Information Theory Quiz

Negotiating in Management and Business

• Distributive negotiations involve opposing preferences, where one party's gain is the other's loss.
• The goal is maximizing individual gain ("slicing the pie").
• Integrative negotiations involve common interests, aiming for maximizing both individual and joint gain ("increasing the pie").

Distributive Negotiation Strategies

• Improve your BATNA (Best Alternative to a Negotiated Agreement):
  • Generate new alternatives.
  • Improve the value of existing alternatives.
  • Increase certainty for probabilistic alternatives.
• Ambitious first offers:
  • Sets the tone (frames the discussion).
  • Anchors the opponent (influences their expectations).
  • Explains a large portion of outcome variance.
• Precise offers:
  • Precision increases anchor potency.
  • Negotiators with precise offers generally perform better.
• Use qualitative anchors:
  • Qualities (e.g., product defects) can anchor perceptions.
  • Highlight positive or negative qualities to influence outcomes.
• Decreasing concessions:
  • Gradual concessions communicate seriousness for reaching bottom line.
  • Some dealmakers use a 25-10-5 model.

Negotiating from a position of low power

• Make the other party smaller:
  • Diversify business across multiple counterparts.
  • Diversify across different parties within your counterpart.
• Make yourself bigger:
  • Build coalitions with other entities.
  • Use deals in sequence to build momentum, credibility, etc.

Example: When not to move first (1/2)

• In 1963, United Artists offered The Beatles' manager Brian Epstein $25,000 upfront and then asked for his view about a suitable percentage of profits for a low-budget movie.
• Epstein asserted they needed 7.5% of profits.
• The movie became a success. United Artists had been willing to offer up to 25%.

Example: When not to move first (2/2)

• Let the other party move first:
  • If the negotiator lacks knowledge on the matter.
• Build expertise and do homework:
  • Research past movie deals with other bands
• Play hard to get:
  • E.g., playing a reluctant buyer

Integrative Negotiations

• Delay first offers:
  • Allows for the discovery of creative agreements.
  • Reduces focus on fixed positions.
• Take the other party's perspective:
  • Empathy and perspective-taking can lead to better results.
• Build trust:
  • Being likable (emphasizing commonalities).
  • Being vulnerable (sharing information).
• Ask questions:
  • Reveals priorities.
  • Strengthens liking.

Complex Negotiations

• Logrolling: Trade-off issues with different values to each party.
• Post-settlement settlement: Exploring additional deals after a deal is agreed to.
• MESOs (Multiple Equivalent Simultaneous Offers): Multiple offers of similar value to anchor the opponent, signal flexibility and reveal preferences.
• Scoorring systems: Quantifying possible outcomes by assigning weights to satisfaction/utility.

Negotiation in Teams

• Identify issues, define your BATNA, worst- and best-case scenarios.
• Decide on team procedures for meetings.
• Clarify facts and information.
• Develop a "Positions and Interests" chart; set priorities.
• Define team roles: Lead negotiator, Number cruncher, Note taker, Good cop/bad cop.
• Use rectangular or circular setups for team meetings dependent on goals.
• Rectangular tables are better for competitive situations while circular tables are better for cooperative situations.

Negotiating in a Global Context

• Culture is like an iceberg (much is unseen).
• Relevant dimensions to consider include: self-interest, communication styles, hierarchies, disagreement approaches, and scheduling.
• Create your own culture map for yourself and your counterpart.
• Be aware of cultural stereotypes.
• Use diverse communication channels for international negotiation

Communicating virtually

• Communication channels matter (synchronicity / social bandwidth).
• Use appropriate channels for the negotiation, participants' needs, etc.
• Be conscious of potential miscommunication with virtual negotiation channels.

Dispute Resolution

• A dispute arises when a claim is made and rejected, not just an exchange of resources.
• Characteristics: high emotions, possibly no bad intentions, and linked BATNAs
• Model of dispute resolution considers interests, rights, and power as interdependent factors.
• Effective dispute resolution focuses on interests first, using rights and power as backup.
• To address disputes, use an approach that balances power, rights, and interests.

Test your understanding of the implications of lacking information and the dynamics between information and knowledge. Explore how insufficient data influences decision-making and the role of misinformation in discussions.