Negotiation
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- 13 Jun 2014
- Working Paper Summaries
Handshaking Promotes Cooperative Dealmaking
A simple handshake can have large consequences for a negotiation. In this paper the authors suggest that handshakes before negotiations—or the lack thereof—serve as subtle but critical indicators of negotiators' social motives. In particular, handshakes signal willingness to act cooperatively during negotiations. The authors propose and show through experiments that handshakes increase cooperative behaviors at the bargaining table and, as a result, influence outcomes in both integrative and distributive negotiations. Integrative negotiations are those in which parties' interests are neither completely opposed nor completely compatible, allowing negotiators to mutually benefit by making efficient trades. In contrast, distributive or "zero-sum" negotiations—in which the parties' interests are completely opposed—are characterized by a different set of strategies such as appearing firm and even lying about one's interests. Overall, these results contribute to research and scholarship on social motives. The work also has practical implications for the importance of building rapport in negotiation and conflicts more generally. Key concepts include: Simply shaking hands before negotiations can increase cooperation at the bargaining table. The social ritual of shaking hands can have positive effects even in antagonistic settings such as negotiations between parties in conflict. A simple everyday ritual such as a handshake can create positive outcomes not just for individuals, but for parties in conflict. Closed for comment; 0 Comment(s) posted.
- 01 May 2014
- Working Paper Summaries
Better Deals Through Level II Strategies: Advance Your Interests by Helping to Solve Their Internal Problems
While most of us focus on our own interests in negotiation, our counterparts are more likely to say "yes" to a proposal if it meets their interests. Frequently, their interests entail satisfying, or at least not annoying, their "behind the table" constituencies. These may include a boss, board, investor group, spouse, client, union membership, community group, NGO, political party, or the US Senate that must ratify the treaty that negotiators prepare on behalf of the President. The author of this paper argues that a potent barrier to success in negotiation is often the prospect that your or the other side's constituents will reject the deal. While most negotiators are highly sensitive to their own constituencies, they tend to pay far less attention to the other side's constituents: "that's their problem. Let them solve it." Yet one low-cost way for negotiators to advance their own interests can be help the other side solve its internal constituency problems—in a manner consistent with each both side's interests. Sophisticated negotiators have been amazingly inventive in coming up with practical and highly valuable approaches to this often‐unexplored challenge. This paper develops and illustrates several such approaches. Key concepts include: Many negotiators experience the effect of constituencies that must formally or informally approve an agreement. In negotiation, Level II challenges are the other side's internal or "behind-the-table" dilemmas. Even where Level II parties do not have formal ratification power, they may often facilitate the implementation of agreements that they like and effectively block those that they do not. Negotiators can meet their own interests by helping the other side resolve its Level II dilemmas. There are several categories of practical measures that negotiators can use to advance their own interests by focusing on the other side's Level II negotiations. Closed for comment; 0 Comment(s) posted.
- 07 Apr 2014
- Research & Ideas
Negotiation and All That Jazz
In his new book The Art of Negotiation, Michael Wheeler throws away the script to examine how master negotiators really get what they want. Open for comment; 2 Comment(s) posted.
- 07 Apr 2014
- Working Paper Summaries
Better Deals Through Level II Strategies: Advance Your Interests by Helping to Solve Their Internal Problems
While most of us focus on our own interests in negotiation, our counterparts are more likely to say "yes" to a proposal if it meets their interests. Frequently, their interests entail satisfying, or at least not annoying, their "behind the table" constituencies. These may include a boss, board, investor group, spouse, client, union membership, community group, NGO, political party, or the United States Senate that must ratify the treaty that negotiators prepare on behalf of the President. The author of this paper argues that a potent barrier to success in negotiation is often the prospect that your or the other side's constituents will reject the deal. While most negotiators are highly sensitive to their own constituencies, they tend to pay far less attention to the other side's constituents: "that's their problem. Let them solve it." Yet one low-cost way for negotiators to advance their own interests can be help the other side solve its internal constituency problems-in a manner consistent with each both side's interests. Sophisticated negotiators have been amazingly inventive in coming up with practical and highly valuable approaches to this often‐unexplored challenge. This paper develops and illustrates several such approaches. Key concepts include: Many negotiators experience the effect of constituencies that must formally or informally approve an agreement. In negotiation, Level II challenges are the other side's internal or "behind-the-table" dilemmas. Even where Level II parties do not have formal ratification power, they may often facilitate the implementation of agreements that they like and effectively block those that they do not. Negotiators can meet their own interests by helping the other side resolve its Level II dilemmas. There are several categories of practical measures that negotiators can use to advance their own interests by focusing on the other side's Level II negotiations. Closed for comment; 0 Comment(s) posted.
- 07 Apr 2014
- Research & Ideas
Excerpt: ‘The Art of Negotiation’
Great jazz musicians are a model for negotiators, says Michael Wheeler in his new book, The Art of Negotiation: How to Improvise Agreement in a Chaotic World. Creativity at the bargaining table starts with disruption of familiar routines and old assumptions. Open for comment; 0 Comment(s) posted.
- 13 May 2013
- Research & Ideas
How to Spot a Liar
Key linguistic cues can help reveal dishonesty during business negotiations, whether it's a flat-out lie or a deliberate omission of key information, according to research by Deepak Malhotra. Closed for comment; 55 Comment(s) posted.
- 04 Sep 2012
- Working Paper Summaries
Level II Negotiations: Helping the Other Side Meet Its ‘Behind the Table’ Challenges
Many situations make it important to productively synchronize "internal" with "external" negotiations. In fact, much research to date has focused on how each side can best manage its internal opposition to agreements negotiated "at the table." Often implicit in this research is the view that each side's leadership is best positioned to manage its own internal conflicts. Traditionally, a negotiator does this by 1) pressing for deal terms that will meet its internal objections, and 2) effectively "selling" the agreement to its key constituencies. However, James Sebenius argues that to achieve your own goals in negotiation it is also vital to understand all the ways in which you can help the other side with the its "behind-the-table" barriers (and vice versa). Independent of any altruistic motives, helping them to solve "their internal negotiation problem" is often the best way to get them to say yes to an agreement that is in your interest. To do this, negotiators should explicitly probe the full set of the other party's interests including the other side's interest in dealing effectively with its internal, behind-the-table challenges and conflicts. This requires you to deeply probe the context in which they are enmeshed: the web of favorable and opposing constituencies as well as their relationships, perceptions, sensitivities, and substantive interests. By way of a number of challenging case examples, this paper details a number of ways to develop this fuller understanding and to act effectively on it. Key concepts include: Each side can help the other side with its internal conflicts. One side can help the other side by, for example, the form of the negotiating process (to send a useful signal to constituencies); by avoiding (or making) statements that inflame (or mollify) the other side's internal opponents; by constructive actions at the bargaining table informed by knowledge of the other side's internal conflicts; by acting to directly affect the other side's internal situation; and so on. The term "Level II" comes from Robert Putnam (1988), who developed the concept of "two level games" in the context of diplomacy and domestic politics. In Putnam's conception, "Level I" games focus on traditional diplomatic agreements, while "Level II" games focus on the formal or informal domestic ratification of such agreements. Sebenius extends the meaning beyond diplomacy to focus on Level II domestic constituencies or other internal factions-whether in the public or private spheres-that can support or block "across the table" agreements. Level II factions frequently act on behalf of small but influential minority interests. Closed for comment; 0 Comment(s) posted.
- 12 Jul 2012
- Working Paper Summaries
Negotiation Processes As Sources of (And Solutions To) Interorganizational Conflict
Negotiations are often conceptualized as a means of managing or resolving conflict. Yet just as the process of negotiation may be a solution to conflict in some cases, it may be a source of conflict in others. This paper examines how contextual features within organizations affect negotiation processes and outcomes, and how these processes in turn become a source of or solution to interorganizational conflict. The authors argue that principals, agents, and teams face different sets of constraints and opportunities in negotiations. It is thus important to understand the link between unfolding interactions (the subject of considerable negotiation process research) and more macro features of organizations, such as formalization of roles, culture, or party representation. Key concepts include: Relational aspects of negotiation processes and outcomes are very important. Inter-organizational negotiations present choices regarding who will negotiate on behalf of the organization. Despite the critical resources at stake, little is known about the relative pros and cons of negotiating alone for one's own interests, sending an agent, or relying on a team. Constraints and opportunities center on three domains: (a) the knowledge and skills that parties bring to bear on the negotiation; (b) the potential development of cross-party identification, trust, or relational conflict; and (c) coordination and communication. Closed for comment; 0 Comment(s) posted.
- 10 Jul 2012
- Working Paper Summaries
Communicating Frames in Negotiations
Economists examining bargaining behavior and outcomes often disregard the complex role of communication, restrict interaction to offers and counteroffers, or study the mere presence of communication while ignoring or constraining its content. This paper asks: How and why does talk sometimes make bargaining more cooperative and other times make bargaining more competitive? The answer may depend on examining what is being communicated about the underlying purpose of the interaction. Kathleen L. McGinn and Markus Noth argue that the content of communication frames the bargaining situation and thus can help predict bargaining behavior and final agreements. Key concepts include: Notions about the nature of the interaction form the basis for bargaining behavior and the final terms of agreement or disagreement. Communication sets certain behavior in motion by signaling the fundamental nature of the interaction, i.e., the right thing to do. Communication shapes the shared understanding of the negotiation and this, in turn, shapes the admissible arguments and strategies. Closed for comment; 0 Comment(s) posted.
- 07 May 2012
- Research & Ideas
The Art of Haggling
When teaching negotiation skills, many educators now focus almost exclusively on an interest-based approach in which both parties openly collaborate to find a mutually satisfying solution. Michael Wheeler argues that it's important for students to realize that there's also a time and place for old-school haggling. Closed for comment; 16 Comment(s) posted.
- 28 Mar 2012
- Working Paper Summaries
When Performance Trumps Gender Bias: Joint versus Separate Evaluation
Gender-based discrimination in hiring, promotion, and job assignments is difficult to overcome. This paper suggests a new intervention aimed at avoiding biased assessments: an "evaluation nudge," in which employees are evaluated jointly rather than separately regarding their future performance. While joint evaluation is common for most hiring decisions, especially at the lower levels, it is rarely used when job assignments and promotions are being considered. The research shows that a joint-evaluation mode succeeds in helping employers choose based on past performance, irrespective of an employee's gender and the implicit stereotypes the employer may hold. While it is not always feasible to bundle promotion decisions and explicitly compare candidates, the research suggests that, whenever possible, joint evaluation would increase both efficiency and equality. Findings have implications for organizations that want to decrease the likelihood that hiring, promotion, and job-assignment decisions will be based on irrelevant criteria triggered by stereotypes. Key concepts include: In addition to being a profit-maximizing decision procedure, joint evaluation is also a fair mechanism, as it encourages judgments based on people's performance rather than their demographic characteristics. In experiments, employers tasked to choose an employee for future performance were influenced by the candidate's gender in cases where candidates were evaluated separately. In contrast, in joint evaluation, gender was irrelevant. Employers were significantly more likely to choose the higher- rather than the lower-performing employee. Companies concerned about discrimination in these phases of employment might choose to review how, for example, career-relevant jobs are assigned and how promotion decisions are made. Closed for comment; 0 Comment(s) posted.
- 21 Sep 2011
- Research & Ideas
Gender and Competition: What Companies Need to Know
Do women shy away from competition and thus hurt their careers? New research by Harvard's Kathleen L. McGinn, Iris Bohnet, and Pinar Fletcher suggests the answer is not black and white, and that employers need to understand the "genderness" of their work. Open for comment; 5 Comment(s) posted.
- 11 Jul 2011
- Research & Ideas
Non-competes Push Talent Away
California is among several states where non-compete agreements are essentially illegal. Is it a coincidence that so many inventors flock to Silicon Valley? New research by Lee Fleming, Matt Marx, and Jasjit Singh investigates whether there is a "brain drain" of talented engineers and scientists who leave states that allow non-competes and move to states that don't. Key concepts include: The research shows that inventors are leaving states that allow non-competes and moving to states that don't. The results are most pronounced among those inventors with the most patent citations—that is, those who are most productive, collaborative, and valuable to their firms. The researchers hope that their study will induce state legislators to consider regional rules regarding non-compete agreements. Open for comment; 8 Comment(s) posted.
- 19 May 2010
- Working Paper Summaries
The Job Market for New Economists: A Market Design Perspective
How should the most appropriate employers and job candidates find each other? Newly minted economists typically send applications to an average of 80 potential employers, and as a result, many employers receive hundreds of applications. It is extremely time-consuming to sort through all the applications, and as the process unfolds, there is a risk of coordination failure, in which employers and candidates who would be well-suited do not manage to create a match. In this paper, HBS professors Peter A. Coles and Alvin E. Roth and colleagues provide an overview of the market for new PhD economists and describe new mechanisms to improve the matching process. They conclude by discussing the emergence of platforms for transmitting job market information, and other design issues that may arise in the market for new economists. Key concepts include: Practical market design is often a response to particular problems. A new market design often leads the way to developing new knowledge. Two new mechanisms have facilitated matches. The first, a signaling service, allows job candidates to express interest to a limited number to potential employers prior to interviews at association meetings. The second mechanism, a web-based "scramble," reduces search costs and "thickens" the late part of the job market for candidates and employers still seeking a match. Closed for comment; 0 Comment(s) posted.
- 08 Mar 2010
- Sharpening Your Skills
Sharpening Your Skills: Successful Negotiation
Can you out-negotiate Wal-Mart? Can women overcome gender stereotypes to win equitable pay? Recent research from Harvard Business School looks at important factors to consider before sitting down at the bargaining table. Closed for comment; 0 Comment(s) posted.
- 14 Jan 2010
- Working Paper Summaries
Optimal Auction Design and Equilibrium Selection in Sponsored Search Auctions
Reserve prices may have an important impact on search advertising marketplaces. But the effect of reserve prices can be opaque, particularly because it is not always straightforward to compare "before" and "after" conditions. HBS professor Benjamin G. Edelman and Yahoo's Michael Schwarz use a pair of mathematical models to predict responses to reserve prices and understand which advertisers end up paying more. Key concepts include: A search engine's optimal reserve price is independent of the number of bidders and also independent of the rate at which click-through rate declines over positions. Most incremental revenue from setting reserve price optimally comes from the indirect effects on high bidders—not from the low bidder's direct effect, nor from indirect effects on other low bidders. This result may appear counter-intuitive because top bidders' large valuations place them, in an important sense, "furthest from" the reserve price. Closed for comment; 0 Comment(s) posted.
- 03 Dec 2009
- Working Paper Summaries
Walking the Talk in Multiparty Bargaining: An Experimental Investigation
Talk can unite, but it can also divide. In multiparty bargaining, communication can focus parties on a fair distribution of resources, but it can also focus parties on a competitive distribution of resources. As HBS professor Kathleen L. McGinn and coauthors Katherine L. Milkman and Markus Nöth show through experiments, at the onset of interaction the dominant logic in discussions—be it fairness or competition—strongly influences the equality of payoffs even in complex, full-information multiparty bargaining. Increases in the relative frequency of talk about fairness are associated with payoffs closer to an equal split. Talk about competitive reasoning has the opposite effect, driving payoffs away from an equal division, though these effects are less consistent than fairness talk effects. The researchers' results add critical insights to our understanding of the role of communication in multiparty bargaining. Key concepts include: In multiparty bargaining, as in two-party bargaining, communication may work in part through social awareness and in part by allowing players to threaten to walk away. Communicating the willingness to walk away, in conjunction with loss aversion by stronger players, may help weaker players convince stronger players to move toward a more equal split of the available surplus, but it also permits strong players to threaten weak players. In a competitive, multiparty game, communication may play a more nuanced role than observed in simpler bargaining contexts. Closed for comment; 0 Comment(s) posted.
- 26 Oct 2009
- Executive Education
The New Deal: Negotiauctions
Whether negotiating to purchase a company or a house, dealmaking is becoming more complex. Harvard Business School professor Guhan Subramanian sees a new form arising, part negotiation, part auction. Call it the negotiauction. Here's how to play the game. Key concepts include: In a negotiauction, the rules are never perfectly pinned down, which creates both opportunities and challenges. The three common negotiauction moves are set-up, rearranging, and shut-down. Negotiauctions help in the current economic downturn by providing a more nuanced mechanism and better outcome for both parties. Closed for comment; 0 Comment(s) posted.
- 20 Aug 2009
- Working Paper Summaries
A Decision-Making Perspective to Negotiation: A Review of the Past and a Look into the Future
The art and science of negotiation has evolved greatly over the past three decades, thanks to advances in the social sciences in collaboration with other disciplines and in tandem with the practical application of new ideas. In this paper, HBS doctoral student Chia-Jung Tsay and professor Max H. Bazerman review the recent past and highlight promising trends for the future of negotiation research. In the early 1980s, Cambridge, Massachusetts, was a hot spot on the negotiations front, as scholars from different disciplines began interacting in the exploration of exciting new concepts. The field took a big leap forward with the creation of the Program on Negotiation, an interdisciplinary, multicollege research center based at Harvard University. At the same time, Roger Fisher and William Ury's popular book Getting to Yes (1981) had a pronounced impact on how practitioners think about negotiations. On a more scholarly front, a related, yet profoundly different change began with the publication of HBS professor emeritus Howard Raiffa's book The Art and Science of Negotiation (1982), which for years to come transformed how researchers would think about and conduct empirical research. Key concepts include: Even as it has transitioned from decision analysis to behavioral decision research to social psychology, the decision perspective to negotiation has remained central to practitioners and academics alike, offering both practical relevance and the foundation for exciting new lines of research. Some of the most recent directions being pursued are surprises that early contributors to the decision perspective could have never predicted, as negotiation scholars engage with other disciplines and draw insights from diverse fields ranging from philosophy to neurobiology. Such collaboration is a healthy sign for an ongoing line of negotiation research. Closed for comment; 0 Comment(s) posted.
The Role of Emotions in Effective Negotiations
Andy Wasynczuk, a former negotiator for the New England Patriots, explores the sometimes intense role that emotions can play in negotiations. Closed for comment; 19 Comment(s) posted.