•“To tell you the truth” / “Believe me” Pause before answering
•“Let me be clear” / “The fact is” Repeat themselves
Consequences of lying in negotiation
Protecting A negotiator’s precious resource “Reputation”

Intrusive Question for strategic reasons you Move to


are not ready to discuss another topic

tempted to lie
about options that express your opinion, your
you don't have your optimism opportunities

"This is my
make more offers that Keep momentum
final offer" going but leave
contain smaller concessions room to move.

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