Basics of Negotiation Theory-2

Basics of Negotiation Theory

(Governance is Persuasion and

Bargaining)

Negotiation

● Explicit Bargaining

● Implicit Negotiations

● All programme and policymaking, and implementation, is

essentially indirect management. Its effectiveness requires

persuasion and implicit bargaining.

Richard Neustadt: Presidential Power

✔ “Presidential power is the power to persuade.”

✔ Three sources of effective influenceThree sources of effective influence:

1. The bargaining advantages inherent in his job with which to persuade other men that what he wants of them is what their own responsibilities require them to do.

2. The expectations of those other men regarding his ability and will to use the various advantages they think he has.

3. Those men's estimates of how his public views him and of how their public may view them if they do what he wants.


"A President, himself, affects the flow of power from these

sources, though whether they flow freely or run dry he never will

decide alone. He makes his personal impact by the things he says

and does. Accordingly, his choices of what he should say and do,

and how and when, are his means to conserve and tap the sources

of his power.

The outcome, case by case, will often turn on whether he

perceives his risk in power terms and takes account of what he

sees before he makes his choice. A President is so uniquely

situated and his power so bound up with the uniqueness of his

place, that he can count on no one else to be perceptive for him."


"'Powers' are no guarantee of power... Persuasion is a give and

take, a two-way street... The power to persuade is the power to

bargain... You get no help if you do not pay for it."

““In a democracy power is decentralized In a democracy power is decentralized

and responsibility shared.”and responsibility shared.”

Assumptions/ Features of Negotiations

✔ Two or more parties with an interdependent goal

✔ There should be a conflict of interests

✔ The parties should be voluntarily prepared to settle rather

than fight it out.

✔ An agreement should be prima facie seem possible and

should be better than the alternative of no agreement

(better than the Best Alternative to Negotiated Agreement

(BATNA).

✔ The Zone of Possible Agreement (ZOPA) lies between the

BATNAs of the parties to negotiation.


✔ Any negotiation tends to an opportunistic interaction and

hence there is a possibility of parties not cooperating fully,

engaging in less than fully open motives and methods,

withholding some information, moving to stake favourable

positions, turning situation to one's advantage and seeking

to mould perceptions and aspirations to one's own

advantage.

✔ Negotiations are always beset with dilemmas: the

dilemma of trust; dilemmas of honesty.


✔ Negotiations are strategic interactions

✔ Negotiations can be treated as games for which game

theories become relevant

✔ Opportunistic behaviour being intrinsic to negotiations,

the course of negotiation is zigzag and ofter acrimonious.

✔ Strategic sharing of information is intrinsic to negotiations.

The extent and of information to share and the mode of

sharing are important decisions.


✔ Every negotiation has two aspects: substantive and

psychological.

Issue, Position and Interests

✔ An issue is the item on which an agreement is sought

✔ A position is the stand a party takes on an issue

✔ An interest is the basic objective or concern underlying

the issue.

Position and Value

✔ Given the opportunistic interaction inherent in the

negotiations, a party's position on an issue may not reflect

the true value that it attaches to that issue.

✔ For negotiations to succeed we need to move from

positions to real issues that parties attach to the issues.

✔ Principled Negotiations: Negotiations that employ

interest-based approach.

Getting to Yes (Roger Fisher and W. Ury)

✔ Four fundamental principles of negotiation:

✔ Separate the people from the problem

✔ Focus on interests, not positions

✔ Invent options for mutual gain

✔ Insist on objective criteria

1973 – David Camp Negotiations

Getting to Yes (Roger Fisher and W. Ury)

✔ Four fundamental principles of negotiation:

✔ Separate the people from the problem

✔ Focus on interests, not positions

✔ Invent options for mutual gain

✔ Insist on objective criteria

1973 – David Camp Negotiations1973 – David Camp Negotiations

Land AcquisitionsLand Acquisitions

Substantive and Relational Outcomes

✔ A part of series of Negotiations

✔ Isolated and discrete

✔ Idea of psychological fairness

✔ Trade off between substantive and relational outcomes

✔ Repetitive negotiations and past relations

The Ultimate Game: A classic psychology/ The Ultimate Game: A classic psychology/

economics experimenteconomics experiment

Internal and External Negotiations

✔ (Group A) (Group B) (A+B)

✔ Internal Negotiations:

1. Selecting the negotiating team

2. Defining the issues

3. choosing the goals

4. Trip wire (tea break) for assessment

5. Negotiation strategy

6. Reviewing the progress

7. aligning the negotiation strategy and tactics to the evolving

situation

8. Clinch the deal or break off

Multiparty Negotiations and Coalitions Dynamics

✔ Block-type coalitions and issue-base coalitions

✔ Issue based coalitions are ad-hoc (threat-opportunity

coalition)

✔ Divergence and negotiation

✔ Multiple issues and complexity of negotiations

✔ More contentious issues need to be dropped

✔ A+B+C

✔ Integrative and Distributive negotiations

Integrative and Distributive Negotiations

Integrative DistributiveWin – Win Negotiations Win-Lose Negotiations

Cooperation for solving the problem through value creation

Opportunistic interaction (Clash of Interests)

Expansion of Pie Maximization of one's share of the Pie

Cooperative Games Zero-sum games and Non-cooperative Games

Policy Negotiations should be integrative Negotiations

Game Theory and Negotiations

✔ Adam Smith – Invisible Hand

✔ Von Neumann –

Zero-Sum Games

» Cooperative Games

✔ John Nash

» Cooperative Games

» Non-cooperative Games

» Nash Equilibrium

A negotiation may include both the distribute as well as integrative negotiation

3 Ds of Negotiations

✔ David A Lax and James K. Sebenius: 3 – D Negotiation:

Playing the Whole Game (2003)

“Savvy negotiators not only play their cards well, they design the game in their favor even before they get to the table”✔ Tactics

✔ Deal design

✔ Set up

Tactics

✔ Interpersonal processes and the tactics at the bargaining

table

Common Barriers:

» lack of trust between two parties

» poor communication

» Hard ball tactics

✔ Resolution of these

Deal Design

✔ Creating lasting value for the negotiators

✔ Economic and non-economic value

✔ Political and non-political value

✔ A deal having creative concepts and structure

Negotiating Set up

✔ Negotiations with:

Right parties

» Right set of issues

» Right sequence of negotiators

» Right time

» Right set of expectations

» Right no-deal options

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Basics of Negotiation Theory-2