Tyler Dingess posted Aug 23, 2018 9:51 AM
1. In Chapter one your text author states that most people are ineffective negotiators who fall prey to some very common traps. What are these traps and why do we fall into them? Describe your own experiences with the common traps and the reasons for them. Where do you see yourself in these behaviors?
In chapter one of our text, Leigh Thompson says that while most people consider themselves to be effective negotiators, in reality fewer than 4% of manager reach win-win outcomes (2015). According to the author, there are four major shortcomings in negotiations: “leaving money on the table, settling for too little, walking away from the table, and settling for terms that are worse than your best alternative” (Thompson, 2015). These traps are all rooted in four fundamental biases: “egocentrism, confirmatory information processing, satisficing, and self-reinforcing incompetence” (Thompson, 2015). Egocentrism becomes an issue when one overestimates one’s own abilities based on previous experiences, giving a sense of undue confidence (Thompson, 2015). Similarly, confirmation bias is “the tendency of people to see what they want to see when appraising their own performance” (Thompson, 2015). The text says that satisficing is the opposite of optimizing, and that when one satisfices “they settle for something less than they could otherwise have” (Thompson, 2015). Self-reinforcing incompetence is the ignorance of one’s own incompetence that “creates a cycle in which the lack of skill deprives them of not only the ability to produce correct responses but also the expertise necessary to surmise that they are not producing them” (Thompson, 2015).
I do not have much experience with negotiation in my professional life or otherwise. The trap that I would be most likely to fall for is “settling for terms that are worse than your best alternative”. This is because I have a basic desire to satisfy people. Until recently all my work experience has focused on customer service, where pleasing people is a valuable skill. I tend to be more self-critical than blind to my shortcomings, so I do not see myself having an issue with egocentrism or confirmation bias. I look forward to learning the skills I need to be an effective negotiator from this course.
2. Differentiate between the following terms: BATNA, Reservation Point, and Target Point.
BATNA is the Best Alternative To a Negotiated Agreement. A negotiator’s BATNA is the acceptable outcome of a negotiation, not necessarily the most desirable (Thompson, 2015). The target point, or aspiration point, is the ideal outcome. The reservation point is the quantification of a BATNA based on other alternatives (Thompson, 2015).
3. Differentiate between a focal point and sunk costs. How do these negatively impact negotiations?
A focal point is arbitrary information that is meant to distract the negotiator from their reservation point (Thompson, 2015). Sunk cost is money that has been invested and cannot be recuperated. Both of these can distract from the reservation point, making it less likely for the negotiator to achieve their ideal outcome.
4. Differentiate between the endowment effect, violations of the sure thing principle and counterfactual thinking. Describe a situation where you or someone you know exhibited each.
The endowment effect results from differing reference points between buyers and sellers. According to the text, sellers often see selling an object as a loss. This leads them to demand more than a buyer is willing to pay (Thompson, 2015). I can see this effect in my father with his classic cars. When I was growing up, my father was always working to restore model cards and would then sell them. When he considered the value, he thought of all the work he had put into restoring them in addition to the attachment he had to them.
Counterfactual thinking is when one is concerned with what might have been. I would use my first experience buy a car as an example of this. I went alone, not expecting to make an immediate purchase, and I left with a car. I did not feel confident enough to negotiate the price of the car, and I immediately felt that I could have gotten a better deal.
Violations of the sure thing principle occur when someone delays making a decision until there is no ambiguity involved in the decision, even if the outcome will be the same anyway (Thompson, 2015). Once again, I would use myself as an example. When deciding I wanted to move to Columbus last year, I waited until I received a job offer before I began looking at apartments in the area. In reality, I would have moved to Columbus even if I had not gotten that specific job.
5. Where do you see yourself with regard to risk aversion as applied to negotiations in this chapter? Where do you see yourself with regard to confidence in negotiations as described in the text? Give examples to support each.
I would say that I am risk adverse and almost all cases. I do not like to make decisions under uncertainty. When faced with a sure thing and the potential for gain or loss, I will usually choose the sure thing. In a negotiation I would seek to minimize my losses.