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New research on negotiation from Harvard Business School faculty on issues including negotiation strategy, style, and tactics.
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Gender and Competition: What Companies Need to Know

by Kim Girard

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; 0 Comments.

Non-competes Push Talent Away

by Carmen Nobel

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; 0 Comments.

The Job Market for New Economists: A Market Design Perspective

by Peter A. Coles, John Cawley, Phillip B. Levine, Muriel Niederle, Alvin E. Roth & John J. Siegfried

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 Comments.

Sharpening Your Skills: Successful Negotiation

by Staff

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 Comments.

Optimal Auction Design and Equilibrium Selection in Sponsored Search Auctions

by Benjamin G. Edelman & Michael Schwarz

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 Comments.

Walking the Talk in Multiparty Bargaining: An Experimental Investigation

by Kathleen L. McGinn, Katherine L. Milkman & Markus Nöth

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 Comments.

The New Deal: Negotiauctions

by Julia Hanna

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 Comments.

A Decision-Making Perspective to Negotiation: A Review of the Past and a Look into the Future

by Chia-Jung Tsay & Max H. Bazerman

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 Comments.

The Surprisingly Successful Marriages of Multinationals and Social Brands

by Sarah Jane Gilbert

What happens when small iconic brands associated with social values—think Ben & Jerry's—are acquired by large concerns—think Unilever? Can the marriage of a virtuous mouse and a wealthy elephant work to the benefit of both? Professors James E. Austin and Herman B. "Dutch" Leonard discuss their research. Closed for comment; 0 Comments.

Gender in Job Negotiations: A Two-Level Game

by Hannah Riley Bowles & Kathleen L. McGinn

The traditional division of labor between the sexes—women managing the private realm and men the public—continues to have an indirect influence on job negotiation outcomes through links between private realm and public realm negotiations. Women's negotiations at work are often constrained by agreements in negotiations at home. There still remains a significant "unexplained" difference in male and female compensation that, according to research in the past several years, cannot be accounted for by gender differences in work commitment, education, and experience, or other considerations such as unionization. The literature on gender in negotiation may offer insights with regard to how negotiation contributes to or could help diminish gender differences in compensation. Bowles and McGinn review two bodies of literature on gender in negotiation—one from psychology and organizational behavior on candidate-employer negotiations, and another from economics and sociology on household bargaining over chores and child care. Key concepts include: The traditional division of labor between the sexes—in which women managed the private realm and men the public—continues to have an indirect influence on job negotiation outcomes through gendered stereotypes feeding into gendered pay expectations. The effects of gender on job negotiations are best understood if negotiations at work are viewed as a two-level phenomenon in which candidates' job outcomes are the product of negotiations with domestic partners as well as prospective employers. Separate bodies of research on gender in candidate-employer negotiations and on gender in intra-household bargaining offer complementary insights into these two levels of negotiation. Taking stock of the practical implications of this literature may help candidates overcome disadvantageous effects of gender on job negotiations and facilitate the creation of greater value for their employers, their domestic partners, and themselves. Closed for comment; 0 Comments.

Negotiating with Wal-Mart

by Julia Hanna

What happens when you encounter a company with a great deal of power, like Wal-Mart, that is also the ultimate non-negotiable partner? A series of Harvard Business School cases by James Sebenius and Ellen Knebel explore successful deal-making strategies. From the HBS Alumni Bulletin. Closed for comment; 0 Comments.

Unconventional Insights for Managing Stakeholder Trust

by Michael Pirson & Deepak Malhotra

Most organizations understand the need to manage stakeholder trust. The bad news: Most organizations don't really understand how to manage the difficult job effectively. However, for those companies wishing to reap the benefits of improved cooperation with suppliers, increased motivation and productivity among employees, enhanced loyalty among customers, and higher levels of support from investors, managing stakeholder trust is a prudent, if not critical investment. Trust management may require an appreciation for some unconventional insights regarding the appropriate investment of resources. Stakeholders differ in regard to the kinds and degrees of vulnerability they face; what they need to believe before they will trust also differs. Would-be trust managers will be wise to consider these varying needs and to anticipate the tradeoffs that exist in strengthening relationships with specific stakeholders. Key concepts include: Trust is multidimensional, and it is not obvious which dimension you need to focus on when dealing with any particular stakeholder group. Stakeholder groups have different needs and vulnerabilities. Efforts aimed at solving one trust problem can exacerbate others. Stakeholders of all types are interested in associating with organizations with whom they can identify, and with whom they perceive a match in values. Closed for comment; 0 Comments.

Psychological Influence in Negotiation: An Introduction Long Overdue

by Deepak Malhotra & Max H. Bazerman

This paper attempts to encourage a better dialogue between research on social influence and on negotiation. It provides an overview of the literature on both areas, and identifies opportunities for creating more effective and useful research. First, HBS professors Deepak Malhotra and Max Bazerman identify those elements of psychological influence that do not require the influencer to change the economic or structural aspects of the bargaining situation in order to persuade the target. Second, they review prior research on behavioral decision-making in negotiation to identify those ideas that may be relevant to influence in negotiation. Third, they provide a framework for thinking about how to leverage behavioral decision research to wield influence in negotiation. Fourth, they consider how targets of influence might defend against these tactics. Fifth, because psychological influence is, by definition, aimed at achieving one's own ends through the strategic manipulation of another's judgment, they consider the ethical issues surrounding its application in negotiation. Key concepts include: A broader research field of negotiation is needed, one that more closely matches real-world views of what negotiation entails. This paper conceptualizes and organizes a new domain of academic inquiry—psychological influence in negotiation—contrasting it with literature on social influence. The last 50 years of research on social influence has focused largely on economic and structural elements of influence. However, psychological influence is an interesting and important domain of study in its own right, and is very relevant to the field of negotiation research. Closed for comment; 0 Comments.

Dealing with the ‘Irrational’ Negotiator

by Deepak Malhotra & Max H. Bazerman

"Negotiators who are quick to label the other party 'irrational' do so at great potential cost to themselves," say HBS professors Deepak Malhotra and Max H. Bazerman. Their new book, Negotiation Genius, combines expertise in psychology with practical examples to show how anyone can improve dealmaking skills. In this excerpt, Malhotra and Bazerman describe what to do when the other party's behavior does not make sense. Open for comment; 0 Comments.

Five Steps to Better Family Negotiations

by John A. Davis and Deepak Malhotra

Family relationships are complicated, even more so when your uncle, mother, or daughter is your business partner. Harvard Business School's John A. Davis and Deepak Malhotra outline 5 ways to analyze and improve dealmaking and dispute resolution while protecting family ties. Closed for comment; 0 Comments.

Negotiating in Three Dimensions

by Martha Lagace

"Negotiation is increasingly a way of life for effective managers," say HBS professor James Sebenius and colleague David Lax. Their new book, 3-D Negotiation, describes how you can shape important deals through tactics, deal design, and set-up, and why three dimensions are more powerful than one. Here's a Q&A and book excerpt. Key concepts include: Three-D negotiation comprises tactics, deal design, and set-up. Their use depends on the nature of the barriers you face. A 3-D strategy is an aligned combination of set-up moves that occur away from the table, deal design moves, and tactics at the table, all designed to overcome the barriers you've identified. The best response to a barrier in one dimension may be moves within other dimensions. Closed for comment; 0 Comments.

Negotiating When the Rules Suddenly Change

by Michael Wheeler

Following the adoption of a collective bargaining agreement in 2005, National Hockey League GMs had one month to absorb the new rules and put a team together. How to best negotiate in an uncertain environment? Michael Wheeler advises looking to military science for winning strategies. Key concepts include: Traditional negotiation theory says little about crafting strategy in highly dynamic markets—but the military knows all about strategy and uncertainty. Make an informed bet on how you think events will unfold, but also identify the greatest threats to success. Prepare to make good decisions on the fly. Situational awareness and the ability to learn as you go are critical. Closed for comment; 0 Comments.

When Not to Trust Your Gut

by Max H. Bazerman & Deepak Malhotra

Most of us trust our intuition more than we should, especially when the pressure is on in negotiations. Professors Max Bazerman and Deepak Malhotra on negotiating more rationally. From Negotiation. Key concepts include: Too much trust in intuition can lead to irrational decisions. Employ "System 2" thinking to apply logic even in times of stress and indecision. In negotiations, schedule more time than you think you will need. Closed for comment; 0 Comments.

Maximizing Joint Gains: Transaction Utility Within and Between Groups

by Stephen Garcia, Max H. Bazerman & Dale Miller

Win-win deals are more easily described than carried out. Earlier studies have shown that when people don't know the gender or social category of their negotiating partner, they are happy to make a profit even if their partner earns a greater profit. Four new studies looked at how gender or other social contexts influence the way people cut a deal. Key concepts include: Social category in context is key to negotiation. What we consider a good deal within our own social category may be a worse deal when we compare ourselves to members of a different social category. "Maximizing the pie" in negotiation may be more difficult across social category lines (e.g., countries, regions, etc.). Brokering win-win deals across national, cultural, and religious lines therefore requires special care. Closed for comment; 0 Comments.