Bargaining for Advantage
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50 price of a home: M. H. Bazerman, M. A. Neale, K. L. Valley, E. J. Zajac, and Y. M. Kim, “The Effect of Agents and Mediators on Negotiation Outcomes,” Organizational Behavior and Human Decision Processes, Vol. 53, No. 1 (1992), pp. 53-73 (noting that real estate commissions in the United States were formerly set by regulation at 6 percent and have continued at that level for decades in the wake of deregulation).
51 significantly affect negotiation results: Sally Blount, Melissa C. Thomas-Hunt, and Margaret A. Neale, “The Price Is Right—Or Is It? A Reference Point Model of Two-Party Price Negotiations,” Organizational Behavior and Human Decision Processes, Vol. 68, No. 1 (October 1996), pp. 1-12.
53 “would’ve approached it differently”: Paul Magnusson, “A Wake-up Call for Business,” Business Week, September 1, 1997, p. 29.
54 our deference to authority: Herb Cohen, You Can Negotiate Anything (New York: Lyle Stuart, 1980), pp. 58-60.
55 eardrops into people’s eyes: Neil M. Davis and Michael R. Cohen, Medication Errors: Causes and Prevention (Philadelphia: George F. Strickley, 1981), p. 80.
55 ultimately, negotiate effectively: Connie J. G. Gersick and J. Richard Hack-man, “Habitual Routines in Task-Performing Groups,” Organizational Behavior and Human Decision Processes, Vol. 47 (1990), pp. 65-97.
56 [Sound of impact.]: This conversation is reprinted in Deborah Tannen, Talking from 9 to 5 (New York: Avon Books, 1994), pp. 92-93, based on the actual transcript taken from Air Florida Flight 90’s “black box” flight recorder. See Aircraft Accident Report NTSB-AAR-82-8, published by the U.S. Government National Transportation Safety Board, Washington, D.C. 20594.
CHAPTER 4: The Fourth Foundation: Relationships
58 Franklin D. Roosevelt: I do not know the original source of this quotation. I found it in a book on negotiation by sports and entertainment agent Bob Woolf. See Bob Woolf, Friendly Persuasion: How to Negotiate and Win (New York: Berkley Books, 1990), p. 37.
58 Kenyan folk saying: R.G.H. Siu, Folk Wisdom and Management 3,333 Proverbs (Washington, D.C.: Manuscript, 1994), p. 74.
59 “have had with them”: Alvin W. Gouldner, “The Norm of Reciprocity: A Preliminary Statement,” American Sociological Review, Vol. 25, No. 2 (April 1960), pp. 161-178; quote at pp. 170-171.
59 Italy in 1935: Robert Cialdini summarizes this research in his book. See Robert B. Cialdini, Influence: The Psychology of Persuasion (New York: William Morrow, 1984), pp. 17-57.
60 can from every transaction: Economist Matthew Rabin wrote a pathbreaking article in 1993 in which he modeled the effect of relationships on exchange. This article is considered somewhat radical within the economics profession. See Matthew Rabin, “Incorporating Fairness into Game Theory and Economics,” American Economic Review, Vol. 83, No. 5 (December 1993), pp. 1281-1302. Of course, the entire discipline of social psychology assumes that relationships affect exchange in deep, pervasive ways.
60 J. P. Morgan in his autobiography: Andrew Carnegie, Autobiography (New York: Doubleday, 1920), pp. 165-166.
61 “henceforth a firm friend”: Ibid., p. 166.
61 called the “ultimatum game”: Ultimatum games provide data about our taste for fairness both with and without relationships as factors in decision making. For a review of the ultimatum game literature, see Werner Guth and Reinhard Tietz, “Ultimatum Bargaining Behavior: A Survey and Comparison of Experimental Results,” Journal of Economic Psychology, Vol. 11 (1990), pp. 417-432.
62 this patently unfair division: Most ultimatum game studies reveal that people offer an average of 40 percent of the amount being divided and will usually reject amounts that fall below 20 percent. See George Lowenstein, Samuel Issacharoff, Colin Camerer, and Linda Babcock, “Self-serving Assessments of Fairness and Pre-trial Bargaining,” Journal of Legal Studies, Vol. 22, No. 1 (1993), pp. 135-159.
66 dating couples handled bargaining: William R. Fry, Ira J. Firestone, and David L. Williams, “Negotiation Process and Outcome of Stranger Dyads and Dating Couples: Do Lovers Lose?,” Basic and Applied Social Psychology, Vol. 4, No. 1 (1983), pp. 1-16.
67 when it comes to bargaining: Jennifer J. Halpern, “The Effect of Friendship on Personal Business Transactions,” Journal of Conflict Resolution, Vol. 38, No. 4 (December 1994), pp. 647-664.
67 between friends and strangers: Edward H. Lorenz, “Neither Friends nor Strangers: Informal Networks of Subcontracting in French Industry,” in Trust: Making and Breaking Cooperative Relations (New York: Basil Blackwell, 1988), p. 194.
68 similarity to help him: Two studies documenting the similarity principle from the early 1970s are discussed in Cialdini, Influence. In the first, researchers dressed as “hippies” or as “straights” and roamed a college campus asking for small change (a dime). They discovered that their request was granted roughly two thirds of the time when they were dressed similarly to the person being asked but less than half the time when the target was dressed differently. See T. K. Emswiller and J. E. Willits, “Similarity, Sex and Requests for Small Favors,” Journal of Applied Social Psychology, Vol. 1 (1971), pp. 284-291. The same result was achieved by similar means in a study seeking signatures on an anti-Vietnam War petition. See P. S. Suedfeld, S. Bochner, and C. Matas, “Petitioner’s Attire and Petition Signing by Peace Demonstrators: A Field Experiment,” Journal of Applied Social Psychology, Vol. 1 (1971), pp. 278-283.
69 the HBJ example: Colin Camerer, “Gifts as Economic Signals and Social Symbols,” American Journal of Sociology, Vol. 94 (Suppl.) (1988), pp. S180-S214.
70 do in the West: Murray Weidenbaum, “The Bamboo Network: Asia’s Family-Run Conglomerates,” Strategy and Business, No. 10 (1998), pp. 59-65; Cynthia L. Kemper, “Russian business success is a long-term proposition,” The Denver Post, June 8, 1997, p. 14.
70 reciprocal signs of respect: The ceremony can be quite elaborate; one business book takes three pages to describe it. See Jon P. Alston, The Intelligent Businessman’s Guide to Japan (New York: Charles E. Tuttle, 1990), pp. 39-42.
70 the issue of trust: Ibid., pp. 49-53.
70 guanxi (pronounced “gwang-chi”): Eric W. K. Tsang, “Can guanxi be a source of sustained competitive advantage for doing business in China?,” Academy of Management Executive, Vol. 12, No. 2 (1998), pp. 64-73.
70 “simplest deals can disintegrate”: “The ‘Guanxi’ List 1997,” International Business Asia, Vol. 5, No. 12 (June 30, 1997), pp. 11-23.
71 soon opened as planned: See Evelyn Iritani, “On the Front Lines: A Handful of U.S. Entrepreneurs Are Battling Bureaucracy and Corruption to Establish Their Niches in China,” Los Angeles Times, October 8, 1997, p. D1.
71 “best business and political circles”: “The ‘Guanxi’ List 1997,” International Business Asia, pp. 11-21.
CHAPTER 5: The Fifth Foundation: The Other Party’s Interests
76 Adam Smith (1776): Adam Smith, An Inquiry into the Nature and Cause of the Wealth of Nations (Oxford: Oxford University Press, 1993), p. 22.
76 Henry Ford: I have not been able to find the original source of this quote but it is attributed to Henry Ford in Dale Carnegie, How to Win Friends and Influence People, rev. ed. (New York: Pocket Books, 1981), p. 37. The quote has an ironic twist, given Henry Ford’s reluctance to alter his Model T car’s basic design even when consumers began demanding variety from automobile manufacturers.
78 “always another billion dollars”: Melissa Wahl, “1st Union chief’s nerve-racking wait for CoreStates,” Philadelphia Inquirer, November 26, 1997, p. D1.
78 “thinking about the other side . . .”: Gail DeGeorge, The Making of Blockbuster (New York: John Wiley & Sons, 1996), p. 48. I have altered this quotation to the present tense for clarity.
78 having partisan perceptions: Leigh A. Thompson, “They Saw a Negotiation: Partisanship and Involvement,” Journal of Personality and Social Psychology, Vol. 68 (1995), pp. 839-853.
78 are contributing to it: Actually, most negotiators believe not only that others are like them but also that others
are not quite as flexible, purposeful, competent, fair, honest, or cooperative—in short, that others are like them only not as “good.” See Max H. Bazerman and Margaret A. Neale, Negotiating Rationally (New York: Free Press, 1992), p. 61.
79 make the pie bigger: Ibid., pp. 16-22.
79 50 percent of the time: Leigh Thompson, The Mind and Heart of the Negotiator (Englewood Cliffs, N.J.: Prentice-Hall, 1998), p. 49.
79 real interests and motivations: Walter Morley Balke, Kenneth Hammond, and G. Dale Meyer, “An Alternate Approach to Labor-Management Relations,” Administrative Science Quarterly, Vol. 18 (1973), pp. 311-327.
80 feasible options for settlement: N. Rackham and J. Carlisle, “The Effective Negotiator—Part 1: The Behavior of Successful Negotiators,” Journal of European Industrial Training, Vol. 2, No. 6 (1978), pp. 6-11; N. Rackham and J. Carlisle, “The Effective Negotiator—Part 2: Planning for Negotiations,” Journal of European Industrial Training, Vol. 2, No. 7 (1978), pp. 2-5.
80 price, power, or control: Only 11 percent of the comments of the less skilled negotiators were focused on possible common ground. Rackham and Carlisle, Part 2.
81 on their own goals: Leigh Thompson, “Information Exchanged in Negotiation,” Journal of Experimental Social Psychology, Vol. 27 (1991), pp. 161-179; Leigh Thompson and T. DeHarpport, “Social Judgment, Feedback, and Interpersonal Learning,” Organizational Behavior and Human Decision Processes, Vol. 58, No. 3 (1994), pp. 327-345; Leigh Thompson and R. Hastie, “Social Perception in Negotiation,” Organizational Behavior and Human Decision Processes, Vol. 47, No. 1 (1990), pp. 98-123.
84 “Ask and It Shall Be Discounted”: “Ask and It Shall Be Discounted: Business-to-business bargains are becoming a way of life,” Business Week, October 6, 1997, pp. 116-118.
85 up to that time in U.S. history: Wahl, “1st Union chief’s nerve-racking wait,” p. D1.
86 California, and its garbage: Jeff Bailey, “Arizona Has Plenty of What Oceanside Needs and Vice Versa,” The Wall Street Journal, March 4, 1997, p. 1.
CHAPTER 6: The Sixth Foundation: Leverage
89 I know those reasons: Bob Woolf, Friendly Persuasion: How to Negotiate and Win (New York: Berkley Books, 1990), p. 129.
89 Attributed to American gangster Al Capone: Ibid., pp. 129-130.
90 bargainers achieve their goals: Chester L. Karrass, The Negotiating Game, rev. ed. (New York: HarperBusiness, 1992), pp. 20-22.
90 faced a big problem: This story comes from Matthew Lynn, Birds of Prey, Boeing vs. Airbus: A Battle for the Skies, rev. ed. (New York: Four Walls Eight Windows, 1997), pp. 120-122.
91 turned-producer Peter Guber: Nancy Griffin and Kim Masters, Hit and Run: How Jon Peters and Peter Guber Took Sony for a Ride in Hollywood (New York: Simon & Schuster, 1996), pp. 88-89.
91 its giant generating station: Daniel Machalaba, “Tired of Costs, Delays of Railroads, Firms Lay Their Own Tracks,” The Wall Street Journal, February 6, 1998, p. A1.
93 is dictating your moves: Hostage situations have been the subject of extensive research in negotiation, particularly by scholars interested in human communication. See William A. Donohue and Anthony J. Roberto, “Relational Development as Negotiated Order in Hostage Negotiation,” Human Communication Research, Vol. 20, No. 2 (December 1993), pp. 175-198, for a review of the literature.
95 threat may lack credibility: Thomas C. Schelling makes this point convincingly in his classic work. Thomas C. Schelling, The Strategy of Conflict (London: Oxford University Press, 1960), pp. 21-52.
95 the use of force: Before police and other authorities began using negotiation to help them resolve hostage situations, many more hostages died during police-led assaults to free them than were killed directly by hostage takers. See Abraham H. Miller, Terrorism and Hostage Negotiations (Boulder, Colo.: Westview Press, 1980), pp. 37-38.
96 surviving are quite good: Ibid., p. 42.
97 “it for [many] hours”: Ibid.
97 to meet his death: Bruce W. Nelan, “How They Did It: In a Quick and Brutal Assault, Fujimori’s Troops Rescue All But One of the 72 Hostages,” Time, May 5, 1997, p. 67. This phenomenon works both ways. Hostages sometimes suffer from the “Stockholm syndrome,” named for a famous 1973 bank robbery in Sweden during which a female hostage fell in love with her captor, had voluntary sexual relations with him while a captive, and continued the relationship after he went to prison. Miller, Terrorism and Hostage Negotiations, p. 46.
100 age of ninety-six: Ibid., pp. 14-36; Tom Mathews, “Seizing Hostages: Scourge of the 70s,” Newsweek, March 21, 1977, p. 16.
101 “the greater your power”: Roger Fisher, William Ury, and Bruce Patton, Getting to Yes, 2d. ed. (New York: Penguin Books, 1991), pp. 97-106.
101 to achieve its goals: Peter H. Kim and Alison R. Fragale, “Choosing the Path to Bargaining Power: An Empirical Comparison of BATNAs and Contributions in Negotiation,” Journal of Applied Psychology, Vol. 90 (2005), pp. 373-381 (BATNA was a better measure of bargaining power for small bargaining zones but relative contributions to the relationship mattered more for large bargaining zones).
102 “simply cannot do without”: Donald J. Trump, The Art of the Deal (New York: Random House, 1987), p. 37.
103 section of Fifth Avenue: Ibid., pp. 103-104.
103 than do equivalent gains: There is a rich literature on the importance of how people think about potential losses versus potential gains. See Daniel Kahneman and Amos Tversky, “Prospect Theory: An Analysis of Decision Risk,” Econometrica, Vol. 47, No. 2 (1979), pp. 263-291; Paul H. Schurr, “Effects of Gains and Loss Decision Frames on Risky Purchase Negotiations,” Journal of Applied Psychology, Vol. 72, No. 3 (1987), pp. 351-358; Eric van Dijk and Daan van Knippenberg, “Buying and Selling Exchange Goods: Loss Aversion and the Endowment Effect,” Journal of Economic Psychology, Vol. 17 (1996), pp. 517-524.
105 the jury unanimously endorses: Harry Kalven, Jr., and Hans Zeisel, The American Jury (Boston: Little Brown, 1966), pp. 486-91; John Sabini, Social Psychology, 2d. ed. (New York: W. W. Norton, 1992), pp. 94-95.
105 scientists call social proof: Cialdini, Influence, pp. 114-166.
106 too proud to apply: Scott Kilman, “Hard-Pressed Ranchers Dream of Marketing Own Brand of Beef,” The Wall Street Journal, March 26, 1997, p. A1.
109 of newspaper comic strips: David M. Herszenhorn, “Widowed Homeowner Foils Trump in Atlantic City,” New York Times, July 21, 1998, p. B1; Tiffany Danitz, “When Private Land Is Public Property,” Washington Times, April 6, 1998, p. 14; John Curran, “Elderly Woman Battles Casinos over Her Home,” Los Angeles Times, February 25, 1996, p. A11.
112 “up to the President”: Howard Gardner, Leading Minds: An Anatomy of Leadership (New York: Basic Books, 1995), pp. 148-149.
112 coupled with expertise: Expertise is one of the most well-documented persuasion techniques in the literature on marketing. Elizabeth J. Wilson and Daniel L. Sherrell, “Source Effects in Communication and Persuasion Research: A Meta-Analysis of Effect Size,” Journal of the Academy of Marketing Science, Vol. 21 (1993), pp. 101-112; Arch G. Woodside and J. William Davenport, Jr., “The Effect of Salesman Similarity and Expertise on Consumer Purchasing Behavior,” Journal of Marketing Research, Vol. 11 (1974), pp. 198-202.
CHAPTER 7: Step 1: Preparing Your Strategy
117 Sir Francis Bacon (1597): Michael Kiernan, ed., Sir Francis Bacon, The Essays of Counsels, Civill and Morall (Cambridge, Mass.: Harvard University Press, 1985), pp. 145-147. The essay from which this quote is taken is called “Of Negotiating” and first appeared in 1597.
117 Turkish folk saying: R.G.H. Siu, Folk Wisdom and Management 3,333 Proverbs (Washington, D.C.: Manuscript, 1994), p. 30.
119 American business mergers: Dr. Gulliver identifies eight distinct stages. Simplified, these stages include: 1) search for an arena, 2) formulation of an agenda, 3) preliminary statements, 4) narrowing of issues, 5) preliminaries to final bargaining, 6) bargaining, 7) agreement and ritual confirmation, and 8) implementation. P. H
. Gulliver, Disputes and Negotiations: A Cross-Cultural Perspective (New York: Academic Press, 1979), p. 82. I prefer to condense these eight steps into four for pedagogical purposes. Other scholars have identified basically similar stages in the negotiation process. Ann Douglas, Industrial Peacemaking (New York: Columbia University Press, 1962), pp. 13-99; Ian Morley and Geoffrey Stephenson, The Social Psychology of Bargaining (London: George Allen & Unwin Ltd., 1977), pp. 284-93; Michael E. Holmes, “Phase Structures in Negotiation,” in Communication and Negotiation (Newbury Park, N.J.: Sage, 1992), pp. 83-105; Camille P. Schuster and Michael J. Copeland, Global Business: Planning for Sales and Negotiations (Fort Worth, Tex.: The Dryden Press, Harcourt Brace College, 1996), pp. 27-28.
121 in this particular transaction?: The discussion in the text is a variant on the “Dual Concern” model. Peter J. D. Carnevale and Dean G. Pruitt, “Negotiation and Mediation,” Annual Review of Psychology, Vol. 43 (1992), pp. 539-543.
122 John D. Rockefeller, Jr.: Allan Nevins, Vol. 2, John D. Rockefeller: The Heroic Age of American Enterprise (New York: Scribners, 1940), pp. 417-422. Ron Chernow, Titan: The Life of John D. Rockefeller, Sr. (New York: Random House, 1998), pp. 390-392.
124 the Depression-scarred 1930s: Abraham Pais, Einstein Lived Here (New York: Clarendon Press, 1994), p. 188. Another account of these negotiations can be found in Dennis Brian, Einstein: A Life (New York: John Wiley & Sons, 1996), p. 232.
125 pockets of everyone involved: The story comes from Benjamin Franklin himself. L. Jesse Lemisch, ed., Benjamin Franklin, The Autobiography and Other Writings (New York: Penguin, 1961), pp. 29-30.
131 whether you like it or not: For an excellent summary of academic learning on the role of agents in negotiation, see Robert H. Mnookin, Lawrence E. Susskind, and Pacey C. Foster, Negotiating on Behalf of Others: Advice to Lawyers, Business Executives, Sports Agents, Diplomats, Politicians, and Everybody Else (Thousand Oaks, CA: Sage Publications, 1999).