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Terms Distributive negotiation Reservation Price BATNA Target Price Bargaining Zone/ZOPA negative positive Distributive Negotiation Single issue Your loss is my gain Slicing the Pie How do you get the biggest piece? Preparation Offers Alternatives Concessions

Jims
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  1. Terms • Distributive negotiation • Reservation Price • BATNA • Target Price • Bargaining Zone/ZOPA • negative • positive

  2. Distributive Negotiation • Single issue • Your loss is my gain

  3. Slicing the Pie • How do you get the biggest piece? • Preparation • Offers • Alternatives • Concessions

  4. Accepting First Offers How do you feel when the other party accepts your first offer? I should have asked for more Maybe I just got into a bad deal Less satisfaction Do not accept first offers They are just that – an opener Expectation to negotiate

  5. Offers • Folklore says to let the other party make the first offer • Is that a good idea? • Anchoring • People tend to focus heavily on the first offer • First offer correlates .85 with the final price

  6. Offers (continued) • What if the other party makes the first offer? • Immediate counteroffer • Take away the psychic hold of the 1st offer

  7. BATNA • Best Alternative to a Negotiated Agreement • The lowest acceptable value to an individual for a negotiated agreement • Develop alternatives so you know at what point to stop negotiating • Gives you the POWER to walk away • If we cannot receive an offer of X-amount for the house, then what will you do? • Rent it out?

  8. What’s your bottom line? • “Tell me the bare minimum you would accept and I’ll try and throw in something extra” • “Why don’t you tell me the very maximum you are willing to pay, and I’ll try and I’ll see if I can shave off a bit”

  9. Concessions • Need some cushion (Target price versus reservation price) • Make the first concession • Why? • Norm of reciprocity • Positive feelings • Magnitude of concessions • Less and less to signal you are reaching the end

  10. Reaching Agreement • If you reach an agreement you like, do you still care about how the other party negotiated?

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