AEssentials ofNegotiation

Fifth edition

Roy J. LewickiThe Ohio State University

David M. SaundersQueen's University

Bruce BarryVanderbilt University

McGraw-HillIrwin

about the authors ivpreface v

Chapter 1The Nature of Negotiation 1

A Few Words about Our Style and Approach 3Joe and Sue Carter 4Characteristics of a Negotiation Situation 6Interdependence 9

Types of Interdependence Affect Outcomes 10Alternatives Shape Interdependence 10

Mutual Adjustment 12Mutual Adjustment and Concession Making -13Two Dilemmas in Mutual Adjustment J 4

Value Claiming and Value Creation 15Conflict 18

Definitions 18Levels of Conflict 18Functions and Dysfunctions of Conflict 19Factors That Make Conflict Easy or Difficultto Manage 20

Effective Conflict Management 22

Chapter 2Strategy and Tactics of DistributiveBargaining 27

The Distributive Bargaining Situation 29The Role of Alternativesto a Negotiated Agreement 3 JSettlement Point 32Bargaining Mix 33Fundamental Strategies 33Discovering the Other Party's Resistance Point 34Influencing the Other Party's Resistance Point 34

Tactical Tasks 35Assessing the Other Party's Target, Resistance Point,and Costs of Terminating Negotiations 35Manage the Other Party's Impressions 37Modify the Other Party's Perceptions 39Manipulate the Actual Costs of Delayor Termination 39

Positions Taken during Negotiation 41Opening Offers 41Opening Stance 42Initial Concessions 42Role of Concessions 43Pattern of Concession Making 44Final Offers 46

Commitment 46Tactical Considerations in Using Commitments' 47Establishing a Commitment 47Preventing the Other Party from CommittingPrematurely 49Finding Ways to Abandon a Committed Position 49

Closing the Deal 51Hardball Tactics 52

Dealing with Typical Hardball Tactics 52Typical Hardball Tactics 54

Chapter Summary 60

Chapter 3Strategy and Tactics of IntegrativeNegotiation 62

Introduction 62What Makes Integrative Negotiation Different? 62

An Overview of the IntegrativeNegotiation Process 63

Creating a Free Flow of Information 64

Contents

Attempting to Understand the Other Negotiator'sReal Needs and Objectives 64Emphasizing the Commonalities between the Partiesand Minimizing the Differences 65Searching for Solutions That Meet the Needsand Objectives of Both Sides 65

Key Steps in the Integrative Negotiation Process 66

Identify and Define the Problem 67Understand the Problem FullyIdentify Interestsand Needs 69

Generate Alternative Solutions 72

Section Summary 78

Evaluate and Select Alternatives 79

Factors T|iat Facilitate Successful IntegrativeNegotiation 82

Some Common Objective or Goal 82Faith in One's Problem-Solving Ability 83

A Belief in the Validity of One's Own Positionand the Other's Perspective 83

The Motivation and Commitment toWork Together 84

Trust 85

Clear and Accurate Communication 86

An Understanding of the Dynamics of IntegrativeNegotiation 86

Section Summary 87

Chapter Summary 87

Chapter 4Negotiation: Strategy and Planning 89

GoalsThe Focus That Drives

a Negotiation Strategy 89

Direct Effects of Goals on Choice of Strategy 90Indirect Effects of Goals on Choice of Strategy 91

StrategyThe Overall Plan to AchieveOne's Goals Consistancy 91

Strategy versus Tactics 91

Unilateral versus Bilateral Approaches to Strategy 92

The Dual Concerns Model as a Vehicle for DescribingNegotiation Strategies 92

Understanding the Flow of Negotiations: Stagesand Phases Consistancy 96

Getting Ready to Implement the Strategy:The Planning Process 97

1. Defining the Issues 972. Assembling the Issues and Defining

the Bargaining Mix 99

3. Defining Interests 1004. Knowing Limits 100

5. Knowing Alternatives 101

6. Setting Targets and Asking Prices 101

7. Assessing Constituents and the Social Contextof the Negotiation 103

8. Analyzing the Other Party 105

9. Presenting Issues to the Other Party 108

10. What Protocol Needs to Be Followedin This Negotiation? 109

Chapter Summary 111

Chapter 5Perception, Cognition, and Emotion 112

Perception 113

Perception Defined 113Perceptual Distortion 113

Framing 115

Types of Frames 116How Frames Work in Negotiation 117

Another Approach to Frames: Interests, Rights,and Power 118

The Frame of an Issue Changes as the NegotiationEvolves 120

Section Summary 122

Cognitive Biases in Negotiation 122

1. Irrational Escalation of Commitment 1232. Mythical Fixed-Pie Beliefs 123

Contents

3. Anchoring and Adjustment 1244. Issue Framing and Risk 124

5. Availability of Information 1256. The Winner's Curse 125

7. Overconfidence 1258. The Law of Small Numbers 1269. Self-Serving Biases 126

10. Endowment Effect 12711. Ignoring Others' Cognitions 127

12. Reactive Devaluation 128

Managing Misperceptions and Cognitive Biasesin Negotiation 128

Mood, Emotion, and Negotiation 129

Chapter Summary 133

Chapter 6Communication 136

What Is Communicated during Negotiation? 136

J. Offers, Counteroffers, and Motives 1372. Information about Alternatives 1373. Information about Outcomes 1374. Social Accounts 138

5. Communication about Process 138

Are Negotiators Consistent or Adaptive? 138

Does It Matter What Is Said Earlyin the Negotiation? 139

Is More Information Always Better? 139How People Communicate in Negotiation 139

Characteristics of Language 139Use of Nonverbal Communication J 41Selection of a Communication Channel 142

How to Improve Communication inNegotiation 144

The Use of Questions 145Listening I45

Role Reversal 148

Special Communication Considerationsat the Close of Negotiations 149

Avoiding Fatal Mistakes 149

Achieving Closure 149

Chapter Summary 149

Chapter 7Finding and Using NegotiationPower 151

Why Is Power Important to Negotiators? 151

A Definition of Power 152

Sources of PowerHow People Acquire Power 154

Informational Sources of Power 156Power Based on Personality and IndividualDifferences 157Power Based on Position in an Organization 158

Power Based on Relationships 162

Contextual Sources of Power 166Dealing with Others Who Have More Power 167

Chapter Summary 168

Chapter 8Ethics in Negotiation 170

A Sampling of Ethical Quandaries 170What Do We Mean by "Ethics," and Why Do TheyMatter in Negotiation? 172

Ethics Defined 172

Applying Ethical Reasoning to Negotiation 175

Ethics versus Prudence versus Practicalityversus Legality 175

What Questions of Ethical Conduct Arisein Negotiation? 176

Ethically Ambiguous Tactics: It's (Mostly). AH about the Truth 176

Identifying Ethically Ambiguous Tacticsand Attitudes toward Their Use 179

Deception by Omission versus Commission 180

Contents xiii

The Decision to Use Ethically Ambiguous Tactics:A Model 181

Why Use Deceptive Tactics? Motivesand Consequences 181

The Power Motive 181Other Motives to Behave Unethically 183The Consequences of Unethical Conduct 183Explanations and Justifications 185

How Can Negotiators Deal with the Other Party'sUse of Deception ? 187Chapter Summary 191

Chapter 9Relationship^ in Negotiation 193

The Adequacy of Established Approachesto Research for Understanding Negotiationwithin Relationships 193

Negotiations in Communal Relationships 197Key Elements in Managing Negotiationswithin Relationships 199

Reputation 199Trust 201Justice 204Relationships among Reputation, Trust,and Justice 207Repairing a Relationship 207

Chapter Summary 208

Chapter 10Multiple Parties and Teams 210

The Nature of Multiparty Negotiations 210'Differences between Two-Party Negotiations

' -and Multiparty Negotiations 211Summary 215What Is an Effective Group? 215

Managing Multiparty Negotiations 217The Prenegotiation Stage 218

The Formal Negotiation StageManaging the GroupProcess and Outcome 221The Agreement Stage 227

Chapter Summary 228

Chapter 11International and Cross-CulturalNegotiation 230

International Negotiation: Art and Science 231What Makes International NegotiationDifferent? 231

Environmental Context 232Immediate Context 234Section Summary 236

Conceptualizing Culture and Negotiation 236Culture as Learned Behavior 236Culture as Shared Values 237Section Summary 240Culture as Dialectic 240Culture in Context 240

The Influence of Culture on Negotiation: ManagerialPerspectives 241

Definition of Negotiation 241Negotiation Opportunity 241Selection of Negotiators 242Protocol 242Communication 242Time Sensitivity 242Risk Propensity 243Groups versus Individuals 243Nature of Agreements 244Emotionalism 244

Culturally Responsive Negotiation Strategies 244Low Familiarity 246Moderate Familiarity 247High Familiarity 247

Chapter Summary 248

Contents

Chapter 12Best Practices in Negotiations 2 5 1

1. Be Prepared 2512. Diagnose the Fundamental Structure

of the Negotiation 2523. Identify and Work the BATNA 2534. Be Willing to Walk Away 2535. Master the Key Paradoxes of Negotiation 254

Claiming Value versus Creating Value 254Sticking by Your Principles versus Being Resilientto the Flow 254

Sticking with the Strategy versus OpportunisticPursuit of New Options 255Honest and Open versus Closed and Opaque 255Trust versus Distrust 256

6. Remember the Intangibles 2567. Actively Manage Coalitions 2578. Savor and Protect Your Reputation 2589. Remember That Rationality and Fairness

Are Relative 25910. Continue to Learn from Your Experience 259

Bibliography 261Index 280