Lecture 5

Present Motivational Style Assessments

Discuss Negotiating via Technology

Debrief Nelson Contracting

Negotiate Jessie Jumpshot
1
Lecture 5 Themes
Where did the Internet Age Come From?
What works? What Doesnt ? Good Practices?
Nelson Contracting
Logrolling = Multiple Simultaneous Offers
Measuring Relative Importance
Outcome Efficiency =>Efficient Frontier
Contingent Contracts
Betting Against the Future
Jessie Jumpshot Instructions

2
3
Negotiation via Technology
Whats new about negotiation in
the Networked Internet Age?
4
New Technology 1878
First level effect:
Direct, intended effectefficiency
Telephone as a replacement for the
telegraph
In 1878 Pittsburgh telephone directly had
12 pages all for businesses
Telegraph companies emphasized the
telephone as a ...recognized instrument
for business purposes
Sproul and Keisler Connections: New ways of
working in the networked organization MIT Press
1991

5
New Technology and the Law of
Unintended Consequences
Second Level Effects -> social systems
are affected by new technologies:
1920s-> Bell System emphasized the social
character of the telephone: Friendships path
often follows the trail of the telephone wire.
Today the telephone, internet and web are
accepted as an automatic core of social and
organizational communication
Technology changes social arrangements in
unintended ways! Twitter,YouTube, Facebook
etc.



6

Best practices carry over to this medium

Good interpersonal communication
skills are as or more important when it
is more difficult to judge a counterparts
interests because of the absence of
face to face social cues

Wellens (1989) Psychological
Distancing Model
Face to Face
Kinetic, Visual, Paralinguistic, Linguistic
Two-Way TV
Visual, Paralinguistic, Linguistic
Telephone
Paralinguistic, Linguistic
Computer
Linguistic

7
Paralinguistic
Refers to the non-verbal elements of
communication used to modify meaning
and convey emotion
Pitch
Tone
Volume
intonation

8
E-mail Biases-Thompson Ch. 12
Temporal Synchrony Bias
Negotiators behave as if they are
communicating synchronously but are not
Much turn taking, back and forth dancing,
schmoozing facilitates trust and rapport
Less of it in email negotiations
Burned Bridges Bias
Politeness rituals are missing
Threats, demands, ultimatums are more
frequent

9
Squeaky Wheel Bias
Counter-normal social behavior more likely
More focus on the task content and less on
etiquette
Flaming much more likely

Sinister Attribution Bias
E-communicators (and Bloggers!) have a
greater tendency to attribute diabolical
intentions or malevolent motives (Kramer
(1995))

10
11
Information Technology, Negotiating
Power and Risk
POWER! The weak get strong
Traditional status cues are missing
Status cues are harder to read
The absence of cues causes people to respond more
openly and less hesitatingly
PARANOIA! Uncertainty increases paranoia.
Along with a decline in social posturing and
sycophancy comes a decline in politeness and
concern for others feelings. Bluntness emerges.

12
Negotiation in the Technological
Age
Who dominates a discussion?
Member status is an excellent predictor of
who dominates in a face to face group
discussion
Status cues are amazingly superficial--who
sits where, dress, facial expressions
High status people tend to talk more than low
status
13
Email & Text Messaging-- Great
Equalizers!

Static and dynamic cues about status
are minimized
Group dynamics can change
dramatically:
In risky choice situations, groups that meet
face to face are generally risk averse for
gain choices and risk prone for choices
that involve losses
Groups that decide risky choices by email
are more often risk prone !
IT Effects on Negotiation
Outcomes (Thompson Exhibit 12-3)
E-Negotiation Enhanced vs. Not
vs. Face-to-face Enhanced E-Negotiaton

Impasse Rates Brief personal disclosure
over email reduces
impasse rate

Integrative More multi-issue Brief prior telephone call
Behavior offers improves joint outcomes


14
E-Negotiation
vs. Face-to-face

Expanding Mixed Results
The Pie

Pie Slicing Computer mediated leads to
more equal pie slices than
face-to-face
15
E-Negotiation Enhanced vs. Not
vs. Face-to-face Enhanced E-Negotiaton
Distributive Negotiators concerned
Behaviors about group reputation use
more aggressive strategies
that lead to worse outcomes
than negotiators focused on
their own reputation

Trust Less rapport Brief prior telephone call
& Rapport increases cooperation &
relationship quality
16
17
Keys to Successful e-mail/text IM
Negotiation
Make your message concise and clear!
Dont overestimate other peoples ability to
understand your message
It is hard enough in face-to-face negotiation
Fit your message on a single screen
Screen loading (long messages) annoy us
A greater number of small exchanges is preferable
Permits rectification of misunderstandings: you can
rectify misperceptions quickly
18
Keys to Success (contd)

Watch your Temper!
Face-to-face groups have behavioral norms
that inhibit flaming
The absence of social context creates a
feeling of anonymity
People react to one another with less
politeness, empathy and inhibition if they
cannot sense the others social presence
19
Flaming
To speak incessantly and/or rabidly on some
relatively uninteresting subject or with a
patently ridiculous attitude

To attempt to denigrate others character,
intelligence and grammar

Be careful!
Its easy to send a message that is misunderstood:
Humor doesnt always work
20
Keys to Success (contd)
If possible, deliver bad news or
negative feedback face-to-face
Ambiguity, doubt and uncertainty afflict e-mail
exchanges
Often, frustration arises.
Frustration may seemingly be offset by an
attempt to control by issuing threats
21
. e-mail negotiations often move at an unpredictable pace, since people
can respond (or not respond) when they like. In group negotiations, those
who check their e-mail most frequently can end up controlling the
discussion. Those who never have a chance to contribute may choose not
to abide by the agreement, to the detriment of the group.

When facing an important e-mail negotiation with someone youve never
met, do whatever you can to meet in person beforehandor, if that isnt
possible, talk on the phonewith the goal of building rapport. In her
research, professor Janice Nadler of Northwestern University found that
when pairs of participants engaged in a short, informal phone call prior to
negotiating the hypothetical sale of a car, they were four times more likely
to reach agreement than pairs who didnt have the chance to schmooze in
advance. Even a little friendly banter at the start of an e-mail message can
help negotiators work together more creatively.

Set ground rules for your e-mail negotiations. If consensus is a worthy goal
for your group, you might agree to wait 24 or 48 hours for everyone to have
time to weigh in on a decision. When finalizing an agreement, arrange a
conference call or a face-to-face meeting to make sure everyone is on
board. In the Program on Negotiation Newsletter The Negotiation
Insider November 9, 2010 Adding Value to e-Negotiation (web access)
22
Effective Email & Text Messaging
Strategies
MBA course at Northwestern
Approximately 50% of pairs reached the
Pareto efficient frontier. This group
used:
Multiple offers of the same value in a single
message
Invited suggestions to decrease hostility
and encourage mutual exploration
Shared information about priorities
Thompson and Kurzberg Information technology and the negotiator
Northwestern working paper
23
What went wrong?
Groups that did not do as well:
Indulged in offer avoidance: wrote long
paragraphs with sweeping general
statements that did not contain crisp clear
offers
Let past issues resurface
Loaded the screen with irrelevant
information
Made accusations of lying,
misrepresentation
Short fuse: Take it or leave it not
supported by a good BATNA
Nelson Contracting
Logrolling, Relative Importance
& Dealing Off the Top!
24
Wikipedia on Logrolling
A practice common in the US Congress in
which two or more legislators agree for
each to trade his vote on one bill he cares
little about in exchange for the others vote
on a bill that is personally much more
important to him.
Logrolling is especially common when the
legislators are relatively free of control by
their national party leaders and are trying
to secure votes for
25
bills that will concentrate sizable benefits
on their own home districts while
spreading most of the costs out over
taxpayers in the rest of the country. Local
projects such as Federally funded dams,
bridges, highways, housing projects, VA
hospitals, job training centers, military
bases and the like are often pushed
through by logrolling.

See Pork Barrel Legislation, Appropriation Bill
26
27
Contingent Contracts
Bets Against the Future!
28
What is a Contingent
Contract?
I believe that the odds are 6 to 4 that the
Red Sox will finish ahead of the Yankees
in the American League East this season

You say Gordon, you are nuts! The
Yankees will dominate the Red Sox.
The odds that the Red Sox will finish
ahead of the Yankees are only 2 to 8.
29
Gordons
Assessment
Expected Value to Gordon = $20
30
Your Assessment
Expected Value to You = $60
31
Differences of Opinion Can
Create Ex Ante Joint Gains
Differences in Valuation
Diagnosing Deceit
Reducing Risk
Motivating Performance

Bypassing Biases
Leveling the Playing Field



32
Bypassing Biases: Over-confidence
SIC Europe and CED formed a US joint venture

Market each others product in Europe & US?

According to SIC ,CEDs announcement of what it
can sell in US is, Much too optimistic!.

According to CED ,SICs announcement of what it
can sell in Europe is, Much too optimistic!.

See Bazerman HBR Sept Oct 1999

SIC+CED Contingent Contract
Key per cent ownership on 1
st
year sales

IF both hit targets or both undersell, each
gets

IF one side under-sells & the other hits
target, under-seller forfeits a fraction of
equity
See Bazerman HBR Sept Oct 1999



33
34
Information AsymmetryLeveling
the Playing Field
L-TEK Case
Audio Division owns a magnetic technology best
commercialized by its Magnets Division
The two are negotiating technology transfer terms
Magnets has deep market info; claims annual profits
of $14-15 M.
Audio Division is enamored with its technology but
lacking magnet marketing info, claims $40 M
Magnet discloses its information
Audio suspects Magnet has skewed announced
profits downward
Arguments and a long delay ensue
See Bazerman HBR Sept Oct 1999


35
Solving the Dispute
Magnets pays an initial sum for the
technology; e.g. $5 M
Magnets gets profits up to $15 M
Audio is credited with 50 % of profits
above $20 M
IF $40 M happens
Audio gets $5 M + $10 M = $15 M.
If Audio believes its forecast, this looks fair
See Bazerman HBR Sept Oct 1999


36
Put Your Money Where Your
Mouth Is!
Uncovering deceit!
Your counterpart claims that it is almost
certain that the profits of the company you are
negotiating to buy from him will be At least
$10 M.
At $10 M profit both agree the company is
worth $18 M.
You reply, OK. If profits are at or above $10
M we will pay you a bonus of $1 M. If not, you
reduce the purchase price of $18 M by $5 M
See Bazerman HBR Sept Oct 1999

37
Reducing Risk
Catalogue Retailing
Long lead times for retail goods
Consumer demand patterns may shift dramatically
between catalogue entry of product and arrival at
consumers homes.
Retailer agrees to purchase N units
Producer delivers a fraction f of N prior to catalogue
mailing; 1-f is backup
After an agreed on time period for observing sales,
retailer has option on the remaining (1-f)N
Option is at an agreed on price
If retailer cancels remainder, she pays an agreed on penalty
to the manufacturer
See Bazerman HBR Sept Oct 1999
Jessie Jumpshot
Restrictions & Instructions
38
39

Jessie and the Sharks each have an opinion
about the size of merchandizing profits if the
Sharks win the title and if they lose the title:

The case numbers are to be regarded as
FIXED.


You negotiate salary, bonus, merchandizing
profits only

No other Side Payments are allowed.
No negative salaries, bonus or
merchandizing profits

Restrictions
MIT OpenCourseWare
http://ocw.mit.edu
15.067 Competitive Decision-Making and Negotiation
Spring 2011
For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms.