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Lecture 4 Negotiating Strategy

Lecture 4 Negotiating Strategy. Sally Swansong Axiomatic (Nash) Bargaining. Sally Swansong. Quick Exercise: After interacting, think about BATNAs. Sally’s Agent: Write down what you think the most the Lyric would have paid?

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Lecture 4 Negotiating Strategy

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  1. Lecture 4Negotiating Strategy • Sally Swansong • Axiomatic (Nash) Bargaining

  2. Sally Swansong • Quick Exercise: After interacting, think about BATNAs. • Sally’s Agent: Write down what you think the most the Lyric would have paid? • Lyric: Write down what you think the least Sally would have accepted? • Do you think your BATNA was stronger or weaker than the other side?

  3. Sally Swansong • The Obvious: • Your goal is not to reach an agreement, • Goal is to create value and do well for yourself. • Involves? • Improving your BATNA • Not doing deals that don’t make sense • Trying to find ways of creating joint (or solo) value.

  4. Sally Swansong • What is the ZOPA? • Zone of possible agreement: $0--$45k • Interests versus positions • Ego versus allocentric • Issue of preparation

  5. Interests? Sally: • Making a comeback • Proving she still has it • Reputation • Performing star role (and being treated as such) • Salary precedent • Firm contract Opera: • Successful Norma • Not creating salary precedent • Finding best talent • Not losing money • Publicity

  6. Nash Solution • Axioms (Assumptions that we’ll use to solve a bargaining problem.) • Respects affine transformations • IIA (Independence of Irrelevant Alternatives) • Pareto Efficiency • Symmetry

  7. Next Time • Readings for Next Time: • Raiffa, pages 251-274 & 288-299 • Bazerman, pages 127-139 • Nash: The Bargaining Problem • Optional: • Osbourne & Rubinstein, Chapter 13. An Introduction to Coalitional Bargaining

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