Negotiation: Theory and Strategy (Second Edition)

SUMMARY OF CONTENTS Contents Preface Acknuwledgments PART 1: INTRODUCTION I . Toward a Conceptual Approach to Negotiation PART U: THE STRUCTURE OF NEGOTIATION 2. Estimating the Bargaining Zone 3. Psychological Factors in Evaluating Alternatives 4. Integrative Bargaining 5. Power 6. Fair Division and Related Social Norms

xi xix xxiii

5

25 27 51 91 1 27 1 59

PART Ill: THE NEGOTIATOR 7. Interpersonal Obstacles to Optimal Agreements 8. Negotiator Style 9. Group Membership

191

PART IV: ADDillONAL PARTIES 10. The Principal-Agent Relationship I I . Multilateral Negotiations 1 2. The Use of Mediation in Negotiation

275

PART V: THE LAW OF NEGOTIATION 1 3. Deceit 1 4. Rules Encouraging Litigation Settlement 15. Limitations on Settlement

359

Table of Cases Collected R£ferences Index

441

193 223 245

277 307 329

361 399 425

443 449

ix

CONTENTS Preface Acknawledgments

xix xxiii

PART 1: INTRODUCTION Chapter

I:

Toward a Conceptual Approach to Negotiation

A. The Steps of Negotiation: An Overview I.

Preparation 2. Information Exchange 3. Agreement Proposals 4. Resolution B. Conceptual Models of Negotiation Carrie Menkel-Meadow, Toward Another View of Legal

Negotiation: The Strncture of Problem-Solving Russell Korobkin, A Positive Theory of Legal Negotiaticm Robert H. Mnookin, Why Negotiations Fail: An Expluration of Barriers to the Resolution of Conflict

Discussion Questions and Problems

PART II: THE STRUCTURE OF NEGOTIATION Chapter 2: Estimating the Bargaining Zone

A. Batnas and Reservation Prices Russell Korobkin, A Positive Theory of Legal Negotiation Notes

B. Calculating Rese rvation Price: A Prescriptive Approach I. Step I : The Baseline 2. Step 2: Adjusting from the Baseline Notes

Discussion Questions and Problems Chapter 3: Psychological Factors in Evaluating Alternatives

A. Heuristics I.

The Self-Serving Bias

5 5 6 8 10 II 12 14 17 20

23

25 27 27 27 30

31 32 32 38

46

51 52 53

xi

Contents

xii

George Loewt"nstein, Samuel Issacharoff, Colin Camerer &: Linda Babcock, &lf--Snving A.ut'ssmmts of Fairn.ess and

Pretrial Bargaining

53

2. OveiWeighting of Salient Information

56

Craig R. Fox 8c Richard Birke, Forecasting Trial Outcomes: Lawyers

Assign Highn Probability to Possibilit;., Thai Art Describ Evolution of Cooperation

204

Notes

208

The Role of Emotions in Bargaining I. The Desire for Interactional Justice 2. Incidental Emotions and Affe ct 3. Creating Helpful Emotional States

211 211 213 214

Notes

Discussion Questions and Problems

218

219

Chapter 8: Negotiator Style

223

A. Conflict Orientation

223 224

l.

B.

Cooperation Versus Competition

Gerald R. Williams, 1-Lgal Negotiation and Settlement

224

2. Empathy Versus Assertiveness

228

Robert H. Mnookin, Scott R. Peppel & Andrew S. Tulumello, T/u> Trnsion Bl'tween Empathy and Assertivent"ss Notes

228 230

Aspiration Levels

232

Russell Korobkin, Aspirations and Seulement Notes

234

Discussion Questions and Problems Chapter 9: Group Membership

A. Gender Linda Babcock & Sara Laschever, Women Dun 't Ask: Negotiation and the Gender Divide Notes

B. Culture

239

241

245 246 246 250

256

Jeanne M. Brett, Culture and Negotiation

258

Jeswald W. Salacuse, Making Deals in Strange Places: A Beginner's Guide to lntnnational Business Negotiatiuns

262

Michele J . Gelfand &: Sophia Christakopoulou, Culture and Negotiator Cognition: judgment Accurary and Negotiation Processes in Individualistic and Co/kctivistic Cullum

265

XV

Contents

268

Notes

Discussion Questions and Problems

PART IV: ADDITIONAL PARTIES Chapter 10: The Principal-Agent Relationship A.

B.

275

277

The Benefits of Lawyer-Agen ts L Tech nical Expertise 2- Negotiation Expertise 3- Signaling 4- Dispassionate Analysis 5- Justification Generation 6. Access 7. Strategic Advantage 8. Cost Effectiveness

277 277 278 278 278 279 279 279 280

Ronald J. Gilson & Robert H. Mnookin, Dir­ vation price of both parties. If a buyer and seller are negotiating a sale of an ear of com in the center of a busy fanner's market, they will probably reach an agree­ ment- if at all -at the market price. The buyer will not pay more than this, because he can buy at this price by turning to the next seller. The seller will not accept less than this, because he can sell at this price by turning to the next buyer. In this case, the bargaining zone between buyer and seller contains only a single point. There is no cooperative surplus to divide; the negotiator's sole task is to locate that single point of possible agreement. Referencing the market price helps accomplish this goal. When there is not an active market for the subject of the negotiation, or when buyer and seller are locked into a bilateral monopoly situation, referencing the "market price" setves another purpose entirely. In this situation, the market price is relevant because it reflects convention and thus is likely to be seen as fair to both parties. For example, when a plaintiff and defendant are attempting to negotiate a settlement, one or both might reference the settlement amounts in similar lawsuits. These amounts do not necessarily relate to either party's reser­ vation price, because neither is able to settle for that price in the open market­ the plaintiff must reach agreement if at all with this defendant, and vice versa. But the market price might be a deal point at which both parties feel they have achieved an agreement that is both beneficial (relative to pursuing tht'ir BATNAs) and equitable.

B.

Convention

1 75

2. Other FO«Jl Points. The market price of an item, or the price charged in other reference transactions that seem appropriate, are appealing deal points because both parties are likely to think that they did not bend to the other party's will or use of power tactics. Negotiators often achieve this same goal by choosing as deal points other prominent values, or "focal points" - locations in the bar­ gaining zone to which attention is naturally drawn. J. Keith Murnighan demonstrates the power of prominence by asking people what they think the selling price of two cars will be if the dealer advertises them for $ 1 0,650 and $2,650 respectively. The vast majority of respondents predict the first car will sell for $ 1 0,000, and that the second car will sell for either $2,000 or $2,500. He concludes from this and related anecdotes: Sometimes bargaining outcomes are obvious, even before the bargaining begins. The bargainers themselves may not realize this. They're too busy trying to analyze the situation and find an advantage they can exploit. But outside observers can often see it and afteJWard, with the benefits of hindsight, the bargainers themselves may see it, too. The moral . . . is that prominence is a very important factor in bargaining. It underlies many negotiations, it can have a potent effect on the outcome of a nego­ tiation . . . . Prominence is not a singular concept: It's fuzzy and can come in any of several forms (first, tallest, etc . ) . But it does make sense. We recognize it immediately when we think of it. It pays to pay attention to it in negotiations. The presence of a prominent solution is one of the most basic aspects of the structure of a bargaining game, whether the game is silent and without contact or more normal. Thus, the stntcture ofthe game itselfs017U'titMs dictates the final outcOtTU'. Even when it doesn 't, prominence can limit the range of possible outcomes. When a prom­ inent solution exists, it will be the most likely outcome. Thus, when you recognize the presence of prominent solutions and, more generally, the driving forces provided by the underlying structure of a bargaining game, you should work within that structure to your best advantage.

J. Keith Murnighan, Bargaining Games 45-46 ( 1 992 ) . J . The Puwer of Refereru:e Points Revisired. The study by Kahneman and his colleagues shows that reference points play a significant role in judgments of fairness. For example, giving employees less than their reference wage in a non­ inflationary environment is considered unfair, but denying employees a raise above their reference wage in an inflationary environment is not judged unfair, even when the two results are economically identical. This finding bears a close relationship to the findings presented in Chapter 3 that individuals often place a higher value on maintaining what they perceive to be the status quo in the face of a "loss" from that position than they place on capturing a "gain" from that position. 4. Are Appeals to Objective Criteria Really Objective? When Fisher and his col­ leagues counsel negotiators to search for objective criteria as a means of iden­ tifying a deal point, they suggest that such an approach is an alternative to either negotiator satisfying his desire to capture as much of the cooperative surplus as possible. james White has called this position "naive," claiming that " [m]ost of the time [objective criteria] will do no more than give the superficial appearance

1 76

Chapter 6.

Fair Division and Related Social Nonns

of reasonableness and honesty to one party's position." James J. White, Essay ReVIew: The Pros and Cons of Getting to Yes, 34Journal ofLegalEducation 1 1 5, 1 1 7 ( 1 984 ) . There is probably some truth to both positions. That is, sometimes appeals to convention are made in an effort to manipulate, and sometimes they are made in an effort to reach agreement in a cooperative way that does not result in "winners" and "losers."

C.

RECIPROCI1Y AS A PROCESS NORM

When people imagine a negotiation, they often conjure up visions of offers and counteroffers flying back and forth like a ping-pong ball across a table: the buyer makes a low offer, the seller responds with a high demand; the buyer raises his offer, the seller in tum lowers his demand, and so forth until the positions of the parties converge. Howard Raiffa has called this "the negotiation dance." Howard Raiffa, The A rt and Science of Negotiation 47 ( 1982 ) . Many negotiations, although certainly not all, include such a dance. Why doesn't a buyer usually begin negotiations by stating his best offer? Why doesn't a seller usually begin by stating his lowest demand? Social convention demands reciprocity. When one person gives something of value to another, we usually expect that the recipient will reciprocate in some way. The next excerpt describes a considerable amount of social science research demonstrating the power of the reciprocity nonn. When you read the excerpt. think about how it helps to explain the negotiation dance. • Robert B. Cialdini, Influence: Science and Practice (1993)* A few years ago, a university professor tried a little experiment. He sent Christmas cards to a sample of perfect strangers. Although he expected some reaction, the response he received was amazing - holiday cards addressed to him came pouring back from people who had never met nor heard of him. The great majority of those who returned cards never inquired into the identity of the unknown professor. . . While small in scope, this study shows the action of one of the most potent of the weapons of influence around us - the rule of reciprocation. The rule says that we should try to repay, in kind, what another person has provided us. If a woman does us a favor, we should do her one in return; if a man sends us a birthday present. we should remember his birthday with a gift of our own; if a couple invites us to a party, we should be sure to invite them to one of ours. By virtue of the reciprocity rule, then, we are obligated to the future repayment of favors, gifts, invitations, and the like. So typical is it for indebtedness to accompany the receipt of such things that a phrase like "much obl iged" has become a synonym for "thank you," not only in the Engl ish language but in others as wel l . • Robert B . Cialdini, Influence: Science and Practice. C ..opyright r c 1 99 3 b y Allyn & Bacon. Rq>­ tinted/adapted by pennission.

C.

Reciprocity

as a

Process Norm

1 77

The i mpressive aspect of reciprocation with its accompanying sense of obl igation is its pervasiveness i n human culture. It is so widespread that. alter i ntensive study, Alvin Gouldner (1960), along with other sociologists, report that all human societies subscribe to the rule. Within each society it seems pervasive also; it permeates exchanges of every kind. I ndeed, it may well be that a developed system of i ndebt­ edness flowing from the rule of reciprocation is a unique property of human cu lture. The noted archaeologist Richard Leakey ascribes the essence of what makes us human to the reciprocity system. He claims that we are human because our ancestors learned to share food and skills "in an honored network of obl igation " (Leakey & Lewin, 1978). Cu ltural anthropologists Lionel Tiger and Robin Fox (1971) view this "web of i ndebtedness" as a u nique adaptive mechanism of human beings, al lowing for the division of labor, the exchange of diverse forms of goods and different services, and the creation of interdependencies that bind ind ividuals together i nto highly efficient units . . . To understand how the rule of reciprocation can be exploited by one who recog­ nizes it as the weapon of influence it certainly is, we might closely examine an exper­ iment conducted by psychologist Dennis Regan (1971). A subject who participated in the study rated, a long with another subject, the qual ity of some painti ngs as part of an experiment on "art appreciation." The other rater - we can call h i m Joe - was only posing as a fellow subject and was actually Dr. Regan's assistant. For our purposes, the experiment took place under two different conditions. I n some cases, Joe did a small, unsolicited favor for the true subject. During a short rest period, Joe left the room for a couple of minutes and returned with two bottles of Coca-Cola, one for the subject and one for h imself, saying " I asked him [the experi menter] if I could get myself a Coke, and he said it was OK, so I bought one for you, too." I n other cases, Joe did not provide the subject with a favor; he simply returned from the two minute break empty-handed. I n all other respects, however, Joe behaved identica l ly. Later on, alter the pai ntings had all been rated and the experimenter had momen­ tarily left the room, Joe asked the subject to do him a favor. He indicated that he was selling raffle tickets for a new car and that if he sold the most tickets, he would win a $50 prize. Joe's request was for the subject to buy some raffle tickets at 25 cents apiece: "Any would help, the more the better." The major finding of the study con­ cerns the number of tickets subjects purchased from Joe under the two conditions. Without question, Joe was more successful in sel ling his raffle tickets to the subjects who had received his earlier favor. Apparently feeling that they owed him something, these subjects bought twice as many tickets as the subjects who had not been given the prior favor. . Think of the impl ications. People we might ordinarily dislike - unsavory or unwel­ come sales operators, disagreeable acquai ntances. representatives of strange or unpopular organ izations - can greatly increase the chance that we will do what they wish merely by providing us with a small favor prior to their requests. Let's take an example that. by now, many of us have encountered. The Hare Krishna Soci­ ety is an Eastern religious sect with centuries-old roots traceable to the Indian city of Ca lcutta. Its spectacular modern-day story occurred in the 1970s when it experienced a remarkable growth, not only in followers, but also i n wealth and property. The economic growth was funded through a variety of activities, the principal and sti ll most visible of which is society members' requests for donations from passersby in public places. During the early history of the group in this country, the solicitation for contri butions was attempted in a fashion memorable for anyone who saw it. Groups of

1 78

Chapter 6.

Fair Division and Related Social Nonn!l

Krishna devotees - often with shaved heads, and wearing ill-fitting robes, leg wrap­ pings, beads, and bells - would canvass a city street. chanting and bobbing in unison while begging for funds. Although h ighly effective as an attention-getting technique, this practice did not work especially well for fund raising. The average American considered the Krishnas weird, to say the least. and was reluctant to provide money to support them. It quickly became clear to the society that it had a considerable public-relations problem. The people being asked for contributions did not like the way the members looked, dressed, or acted. Had the society been an ordinary commercial organization, the solution would have been simple - change the things the public does not like . . . . The Krishnas' resolution was bri lliant. They switched to a fund-raising tactic that made it unnecessary for their targets to have positive feelings toward the fund· raisers. They began to employ a donation-request procedure that engaged the rule for reciprocation, which, as demonstrated by the Regan study, was strong enough to overcome dislike for the requester. The new strategy still involved the solicitation of contributions in public places with much pedestrian traffic (airports are a favorite), but. before a donation was requested, the target person was given a "gift" - a book (usually the Bhagavad Gila), the Back to Godhead magazine of the society, or, in the most cost-effective version, a flower. The unsuspecting passersby who suddenly found flowers pressed into their hands or pinned to their jackets were under no circumstances al lowed to give them back even if they asserted that they did not want them. "No, it is our gift to you, " said the solicitor. refusing to take it back. Only after the Krishna member had thus brought the force of the reciprocation rule to bear on the situation was the target asked to provide a contribution to the society. This benefactor-before-beggar strategy has been wildly successful for the Hare Krishna Society, producing large-scale economic gains and funding the ownership of temples, businesses, houses, and property in 321 centers in the United States and abroad . . . It is a testament to the societal value of reciprocation that even those of us who know what the Krishnas are up to have chosen to avoid them or to deflect their flowers rather than to withstand the force of their gift giving directly by taking the flower and walking away with it. The reciprocation rule that empowers their tactic is too strong. The reciprocity rule governs many situations of a purely interpersonal nature where neither money nor commercial exchange is at issue. Perhaps my favorite illus­ tration of the enormous force available from the reciprocation weapon of influence comes from such a situation. The European scientist Eibi-Eibesfeldt (1975) provides the account of a German soldier during World War I whose job was to capture enemy soldiers for interrogation. Because of the nature of the trench warfare at that time. it was extremely difficult for armies to cross the no-man's-land between opposing front lines. but it was not so difficult for a single soldier to crawl across and slip into an enemy trench position. The armies of the Great War had experts who regularly did so to capture enemy soldiers, who would then be brought back for questioning. The German expert had often successfully completed such missions in the past and was sent on another. Once again, he skillfully negotiated the area between fronts and surprised a lone enemy soldier in his trench. The unsuspecting soldi� r, who . had been eating at the time, was easily disarmed. The frightened capt1ve, w1th only a piece of bread in his hand. then performed what may have been the most important act of his l ife. He gave his enemy some of the bread. So affected was the German by

C.

Reciprocity

as a

Process Nann

1 79

this gift that he could not complete his mission. He turned from his benefactor and recrossed the no-man's-land empty-handed to face the wrath of his superiors. The abil ity of u n i nvited gifts to produce feel i ngs of obl igation is recognized by a variety of organ izations besides the Krishnas. How many t i mes has each of us received small gifts through the mai l - personal ized address labels, greeting cards, key rings - from charitable agencies that ask for funds i n a n accompanying note? I have received five i n just the past year, two from disabled veterans' groups and the others from missionary schools and hospita ls. I n each case, there was a common thread in the accompanying message. The goods that were enclosed were to be considered a gift from the organization: and money I wished to send should not be regarded as payment but rather as a return offeri ng. As the letter from one of the missionary programs stated, the packet of greet i ng cards I had been sent was not to be d i rectly paid for but was designed "to encourage your [my] kind­ ness." If we look past the obvious tax advantage, we can see why it wou ld be beneficial for the orga nization to have the cards viewed as a gift instead of mer­ chandise: There is a strong cultural pressure to reci procate a gift, even a n u nwanted o n e : b u t there i s no s u c h pressure to purchase an unwanted commercial product. There is yet another feature of the reciprocity rule that al lows it to be exploited for profit. Paradoxically, although the rule developed to promote equal exchanges between partners, it can be used to bring about decidedly unequal results. The rule demands that one sort of action be reciprocated with a similar sort of action. A favor is to be met with another favor; it is not to be met with neglect and certa inly not with attack; however, considerable flexibil ity is al lowed. A small initial favor can produce a sense of obl igation to agree to a substantially larger return favor. Si nce, as we have already seen, the rule al lows one person to choose the nature of the indebting first favor and the nature of the debt-canceling return favor, we could easily be manipulated i nto an unfair exchange by those who might wish to exploit the rule. Once again, we turn to the Regan experiment for evidence. Remember in that study, Joe gave one group of subjects a bottle of Coca-Cola as an initiating gift and later asked all subjects to buy some of his raffle tickets at 25 cents apiece. What I have so far neglected to mention is that the study was done in the late 1960s, when the price of a Coke was a dime. On the average, subjects who had been given a 10-cent drink bought two of Joe's raffle tickets, although some bought as many as seven. Even if we look j ust at the average, though, we can tell that Joe made qu ite a deal. A 500 percent return on investment is respectable indeed! . . . . . A person who violates the reciprocity rule by accepting without attempting to return the good acts of others is disliked by the social group. The exception, of course, occurs when a person is prevented from repayment by reasons of circumstance or abil ity. For the most part, however, there is a genuine distaste for an individual who fails to conform to the dictates of the reciprocity rule. Moocher and welsher are unsavory labels to be scrupulously shunned. So undesirable are they that people will sometimes agree to an unequal exchange in order to dodge them . . I was wa lking down the street when I was approached by an 11 or 12-year old boy. He i ntroduced hi mself and said he was sel l i ng tickets to the annual Boy Scouts Circus to be held on the upcoming Saturday n ight. He asked if I wished to buy any tickets at $5 apiece. Since one of the last places I wanted to spend Saturday evening was with the Boy Scouts, I declined. "We l l , " he said, "if you don't want to buy any tickets, how

180

Chapter 6.

Fair Division and Related Social Nonns

about buying some of our big chocolate bars? They're only $1 each." 1 bought a couple and, right away, realized that something noteworthy had happened. 1 knew that to be the case because (a) I do not like chocolate bars; (b) I do like dollars; (c) 1 was standing there with two of his chocolate bars; and (d) he was walking away with two of my dollars. To try to understand precisely what had happened, I went to my office and called a meeting of my research assistants. In d iscussing the situation, we began to see how the reciprocity rule was impl icated in my compliance with the request to buy the candy bars. The general rule says that a person who acts in a certain way toward us is entitled to a similar return action. We have already seen that one consequence of the rule is an obligation to repay favors we have received. Another consequence of the rule, however. is an obl igation to make a concession to someone who has made a concession to us. As my research group thought about it, we realized that was exactly the position the Boy Scout had put me in. His request that I purchase some $1 chocolate bars had been put in the form of a concession on his part: it was presented as a retreat from his request that I buy some $5 tickets. If I were to l ive up to the dictates of the reciprocation rule, there had to be a concession on my part. As we have seen. there was such a concession: I changed from noncompliant to compliant when he moved from a larger to a smaller request, even though I was not really interested in either of the things he offered . . . The reciprocation rule bri ngs about mutual concession in two ways. The first is obvious; it pressures the recipient of an already·made concession to respond in kind. The second, while not so obvious, is pivotally important. Because of a recipient's obl igation to reciprocate. people are freed to make the initial concession and, thereby, to begin the beneficial process of exchange. After all, if there were no social obl igation to reciprocate a concession, who would want to make the first sacrifice? To do so would be to risk giving up something and getting nothing back. However, with the rule in effect, we can feel safe making the first sacrifice to our partner, who is obl igated to offer a return sacrifice. . . . Posing as representatives of the "County Youth Counseling Program," [the author and his research assistants] approached col lege students walking on cam· pus and asked if they would be w i l l i ng to chaperon a group of juvenile delinquents on a day trip to the zoo. This idea of being responsible for a group of juvenile delin­ q uents of unspecified age for hours i n a public place without pay was hardly an inviting one for these students. As we expected, the great majority (83 percent) refused. Yet we obtained very different results from a similar sample of college students who were asked the very same question with one difference. Before we i nvited them to serve as unpaid chaperons on the zoo trip, we asked them for an even larger favor - to spend two hours per week as counselors to j uven ile deli nquents for a minimum of two years. It was only after they refused this extreme request, as all did, that we made the small, zoo-trip request. By presenting the zoo trip as a retreat from our initial request. our success rate increased dramatically. Three times as many of the students approached i n this manner volunteered to serve as zoo cha perons . . . . It seems that certain of the most successful television producers. such as Grant Tinker and Garry Marshall, are masters of this art in their negotiations with network censors. In a candid interview with TV Guide writer Dick Russell (1978), both admitted to "deliberately i nserting lines into scripts that a censor's sure to ax" so that they

C.

Reciprocity as a Process Nonn

181

could then retreat to the lines they really wanted to include. Marshall appears espe­ cially active i n this regard. Consider, for example, the following excerpt from Russell's article: But Marshal l . . . not only admits his tricks . . . he seems to revel i n them. On one episode of his [then] top-rated " Laverne and Shi rley" series, for example, he says, "We had a situation where Squiggy's i n a rush to get out of his apartment and meet some girls upstairs. He says: 'Will you hurry up before I lose my lust?' But i n the script we put something even stronger, knowing the censors would cut it. They did: so we asked i nnocently, wel l , how about ' lose my lust'? 'That's good , ' they said. Sometimes you gotta go at 'em backward.'' O n the "Happy Days" series, the biggest censorship fight was over the word virgin. That time, says Marshall, "I knew we'd have trouble, so we put the word in seven times, hoping they'd cut six and keep one. It worked. We used the same pattern again with the word Pregnant. " Let's . . . say that I wish to borrow $5 from you. By begi nning with a request for $10, I really can't lose. If you agree to it, I will have received from you twice the amount I would have settled for. If, on the other hand, you turn down my initial request. I can retreat to the $5 favor that I desired from the outset and, through the action of the reciprocity and contrast principles, greatly enhance my likelihood of success. Either way, I benefit; it's a case of heads I win, tails you lose . . . . The desirable side effects of making concessions during an interaction with other people are nicely shown in studies of the way people bargain with each other. One experiment, conducted by social psychologists at UCLA, offers an especially apt demonstration (Benton, Kelley, & Liebling, 1972). A subject in that study faced a " negotiation opponent" and was told to barga in with the opponent concern ing how to divide between themselves a certa in amount of money provided by the experimen­ ters. The subject was also informed that if no mutual agreement could be reached after a certai n period of barga ining, no one would get any money. Unknown to the subject. the opponent was really an experimental assistant who had been previously instructed to barga in with the subject in one of three ways. With some of the subjects, the opponent made an extreme first demand, assigning virtually all of the money to h imself and stubbornly persisted in that demand throughout the negotiations. With another group of subjects, the opponent began with a demand that was moderately favorable to himself: he, too, steadfastly refused to move from that position during the negotiations. With a third group, the opponent began with the extreme demand and then gradually retreated to the more moderate one during the course of the bargaining . . . . [C]ompared to the two other approaches, the strategy of starting with an extreme demand and then retreating to the more moderate one produced the most money for the person using it.

Notes I. opening Offrn and 1/u! NegoliDtUm Dance. Howard Raiffa offers the following observations of how his students acted in a negotiation simulation

1 82

Chapter 6.

Fair Division and Related Social Nonns

in which the buyer's reseJVation price was $550 and the seller's reseJVation price

was

$300: (a) A "typical" pattern of offers and counteroffers was: seller opens with an offer of $700; buyer responds with $250; seller then offers $500; buyer oilers $300; seller offers $450, buyer responds with $400; parties agree on a contrdct price of $425. (b) lf the midpoint between the buyer's and seller's initial offers is within

the bargaining zone, that midpoint is the most likely final contract price. However, "if the midpoint falls outside this zone, then it's hard to predict where the final contract will fall . . . . The reason is that the concessions will have to be lopsided, and it's hard to predict the consequences." Howard Raiffa, The Art and Science of Negotiation 4749 ( 1 982) .

Raiffa's observations suggest that aggressive initial offers might be effectivf' not only because they can anchor a counterpart's evaluation of her reservation price or because they can imply relevant information about the bargaining zone (as discussed in Chapter 5, Section B, Note 3 ) , but also because they can set up a favorable pattern of reciprocal concessions. However, these observations also suggest an argument for moderation. Ifthe offer is too extreme, the counterpart might refuse to accept an opening offer as a starting point for negotiations, in which case the potential tactical value of the opening offer might be lost. Sec also Max H. Bazerman & Margaret A. Neale, Negotiating RntionaUy 29 ( 1 992). 2. Tire Number and Size ofCmu:essions. How many rounds of offers and coun­ teroffers are typical, and how large are the differences between the initial and final offers and between counteroffers likely to be? Attorney V. Hale Starr claims that the majority of lawyers expect that the value of a lawsuit is 20.50 percent lower than the initial settlement demand, and thatjuror-qualified suiVey respon­ dents believed that plaintiffs' lawyers expected to receive 30-55 percent less than their initial demand. Starr also claims that experienced negotiators expect a negotiation to include three to seven rounds of offers and counteroffers, with more than five rounds constituting a "difficult" negotiation. V. Hale Starr, The Simple Math of Negotiating, 22 Trial Lawyer 5, 7-8 Uan-Feb. 1 999) . Of course, expectations about the number of rounds of offers and counteroffers will de­ pend a great deal on the context of the negotiation, especially the time that negotiators set aside for bargaining. Starr says that when a dispute resolution negotiation is scheduled for a full day, negotiators usually expect four rounds of offers and counteroffers; two before lunch, two after. Id. at 8. 3. TlrelleciprocityNarm mullleservatUm Prices. Because the reciprocity norm is so firmly established, the initial offer is often perceived as an implicit signal of the negotiator's reservation price. That is, a seller is likely to interpret a buyer's initial offer as a signal that her reservation price is substantially higher than the amount offered, and a buyer is likely to interpret a seller's initial demand as a signal that his reservation price is substantially lower than that demand. As one experienced litigator counsels, "Do not start the negotia­ tions with a number that reflects where you expect to be at the end . . . . If a negotiator does make this error, he is actually misleadi � g his cou � terp�rts, _ ons and d sc ss10ns who have every reason to believe that continued negouat � � � of the issues could lead to movement." Normal J. Watkms, Negouatmg the

C.

Reciprocity as a Process Norm

1 8!

Complex Case, 41 Fur til£ Defense 36, 38, 53 (July 1 999 ) . Refusing to engage in the negotiation dance of reciprocal concessions could cause an opponent to believe not only that the negotiator is not dealing fairly but also that the negotiator is demanding a final deal that is far superior to his actual reser­ vation price, whether or not this is the case. 4. Ntmmonetary Reciprocily. The reciprocity norm operates in a variety of ways, not merely when negotiators are haggling over price. Consider the following advice, given by a mergers and acquisitions expert about negotiating contract terms:

[A]ssume that the seller has objected to provisions in paragraphs 2, 3, 6 and 7. Paragraph 2 deals with an issue that seriously concerns you, as purchaser's counsel; but the points raised with respect to paragraphs 3, 6 and 7 are not significant and can be yielded. In that situation, you might very well approach opposing counsel as follows (although obviously not so briskly ) : "With respect t o t h e poin t in 3, I'll give you that o n e. . . . N o w on t h e issue in 6, I ' m n o t inclined t o argue about that. . . . With respect t o t h e poin t in 7, I still think the provision is fair but if it really bothers you we can change it as you suggested . . . . Now, about that question in number 2 . . . . " If you handle the matter in this fashion, there may be an understandable predis­ position on the part of your adversary to be cooperative on paragraph 2, especially if you can drum up some reasonable support for your position. On the other hand, if you had kicked ofT the negotiating session by saying, "Now, on number 2, I have a lot of trouble . . . , " the other lawyer doesn 't know whether you are going to have the same sort of problems on every one of his points, and he will probably be less inclined to go along with you.

James Freund, Anatomy of a Merger: Strategies and Techniques fur Negotiating Corpcr rate Acquisitions 30 ( 1 975) .

5. &ulwarism. In the post-World War II period, the General Electric Company was known for using a strategy in labor negotiations, conceived of by one of its vice presidents, Lemuel Boulware. Boulware's approach was to make an initial offer to employees that the company believed was fair to both sides, underscoring the inherent fairness of the proposal, and then refuse to reassess or change his position. In recognition of this controversial approach, the negotiation tactic of refusing to revisit an initial offer is often referred to as "Boulwarism. " See NLRB v. General Electric Co., 4 1 8 F.2d 736, 740 (2d Cir. 1969 ) . In legal negotiation situations, Boulwarism might appear t o b e a risky strategy. But it bears remembering that Boulwarism is the dominant negotiating strategy employed in most consumer transactions. When was the last time that the super­ market was willing to bargain with you over the price of the produce? In fact, Lemuel Boulware developed his negotiating strategy by analogizing bargaining with employees to the methods General Electric used when it priced and mar­ keted its products to consumers. See Note, Boulwareism: Legality and Effect, 76 Haroard Law Review 807, 807-8 1 0 ( 1 963) . There is a complicated set of social norms that defines when fairness demands reciprocity in bargaining and when it does not. When there is a disagreement

1 84

Chapter 6 .

Fair Division and Related Soc i al Nonns

o�er whe � e � or not reciprocity is required for a negotiation to be considered bargammg can break down. Consider the following situation:

fau,

Dear Miss Manners: We sell a� tiques, with the prices plainly marked on them. Our policy is to show the . pnces are fair and finn- and yet people keep trying to haggle with us, asking "What is the best you can do?" or "What would you really take?" after we have told them the price. Once we had an Italian customer who said, "What is your final word?" and I said, "lt s 'arrived� rci. ' " "What is a gracious way of telling people that their attempl.'i at lowenng the pnces are not appropriate without making customers lose face?

:

Gentle Reader: What your customers need is proof that the policy applies to evel)'one and is not simply a bargaining strategy you are using on them. Assuming that you think a "Fixed Prices" sign slightly crude for your type of business, Miss Manners suggests you find an oddly framed, dusty old sign saying this in French or Italian. The words are similar enough for anyone who speaks English to understand them, and yet you can seem to be displaying it as a curiosity. The customers will forget to lose face because they'll feel flattered at the assumption that they read French or Italian.

Judith Martin, Miss Manners ' Guide to Excruciatingly Carrect &haviar 424 ( 1982 ) .

D.

COMBINING FAIR DIVISION WI'IH INTEGRATION

In most of the bargaining examples considered up to this point, two negotiators are in a buyer-seller relationship- that is, if they reach agreement, one will transfer money to the other in return for goods or services or a release from legal liability. With this type of relationship in mind, we can view integrative bargaining as an activity separate from dividing the cooperative surplus. Through integrative bargaining, the parties identify the optimal package of goods or services transferred from the buyer to the seller. For example, if a car buyer values an extended warranty at a monetary amount that is greater than what it will cost the dealer to provide it, the agreement should be for the car and a warranty. If the dealer's cost of providing the warranty is greater than the value the warranty would create for the buyer, the agreement should be for the car only. The price of the optimal package, in contrast, is a distributive bargaining issue, and nonns of fair division can be used by negotiators as bar­ gaining tools when haggling over the final price. When negotiators rely on fairness norms solely in an attempt to divide an amount of money - that is, to settle on a price - they are engaging in a purely distributive negotiation that, at that point, has no integrative potential. In negotiation settings in which the panies must divide a shared set of entitlemen ts - such as a divorcing couple that must divide their property, a group of. heirs that must divide an estate in probate, or business partners winding up and

D.

Combining Fair Division with Integration

1 85

disbanding a joint venture - the relationship between integrative bargaining and fair division is more complicated. In this setting, when what is being divided is not money, the method of division can affect the integrative potential of the bargain. Thus, negotiators who want to create as much joint value as possible and to divide the cooperative surplus fairly should take into account the inte­ grative effects of various methods of fair division. To understand the problem, consider the following simple example: Ward, a deceased father, wills a valuable antique grandfather clock to his sons Wally and Beaver. Assume that the brothers agree that the clock should be divided equally, either because they can agree on equality as a justice principle, or because it is consistent with convention due to the fact that a court likely would rule that the two are legally entitled to equal shares. One way they might divide the clock is to saw it down the middle. This would satisfY the brothers' desire for an equal division, but it would be very inefficient. Each brother would be left with an item of little or no value, and both would obviously have been better off if one had kept the clock and made a side payment to the other. It is, of course, unlikely that the brothers would actually cut the clock in half, but they might well allocate the clock based on a coin flip. This could plausibly be viewed as an equal division of sorts: each brother receives an equal 50 percent chance at winning the clock. But this method could also fail to take advantage of the full integrative potential of the agreement, because there would be a 50 percent chance that the brother who valued the clock less would end up with it. Wally and Beaver might use a number of possible strategies lO structure an agreement that maximizes the joint value of their inheritance (by ensuring that goods are allocated to the brother who values them most) and divides that total amount of value equally. These methods can be divided into two categories: methods that require cash side payments from one party to the other and meth­ ods that do not. Approaches that make use of cash side payments require the parties to reveal the monetary value that they individually place on the subject of the negotia­ tion - here, the grandfather clock. Suppose that the clock would be worth $500 to Beaver and $400 to Wally. One approach that would divide the inheritance efficiently, and arguably equally, is sometimes called the "naive method." Using this approach, Wally and Beaver would each state their monetary values for the clock, and the brother who places the highest value on the clock would keep it and pay half of that amount to the other. In our example, Beaver would keep the clock and pay Wally $250. Alternatively, the parties could use what we might call the "auction method" of allocation. Both brothers would bid for the clock in cash. The brother making the high bid would purchase the clock, and the money would then be split between the two. Using the auction method, Beaver would "buy" the clock with a bid of just over $400, so he would keep the clock and pay Wally approximately $200. Both of these approaches result in an efficient allocation of the clock - that is, the full integrative potential of the bargain is fulfilled. Because Beaver values the clock $ 1 00 more than Wally does, by making sure Beaver keeps the clock the brothers create $ 1 00 of joint value that would be lost if Wally were to keep the clock. But there are two important differences in the approaches. The more obvious difference is that the $ 1 00 of surplus is divided differently. Under the

1 86

Chapter 6.

Fair Division and Related Social Norms

auction method, Beaver captures all of the cooperative surplus. Under the naive method, Wally and Beaver split the surplus $50/$50. The other im portant difference is that the two methods provide different . _ mcent.JVes for misrepresentat ion. Under the naive method, the amount of the side payment is based on Beaver's stated valuation. Therefore, if Beaver knows Wally's valuation is only $400, he has an incentive to claim that his valuation is lower than $500 so that he will get the clock but owe a smaller side payment to Wally. Under the auction method, the side payment is effectively based on Wally's valuation, because he will collect half of his highest bid. If Wally knows Beaver's valuation is $500, he has an incentive to bid almost to $500 for the clock to maximize his income. If neither party has any inkling of the value the other places on the clock, however, they will probably be truthful in stating their valuations under either method. Under the naive method, Beaver would not want to claim a valuation of much less than $500, because the result could be that Wally would end up with the clock even though he values it less than does Beaver. Under the auction method, Wally would not want to bid much, if any, over $400, because he might end up buying the clock for more than he values it. A more complicated procedure, known as the Steinhaus Fair-Share proce­ dure, effectively splits the difference between the distributive results of the naive and auction methods. According to the Steinhaus method, fairness requires that each brother receive one-half the value of the clock to him, and any additional surplus value should be divided equally between the two. The method is applinl as follows: We begin by determining each brother's "fair share," which is one­ half of the value he places on the clock. Thus, Wally's "fair share" is $200, and Beaver's is $250. We then award the clock to the party who values it most - in this case Beaver. Since Beaver values the clock at $500, and his fair share is only $250, Beaver now has $250 more than his fair share, while Wally (who has nothing at the moment) has $200 less than his fair share. Wally and Beawr combined now have $50 more than their fair shares ($250 minus $200 ) . This amount is divided equally ($25 each ) , so that Wally's adjusted fair share is $225, while Beaver's is $275. At this point, Beaver has $225 more than his adjusted fair share, and Wally has $225 less than his adjusted fair share. Beaver gives Wally $225, and the equal division, Steinhaus style, is achieved. For a more complete description of the Steinhaus method, see Howard Raiffa, The An and Scimcr of Negotiation 28S.289 ( 1 982) . Because under this approach the side payment is based in part on Beaver's valuation and in part on Wally's, Beaver has an incentive to understate his valuation and Wally has an incentive to overstate his, assuming that the brothers have a good estimation of the value each other places on the clock. One obvious shortcoming of all of these methods is that they assume Beaver and Wally have enough cash available that whoever turns out to value the clock more can make a side payment to the other. If multiple goods are to be allo­ cated, however, it is possible to allocate goods based on nonns of fairness and efficiency concerns (a) without the use ofside payments if some of the goods are divisible or (b) with minimal side payments if the goods are not divisible. Con· sider the following application of the "adjusted winner approach," proposed hy Steven Brams and Alan Taylor. See StevenJ. Brams & Alan D. Taylor, Fa.r Dnn­ sion: Frum Cake-Cutting to Di.: Haw to Discuss What Matters Most 1 1 1 - 1 28 ( 1 999) .

Emotional responses to perceived interactional injustice can affect bargain­ ing in three ways. First and most directly, interactional injustice can lead to moral outrage and an accompanying desire to retaliate. See, e.g., Rohert J. Bies, The Predicament of Injustice: The Management of Moral Outrage, in 9 &search in Organizaticmal Behavior 289, 293-296 ( 1 987) . This desire can cause negotiators to attempt to punish counterparts at the expense of achieving their own material goals. In other words, the desire to obtain emotional satisfaction can cause negotiators to compromise their instrumental interests. Second, when negotiators perceive that interactional justice is lacking, result­ ing anger and related emotions (indignation, resentment, hurt, etc.) can inter­ fere with their ability to empathize and work together with their counterpart-; to identify mutually beneficial tradeolfs. One study found, for example, that in a negotiation with multiple issues and the possibility of substantial benefit as a result of integrative trndeoffs, dyads in which subjects were angrier with t·ach other had less regard for each other's interests and less accurate judgnu·nt-; about those interests. Not surprisingly, these dyads achieved fewer joint gains in their negotiations than did the others. Keith G. Allred et al., The lnlluence of Anger and Compassion on Negotiation Performance, 70 Organizational Behavior & Human Decision Processes 1 75, 1 82-1 83 ( 1 997) .

Third, even if the parties are able to reach an agreement, the emotional residue is likely to damage their relationship and interfere with their ahility to work together productively in the future. Psychologist john Gottman studies interactions between spouses, and he has claimed that he can predict whtch couples will ultimately seek divorce with g�eater than 90 per�ent ac� uracy by observing a couple's interactions for 1 5 mmutes. What behaviOrs pmson rela­ tionships and undermine the ability of manied cou ples to ��r� together to solve problems over time? Gottman identifies the culpnts as cnuc� sr:" of the ?�her. s character, expressions of contempt, counterattacks by th: rec1p1ent of cnll � tsm, and refusing to engage when the counterpart wishes to mte�� t. See D�mel �­ Shapiro, Enemies, Allies, and Emotions: The Power of Po�1Uve Emouons m Negotiation, in The Handbook of Dispute &solution 66, 71-72 (Mtchael L. Moffitt & Robert C. Bordone eds., 2005).

B.

The Role of Emotions in Bargaining

21 3

Worse news still is that negative emotions appear to be contagious, which can give them a multiplier effect. Specifically, the available evidence suggests that one negotiator's anger can cause her counterpart to become angry as well. A recent study of disputes arising from online transactions conducted through the eBay web site found both that anger on the part of parties filing claims triggered anger on the part of respondents, and that greater levels of anger reduced the likelihood of settlement. Ray Friedman et al., The Positive and Negative Effects of Anger on Dispute Resolution: Evidence from Electronically Mediated Disputes, 89 journal of Applud Psychology 369, 373 (2004 ) . Al though it is perhaps obvious t o casual observers that negative emotions can impede constructive bargaining, a growing body of research also demonstrates the opposite effect: Positive emotions can affirmatively facilitate agreement. See Bruce Barty et al., Bargaining with Feeling: Emotionality in and Around Nego­ tiation, in Negotiation Theory and Research 1 00 (2006 ) . Negotiators who feel pos­ itively toward their counterpart are more likely to have altruistic motives and thus obtain utility when the counterpart materially benefits from a bargaining outcome. They are also more likely to value maintaining the relationship with their counterpart and thus to perceive an instrumental value in ensuring that the counterpart is pleased with any negotiated outcome. Positive emotions are also likely to increase trusting behaviors, thus helping negotiators to solve the negotiator's dilemma and work collaboratively to identifY jointly optimal agree­ ment terms. And a display of positive emotions is more likely to cause negotia­ tors to wish to work together again in the future. Shirli Kopelman et al. , The Three Faces of Eve: Strategic Displays of Positive, Negative, and Neutral Emo­ tions in Negotiation, 99 Organizational Behavior & Human Decision Processes 8 1 , 8889 ( 2006) . A recent trust game experiment provides an interesting hint as to the biochemical basis of positive emotions. Experimenters administered to half of a group of subjects a nasal spray containing the neuropeptide oxytocin, which is known to facilitate pair-bonding and social attachments. The remainder of the subjects received a placebo. When subjects were asked to play the trust game, 45 percent of the oxytocin recipients in the role of Player l sent the maximum amount of money to Player 2, thus exhibiting complete trust, whereas only 2 1 percent o f the subjects i n the placebo group did the same. Michael Kosfeld e t al. , Oxytocin Increases Trust in Humans, 435 Nature 673 (2005 ) . It is likely that the oxytocin spray mimicked the biochemical effect that positive social interactions create.

2.

Incidental Emotions and Affect

It is intuitive that a negotiator's emotional reaction to his counterpart could potentially impact his behavior during a negotiation and perhaps its outcome as well. Much less intuitive is evidence that specific emotions, and even more dif­ fuse positive or negative moods (often called "affect" ) , that are unrelated to the negotiation itself can have spillover effects on bargaining. Such incidental emo­ tions can leave their imprint on outcomes through different causal mechanisms. One way that incidental emotions play a role in negotiation outcomes is by affecting parties' preferences and, thus, their reservation prices. Incidental

214

Chapter 7.

Interpersonal Obstacles to Optimal AgreementB

feelings of anger can trigger optimism and a sense of control over events, which ca� increase negotiator preferences for risk-seeking choices (i.e., favoring liti­ gauon over settlement ) . Fear evokes the opposite appraisals and can cause negotiato� to avoid risk (i.e., favoring settlement over litigation ) . Jennifer S. Lerner & Dacher Keltner, Beyond Valence: Toward a Model of Emotion-Specific Influences on judgment and Choice, 14 Cogniti<m & E71Wtion 473 (2()()()) . Sad­ ness triggers a desire to change the status quo, which becomes associated with that emotion , causing buyers to increase their reservation prices and sellers to reduce theirs. Disgust evokes a desire to expel, which can cause both buyers and sellers to reduce their reservation prices. Jennifer Lerner et al. , Heart Strings and Purse Strings, Carryover Effects of Emotions on Economic Decisions, 1 5 Psychological Science 3 3 7 , 339 (2004) . Incidental emotions can also have a n impact o n negotiations by chang­ ing behaviors exhibited at the bargaining table. One consistent result of exper­ imental studies is that negotiators who enter a bargaining interaction in a positive mood achieve higher joint gains in negotiation simulations with integrative potential than do mood-neutral negotiators. See, e.g., Peter J.D. Carnevale & Alice M . ]sen, The Influence of Positive Affect and Visual Access on the Discovery of Integrative Solutions in Bilateral Negotiation, 37 Organiza­ tional Behavior & Human Decision Processes I ( 1986) . The benefits that appear to be associated with a positive mood might have more than one direct cause. One review of the relevant literature contends that the evidence points to three independent ways that positive emotion affects negotiation: First, parties in more positive moods tend to set higher goals, and high (but "realis-­ tic" ) goals tend to be associated with better results. [See Chapter 8, Section 8 for an examination of the role of goals, or "aspirations. " ] Second, parties in worse moods tend to have worse relationships. In general, at least when there is a potential forjoint gain , better relationships lead to better deals. Third, negotiators in more positive moods tend to use more cooperative and problem-solving tactics, such as making deals and keeping the deals they make; parties in more negative moods tend to use more threats, make fewer deals, and break the deals they do make.

Clark Freshman et al. , The Lawyer-Negotiator as Mood Scientist: What We Know and Don 't Know About How Mood Relates to Successful Negotiation, 2002 jcrumal ofDispute Resolution ! , 1 9. The literature provides a much murkier picture of whether positive affect necessarily leads to greater individual gains for the focal negotiator, especially if the counterpart does not share the good mood, because some studies have reported that positive mood correlates with less moti­ vation and a greater willingness to make concessions. ld. at 25-29.

3.

Creating Helpful Emotional States

For all the reasons described above, understood as the ability to monitor subsequent actions appropriately, can success. There has been relatively little manage emotions, but Roger Fisher

it follows that emotional intelligence, emotions of counterparts and choose play an important rol � in negotiation research on how negouators can better and Daniel Shapiro provide a useful

B.

The Role of Emotions in Bargaining

2 15

analytical framework for approaching this challenge. They suggest, counterin­ tuitively, that rather than confront emotions directly, negotiators should focus their attention on satisfying a set of core relational concerns, necessary to main­ tain a positive self-image, that are implicated in the course of social interactions. Satisfying these concerns will usually stimulate positive emotions; when these concerns are not satisfied, negative emotions that impede bargaining are likely to emerge. Roger Fisher & Daniel Shapiro, Beyond Reason: Using Emotions as You Negotiate 1 5-2 1 ( 2005) . One core relational concern implicated by bargaining interactions is the need for appreciation. Negotiators who feel unappreciated by their counter­ parts often experience negative emotions. In contrast, negotiators who feel appreciated are better able to work together with their counterparts to identify m utually beneficial solutions to common problems. Individuals feel unappre­ ciated in the negotiation context when they perceive criticism or a lack of understanding coming from their counterparts. To foster feelings of apprecia­ tion, even in the presence of substantive conflict or disagreement, Fisher and Shapiro advise negotiators to take pains to understand their counterparts' views and reasoning, to consciously communicate such understanding back to their counterparts, and to acknowledge merit in counterparts' positions and conten­ tions. Id. at 28-36. The potential impact that feelings of appreciation can have on bargaining outcomes is illustrated by a recent study in which students who favored the legalization of marijuana were tasked with negotiating a drug policy reform proposal with another negotiator opposed to legalization (who was, unknown to the subjects, a confederate of the experimenter) . Prior to the negotiation session, the subjects rated the attractiveness of a variety of policy proposals. During the negotiation, the subjects and confederates first were given the opportunity to present their views to one another. The experimenter would then ask the confederate if he had a proposal he would like to present to the subject, at which point the confederate then presented a proposal that the subject had rated "somewhat attractive" prior to the session. To half of the subjects, the confederate claimed he had come to the session with a different proposal in mind but had changed his position to favor the presented proposal as a result of what the subject had said during the negotiating session. To the other half of the subjects, the confederate said he had come to the session with the presented proposal already in mind. Subjects in the first group not only reported greater positive feelings for the confederate than did subjects in the second, but the former were also significantly more likely to accept the proposal, even though they did not rate it as more attractive than did subjects in the latter group in terms of substance. Andrew Ward et al., Acknowledging the Other Side in Negotiation, 24 Negotiation Journal 269, 277-278 (2008) . The experimenters conclude that the former subjects gave the confederate "credit" for trying to take their input into account. Id. at 280. Put another way, the subjects seemed more likely to accept a given proposal if their contribution was appreciated and its merit acknowledged by the other party. Autonomy, like appreciation, is also a core relational concern. Nearly every­ one likes to believe that they have control over their decisions, and virtually no one enjoys thinking that their actions are dictated or coerced by others. The desire for autonomy explains why, as Chapter 5 briefly discussed, power tactics, if

216

Chapter 7.

Interpersonal Obstacles to Optimal Agreements

used �luntly, can generate an emotional backlash and lead to impasse. A nego­ . of power, and especially the use of commiunent tactics carries tiator s exerctse the implicit assertion that her counterpart has no plausible choice bu; to give her what �he d� mands. � egotiators can foster positive feelings of autonomy by carefully hstenmg to theu counterparts' needs and perspectives, brainstorming options, �eeking thei � counte rparts' advice, and engaging their counterparts in consultation over vanous posstble agreement possibilities rather than adopting the tone of dictating demands. Fisher & Shapiro, supra, at 75-8 1 . Stat�s, o r social standing, i s likewise a core relational concern. Everyone wants to feel tmportant, and status competition is a fundamental feature of many social interactions. When such a competition becomes the subtext of a negotiation, one likely result is that one or both negotiators will feel put down or belittled by their counterpart, which can both divert attention from the substance of the negotiation and impede collaborative problem solving. Fisher and Shapiro advise a negotiator to prevent such emotional backlash by carefully treating every counterpart with respect and affirmatively searching for opportunities to acknowledge the counterpart's high status without demeaning one's own, such as by asking for advice on issues about which the counterpart has special expertise. Id. at 90.1 04. Finally, Fisher and Shapiro identifY feelings of affiliation - of connectedness with others - as a core relational concern. Perhaps as a consequence of our evolutionary history, we tend to see the world as composed of members of our group and of outsiders. By reducing social distance, negotiators can help their counterparts to view them as part of the "in" group, which can foster both interpersonal concern and trust. Social distance can be reduced by identifYing sources of commonality, such as background, family status, common interests, or social roles. Id. at 52-57. This is, no doubt, why most successful negotiators intuitively know to ask about their counterpart's background, hobbies, kids, favorite sports teams, or alma mater- or even just discuss the weather- before getting down to business. A negotiator who perceives herself as working together with her counterpart to identifY ajointly satisfactory resolution of their problem is almost certain to feel more positive emotions toward that counterpart than a negotiator who perceives herself as being locked in a pitched battle. The Fisher and Shapiro framework assumes that negotiators will achieve better outcomes when their counterparts experience positive emotional states. What about the negotiator's own emotions? Positive emotions feel better than negative emotions, of course, and studies show that a positive mood is correlated with enjoyment of bargaining interactions. In this sense, positive emotions are always desirable: Happiness truly is its own reward. In terms of instrumental value, negative emotions can produce a desire for spite, obstruct collaboration, and weaken relationships, making it harder to identity a bargaining zone and harder to create joint value through integrative bargaining. Given this, what behaviors might a negotiator harboring hostile feelings toward her counterpart, or more generally negative affect, employ to mitigate or control these emotions? One approach is to try to view the interaction from the perspective of the counterpart or of a neutral � ird p�rty. This means re�·­ ognizing that others viewing the same set of events might Vlew the counte �J'art s actions as less nefarious, intentional, or blameworthy, and the negotiator. s actions as less selfless and reasonable, than does the negotiator. (Recall the

8.

The Role of Emotions in Bargaining

217

fundamental attribution error, described in Chapter 3, Section 8 ) . Serious perspective-taking requires listening carefully to the counterpart's account of his views, perceptions, and feelings, and incorporating these into one's narrative of the interaction in question. Viewing the interaction from multiple perspec­ tives can make what once appeared to be an aggressive challenge to the nego­ tiator's identity much less clear cut, and thus substantially calm negative emotions. See Stone et al. , supra, at 25-43. Al ternatively, or in addition, the negotiator might initiate a discussion about her emotions. To the extent that powerful feelings are interfering with the negotiator's ability to cognitively evaluate the bargaining problem at hand, expressing them can itself relieve tension. In addition, expressing feelings invites the counterpart to address the perceptions that underlie the feelings, which also has the potential to relieve tension. It is important that negotiators who initiate discussions about their feelings be careful to avoid attributing bad intentions to and blaming the counterpart: "I feel frustrated when you don 't send me the documents that I need to evaluate the case prior to our negotiating sessions," not "you' re dragging out the negotiations by deliberately withholding materials that you know I need." Accusations and blame are more likely to fan the flames of negative emotion than to dampen them. The negotiator also can try to identify her specific, core relational concerns that are not being satisfied by the interaction and both attempt to satisfY them and ask her counterpart to help satisfY them. For example, the negotiator might try to reduce the negative emotions stemming from a hostile interaction with a counterpart by searching for commonalities in their backgrounds and experi­ ences on which to foster a sense of affi l iation. Or, the negotiator might say, "your refusal to explain why your client is opposed to providing us with an indemnity clause makes me feel like you don ' t appreciate the extent to which I've provided you with information about our interests and capabilities," thus giving the coun­ terpart an opportunity to express appreciation, which in turn might ease hostile feelings. Notwithstanding the prior discussion, it is important to recognize that negative emotions are not always instrumentally undesirable in negotiation, nor are positive ones universally desirable, especially when the emotions in question are on public display. If a negotiator erupto; in anger when his coun­ terpart proposes a particular agreement, this might create power by adding perceived credibility to his verbal claim that the offer is too low to warrant consideration and that he is prepared to walk away in the absence of significant concessions. By making the interaction less pleasant, it also might make the counterpart less patient and thus quicker to make concessions. On the other hand, if the same negotiator beams with apparent pleasure, his counterpart might believe that more cooperative surplus is available for the taking and refuse to make further concessions. In one instructive experiment, subjects playing the role of a seller made lower average demands of their buyer counterparts if they were provided with infor­ mation suggesting that the buyer was angry than if they were provided with information suggesting the buyer was happy. Gerben A. van Kleef et al ., The Interpersonal Effects of Anger and Happiness in Negotiations, 86 journal of Personality & Social Psychology 57, 59-62 ( 2004) . These results also suggest, of course, that feigned emotions can be used as a source of barg-a ining power if

218

Chapter 7.

Interpersonal Obstacles to Optimal AgTeements

�hey are con� n �ing- and particularly so if the negotiator has little or no . bml �mg a long term working relationship with a counterpart. In at mterest m � _ leas� one expen �ent, subjects mstructed to display anger received more con­ c esstons fro� the� r counterparts (and thus better outcomes) than did identically . situated subJects mstructed to hide their emotions. Marwan Sinaceur & Larissa Z. Tiedens, Get Mad and Get More Than Even: When and Why Anger Expres­ SIOn Is Effective in Negotiations, 42 joumal of Experimental Social Psycho(Qgy 3 1 4 (2006 ) . These results seem very sensitive to context, however. Another experi­ ment found that subjects made fewer concessions when their counterpart dis­ played negative emotions than when he displayed positive emotions. Kopelman et al., supra at 95. The difference in results might be explained this way: A display of anger suggests an aggressive reservation price, which should prompt greater concessions unless the anger triggers anger in the counterpart, in which case the counterpart might refuse to make concessions out of spite. Notes I. Tire Quality of Evidence Cmu:erning tlu1 Effects of Emotion. Much of the evidence of how emotion affects negotiation comes from controlled laboratory experiments in which student subjects (usually undergraduates) participate in simulated interactions. Chapter 3 (Discussion Questions and Problems #2) noted that the "external validity" of such experiments can be questioned on the ground that there might be important differences between the average col­ lege student subject and the average experienced lawyer or businessperson. This concern might be greater in the realm of emotion than in other areas. There is some evidence that emotion has less effect on the actions of negotiators who use deliberate and consistent bargaining strategies. Lawyers might be unusually likely to fall into this general group, and the types of negotiations in which lawyers tend to engage might tend to be more routine and predictable to lawyers than laboratory negotiations are to student subjects, making lawyers less likely to be swayed by emotion at the bargaining table than experimental results suggesl. Freshman et al., supra, at 45-56. Experimental studies raise the additional concern that true emotions are particularly difficult to simulate in the laboratory environment. Social scien­ tists might respond that, assuming emotions are not as potent in the laboratory as they are in real-world interactions, experimental findings that emotional manipulations have significant effects on behavior suggest that the same effects would likely be even more pronounced in the real world. This response might be correct, but some caution in interpreting the results of such experi­ ments as being directly applicable to non-hypothetical conditions is probably justified. 2. Suppressing Emotion. Negotiators inclined to adopt a cognitive, analytical approach to negotiation often believe that_ they w�ll reach m ?re reason_erl negotiation outcomes if they suppress their emotions, especially negative ones. Daniel Shapiro warns that this approach is hardly fail-safe:

�

It is not possible to suppress one's actual feelings. We feel some particular emo ion, and then we come to realize the emotion which we are experiencing. It is poss1ble.

Discussion Questions and Problems

219

however, to suppress the expression of those feelings. A negotiator may feel angry toward another without expressing that anger through words, tone of voice, or body language. Suppressing resentment, anger, or other strong emotions can debilitate a nego­ tiator's cognitive and behavioral functioning in several ways. First, the negative emotional experience remains, leaving the negotiator in an internal state of tension. This agitated state may motivate us to act in ways that do not serve our short- or long­ term interests. A negotiator may hide her anger toward a colleague, then explode weeks later at a trivial behavior conducted by the colleague. Second, the effort to suppress the display of emotions consumes important cognitive energy. People are limited in their cognitive capacity to process information, so additional cognitive tasks decrease a negotiator's ability to thi n k about important substantive or process issues. Third, a negotiator who suppresses his or her emotions may be more likely to stereotype that counterpart as an "adversary," leading to competitive behavior. There is evidence that the act of suppressing emotions increases physiological arousal both personally and in one's negotiating counterpart. With heightened physiological arousal, each negotiator has a reduced attentional capacity making stereotypical thinking more likely.

Daniel L. Shapiro, Untapped Power: Emotions in Negotiation, in The Negotiator's Fieldbook 263, 265-266 (2006 ) .

DISCUSSION QUESTIONS AND PROBLEMS I. Is flu! Prisoner's Dilemma Analogy Apt? In the prisoner's dilemma, if the game lasts only one round, defection is clearly the dominant strategy. Is the same true in the negotiator's dilemma? Suppose you are negotiating a single transac­ tion with a party whom you know you will never see again . Are there any reasons, save personal ethical principles, for you to be forthright and candid about your interests and preferences? That is, are there any situations in which cooperation can actually be the dominant strategy in a single-round negotiator's dilemma? 2. Avoiding flu! Dilemma Through Contract ar Law. Recall that an important feature of the prisoner's dilemma is that the two prisoners cannot speak to each other, so they cannot enter into a contract in which each promises to cooperate. If they could do so, entering into the contract and cooperating would be the best strategy for each, because each would know that the alternative is mutual defec­ tion. Negotiators, of course, can communicate. Do you think negotiators can avoid the dilemma, then, by contracting to behave cooperatively? How would you draft such a contract? Have the rules of civil procedure provided the regulatory equivalent of such a contract in litigation bargaining situations by specifying rules of discovery and giving judges the power to sanction lawyers who violate them? J. Applying Axelrod's Findings. Robert Axelrod's computer tournament sug­ gests that " nice" strategies are desirable in prisoner's dilemma games in the long nm, so long as they respond adequately to attempts to take advantage of them. Do you think this is a valid conclusion concerning the negotiator's dilemma?

220

Chapter 7.

Interpersonal Obstacles to Optimal Agreements

One sty�ized feature of Axelrod's competition is that defection and cooper­ . atiOn are d1rectly observable. Is this true of legal negotiation situations? That is, if one negotiator defects, how likely is it that this will be observed by the other, such that the other can respond appropriately? Are some types of defection more likely to be discovered and exposed than others? If some types of defec­ tiOns, or all defections in some types of situations, are undiscoverable, is there any justification for cooperating in those circumstances?

4. Having It Both Ways. Can a negotiator cooperate and defect simulta­ neously? Gerald Wetlaufer down plays the conflict created by the negotiator's dilemma with the following reasoning: . . . [T]he argument for openness and truthtelling is not an argument for openness and truthtelling with respect to everything, but instead, is limited to infonnation useful in identifying and exploiting opportunities for integrative bargaining. Thus, an opportunity for integrative bargaining will present an occasion for a certain amount of truthtelling with respect to one's relative interest in Vdrious issues (or one's projections about the future or aversion to risk) without also presenting even a weak argument for truthtelling with respect to one's reservation price.

Gerald B. Wetlaufer, The Limits of Integrative Bargaining, 1 85 Geurgetown Law Journal 369, 390-391 ( 1 996) . Is it really possible for a negotiator to act in such a way that he never misses out on discovering a bargaining zone or expanding it to its maximum potential through integrative bargaining, but at the same time he never leaves himself vulnerable to the other party's attempts to gamer the cooperative surplus? How would you walk this fine line in an actual negotiation setting?

5. Annlogies to the Negotiatitm Proass. One student of labor relations, in describing the negotiation process, remarked that " [t]he name of this game is poker, not chess." William McCarthy, The Role of Power and Principle in Getting to Yes, I NegotiationJournal 59, 64 ( 1 985) . Do you agree with this characterization? Why or why not? To what extent does your answer depend on how you approach the negotiator's dilemma? 6. An Emmplefrom Family Law. Husband and Wife have two children, ages 9 and 1 2 . Husband decides he has fallen out oflove with Wife and moves out of the family home. One year later, he files for divorce. At a settlement hearing, Wife's lawyer explains that Wife has an interest in receiving enough alimony and child support to allow her to work not at all or only part-time until the children finish high school, but her primary interest is in obtaining custody of the children. Husband has no interest in custody of the children. Nevertheless, Husband's lawyer angrily exclaims that custody is also Husband's primary interest, and that he intends to take the fight for custody all the way to the U.S. Supreme Court, 1f necessary. After several hours of angry exchanges, the parties agree to a settle­ ment under which Wife receives custody of the children but no alimony and minimal child support. Did Wife's lawyer fail to protect her client's interests? Did Husband's lawyer behave improperly? What would you have done differently if you had been Wife's lawyer or Husband's lawyer?

Discussion Questions and Problems

221

7. What Game Are We Playing? Recall the evidence above that subjects exhib­ ited more cooperative behavior in a prisoner's dilemma game when they were told they were playing the "community game" than when they were told they were playing the "Wall Street game. " Do you think legal negotiators believe that in some types of negotiations "defection" is expected and in other types "coop­ eration" is expected, and thus behave accordingly? What types of negotiations carry with them the expectation of cooperation or defection? Is there any way for a negotiator to change this expectation in order to promote cooperation? Do you think the idea of "cooperative negotiation agreements," described above, can increase mutual trust by changing the name of the game? Would signing a cooperative negotiation agreement cause you to extend more trust and to act in a more trustworthy way than you otherwise would in the litigation context?

8. Unfair Price tw Unfair Treatment? Recall from Chapter 6 the story of how Steven Lubet was unable to negotiate a one-way ride out of the Siq in Petra, Jordan, from a Bedouin horse guide. Assuming that a guide's reservation price for a ride out of the Siq late in the evening was two dinars, do you think his refusal to accept anything less than four dinars was due to a belief that any amount less than four dinars would be an unfair price for his service, or to a belief that Lubet's attempt to use power tactics to capture the cooperative surplus was a form of interactional injustice? Lubet's children failed to distinguish between these two possibilities by conflating the hypothesis that the guides thought Lubet didn ' t respect them with the very different hypothesis that they thought the guides would rather do nothing than accept less than what they were worth. To better understand this distinction, ask yourself this question: If Lubet had had only three dinars with him that evening and could therefore not offer more than that, and Lubet was able to prove to the horse guide that this was the case, would the guide have given Lubet a ride for three dinars? 9. Errwtions and Puwer. It is often suggested that irrationality or emotional instability can be an asset in negotiations. One analysis of emotion in negotiation puts the poin t this way: "Obviously, if a negotiator can convince the counterpart that he is crazy, this can be an effective strategy." Leigh L. Thompson et al., Some Like It Hot: The Case for the Emotional Negotiator, in Shared Cognition in Orga­ nizations: The Management ofKn(JU)kdge I 39, I 55 (Leigh L. Thompson et al. eds., 1 999) . Do you believe that convincing a counterpart that you are an emotional negotiator could be useful? Why or why not? Do you think it would be useful to then actually be emotional? How might a display of anger work in the same way or differently from a display of irrationality? 10. &spmuling k> Your Oum Errwtions. Imagine that you are involved in a negotiation in which your counterpart belittles your position and efforts, threat­ ens you with ultimatums, and puts you down. In other words, he shows no con­ cern with your needs for appreciation, autonomy, status, or affiliation. How do you think you should respond, and how do you think you would respond? If your answers to these two questions are different, what steps might you take to try to ensure that your actual response better approaches your desired response?

Chapter 8

Negotiator Style

Part II implicitly assumed that negotiators are monolithic and unitary individ­ uals who pursue the goals of estimating, expanding, and dividing a bargaining zone. This approach is useful for understanding the structure of the negotiation process, but it is obviously incomplete because it fails to take into account how individual differences in approaching that process can affect bargaining out­ comes. This chapter relaxes the assumption that individuals approach bargain­ ing with identical orientations and explores how two important variables that vary between negotiators might affect performance and outcomes. Section A considers fundamentally different styles of dealing with interper­ sonal conflict, which generally exists in the bargaining context, and the implica­ tions of variations in style on the bargaining process. This section employs two conceptual models of conflict style: one distinguishes between cooperative and competitive negotiators; the other between assertive and empathetic negotia­ tors. Section B explores how the relative aggressiveness of negotiators' aspira­ tion levels, or goals, can affect the negotiation process. As you read this chapter, consider whether you think you can improve your negotiating performance by adjusting how you approach conflict or how you set your pre-negotiation aspirations, and if so, in what circumstances.

A

CON�CT ORffiNTATION

Few commentators would disagree with the proposition that the way negotiators approach conflict affects the dynamics of the bargaining process. It is substan­ tially more difficult to identify the specific aspects of a negotiator's conflict o rientation that matter. This section considers two very different conceptual frameworks. The first categorizes negotiators on the basis of whether they employ cooperative or uncooperative tactics in bargaining. From this per­ spective, the fundamental distinction between negotiators is whether they are "cooperators" or "competitors." The second categorizes negotiators based on

223

224

Chapter 8.

Negotiator Style

the extent to which they use different communication skills. From this perspective, important implications flow from whether a negotiator is skilled at "asserting" his needs, "empathizing" with the adversary's needs, both, or neither. As you read this chapter, consider which elements of a negotiator's person­ ality or personal style you think have the most important impact on negotiation dynamics and outcomes. Have the authors of either of the main articles iden­ tified the traits that are most relevant, or is there another way of thinking about the issue of conflict style that would be more fruitful?

1.

Cooperation Versus Competition

• Gerald R. Williams, Legal Negotiation and Settlement (1983)* . . . I n the Phoenix version of the survey questionnaire, which is reported here, attorneys were asked to think of their most recently completed case or transaction, to briefly describe the matter, to think of the attorney representing the other party in the matter, and to describe that attorney according to 137 characteristics listed i n the questionnaire. When they had completed the descriptive ratings, they were asked to rate the negotiating effectiveness of the attorney they had described. This rating scale was divided i nto three categories: ineffective, average and effective . . . . The results indicate that legal negotiation proceeds quite consistently within the parameters of two basic approaches. Both approaches are described i n con­ siderable detail by the analysis, providing exceptionally powerful insights into the nature of bargai n i ng processes generally and the behavior of i ndividual negotiators i n particular. The pattern identified in a majority of the negotiators (65%) is best described as a cooperative approach to negotiation, while the second pattern (iden­ tified i n 24% of attorneys) represents a competitive approach . T h e highest-rated characteristics o f effective/cooperative negotiators f a l l into s i x i nformal cl usters. T h e fi rst cluster describes, in order o f i mportance, their motiva­ tional objectives: Clusler One

Conducting self ethically Maximizing settlement for client Getting a fair settlement Meeting client's needs Avoiding litigation Maintaining or establishing a good personal relationship with opponent It is surprising to find the predominant concern is with ethical conduct. This theme recurs among cooperative negotiators at all levels of effectiveness. The second concern is with maximizing settlement for the client, but this must be interpreted

* Reprinled from LegaL Negutialion and Settlnnmt by Gerald R. Williams. Copyright if; 1983 by Wesl Publishing C..o. Reprinted with permission of West Group.

A.

Conflict Orientation

Z%5

in l ight of item number 3, concern for getting a fair settlement. Attorneys of this type feel constrained in their conduct by a standard of fairness and ethical dealing. They want to know their clients' needs and, if possible, meet those needs without the necessity of l itigation. They are also concerned with maintaining a good personal relationship with the opposing attorney. Their strategy for meeting these goals is straightforward, as reflected in the following descriptors: Cluster Two

Accurately estimated the value of the case Knew the needs of the cl ient Took a realistic opening position Probed opponent's position Knew the needs of opponent's cl ient W i l l i ng to share i nformation Forthright Trustfu l Willing to move from original position Objective Fair-minded Reasonable Logical (not emotional) Did not use threats Cluster Three

Courteous Personable Friendly Tactful Sincere Cluster Four

Organizing Wise Careful Faci l itating Cooperative The third cluster relates to personableness: effective/cooperative negotiators are seen as friendly, personable, courteous, and tactfu l . However, some degree of caution is cal led for in interpreting these words. A person unfamiliar with legal negotiation is likely to picture a "soft" negotiator who is, as a consequence of personableness, a pushover. This cannot be a correct interpretation, because the adjectives describe effective negotiators at work i n the legal context. A richer sense of meaning will develop as additional adjective clusters are considered. Effective/cooperative attorneys are also seen as fair, objective, reasonable, logi­ ca l , and willing to move from their established positions. I nterpretation of these

2Z6

Chapter 8.

Negmiator Stylt'

adjectives is aided by the other cluster two descriptors, which indicate these attor­ neys take realistic opening positions. support their position with facts, and are forthright While these traits are quite general , there are a number of descriptors that are focused on negotiating situations. For example, cooperative effectives seek to facil­ itate agreement. they avoid use of threats, they accurately estimate the value of cases they are working on, they are sensitive to the needs of their clients, and they are willing to share information with their opponent. It appears from these items that their strategy is to approach negotiation in an objective, fair, trustworthy way, and to seek agreement by the open exchange of information. They are apparently as concerned with getting a settlement that is fair to both sides as they are with maximizing the outcome for their own cl ient. . The differences in approach between cooperative and competitive attorneys is most quickly illustrated by comparing motivational objectives. I n order of their importance. competitive/effectives have as their goals: Cluster One

Maximizing settlement for client Obtaining profitable fee for self Outdoing or outmaneuvering the opponent Obviously, the goal of getting a maximum settlement value for the client means something different to a competitor than to a cooperator. To competitors, the goal includes a reward to self both in monetary terms and in satisfaction from outdoing an opponent. The difference in view between these two types becomes more apparent from examining other competitor traits. They are seen as: Cluster Two

Tough Dominant Forceful Aggressive Attacking Cluster Three

Ambitious Egotist Arrogant Clever Cluster Four

Made a high opening demand Took unrealistic opening position Used take-it-or-leave-it approach Rigid Disinterested in needs of opponent's cl ient Did not consider opponent's needs

A.

Conflict Orientation

227

Unconcerned about how opponent would look to his c l ient W i l l i ng to stretch the facts Knew the needs of own cl ient Careful about timing and sequence of actions Revealed i nformation gradually Used threats Obstructed Uncooperative In contrast to the friendly, trustworthy approach of cooperative effectives, effective/competitives a re seen as dominating, competitive, forceful, tough, arro­ gant, and uncooperative. They make high opening demands, they use threats, they are will ing to stretch the facts i n favor of their clients' positions, they stick to their positions, and they are parsimonious with information about the case. They a re concerned not only with maximizing the outcome for their client but they appear to take a gamesmanship approach to negotiation. having a principle objective of outdoing or outmaneuvering their opponent. Thus. rather than seeking an out· come that is "fair" to both sides, they want to outdo the other side: to score a clear victory . . Competitive/effectives are careful about the timing and sequence of their actions which underscores the gamesmanship element of competitive negotiating behavior. This reflects a high level of interest in tactical or strategic considerations, suggesting that they orchestrate the case for best effect. One effective/competitive attorney laughed when his cooperative opponent said the objective of negotiation was to accomplish a just outcome. He said, "This is a po�er game, and you do your best to put the best front on you r case and you try to make the other fellow think that his weaknesses are bigger than he really ought to consider them." Another attorney reported that the insurance defense attorney opposing him "could have appraised the case more on injury to the plaintiff rather than on difficu lty of plaintiff in putting on a good case at tria l . " These comments show the unbridgeable gap 1n perceptions and attitudes between cooperative and competitive attorneys. Cooperatives feel that cases should be evaluated objectively, on their merits. and that both sides should seek to find the most fair outcome. Competitive attorneys view their work as a game in which they seek to outwit and out-perform the other side. . . . Both types of effective negotiators are ranked as highly experienced. More i mportantly, both types are seen as ethical, trustworthy and honest. thus dispelling any doubt about the ethical comm itments of effective/competitives. Both effective types are seen as thoroughly prepared on the facts and the law of the case. They are also described as legally astute. The ineffective/cooperative does not have the ski lls or attitudes of an effective/ cooperative. such as being perceptive, or convincing, or having the reasonableness cluster (realistic, rational. and analytical). Nor is he creative, self-controlled, versa· tile, objective, organizing, or legally astute. The ineffective is apparently unsure of h i mself or of the value of his case (conservative, staller, cautious, deliberate). He is torn between being gentle, obliging, patient. moderate, and forgiving, on the one hand, and demanding, "masculine", and argumentative on the other, and tends to be something of an idealist. The idealism may account for lack of versati l ity, adapt­ ability, creativity, and wisdom.

2%8

Chapter 8.

Negotiator Scylt·

Competitive/ineffective attorneys are characterized by negative traits, and can be generally described as irritating . . . . Somehow, competitive/effective legal negotiators are able to apply their expertise without being seen as greedy or conniving, but rather as reasonable and realistic. Again, these comparisons seem to point to the qual ity of the legal work being per­ formed, including the expertise with which an attorney has investigated the facts ol his case, studied and understood the legal rules applicable to it, taken a realistic position with respect to the value of the case, and presented his position in ways that other attorneys accept as bei ng rational, fair, and persuasive (convincing). It may follow that an attorney in this posture has l ittle cause to be argumentative, quarrelsome, rude, and hostile, since he is prepared to effectively go forward on the merits of his position rather than to seek advantage by being personally offens1ve to the opposing attorney, or by stalling, bluffing, or quarreling . . . . . [O]ne wonders whether one approach or the other is more effective. The answer provided by our Phoenix data is that there is no difference in degree of effec­ tiveness attributed to effective/cooperatives and effective/competitives. They received comparably high ratings for effectiveness. It does not appear, therefore, that either approach has the edge when it comes to obtaining the highest (as com­ pared to greatest number) of effectiveness ratings. On the other hand, there are a substantially greater number of effective attorneys of the cooperative type than of the competitive type.

2.

Empathy Versus Assertiveness

• Robert H. M nookin, Scott R. Peppet & Andrew S. Tulumello, The Tension Between Empathy and Assertiveness 12 Negotiation Journal 217 (1996)* . . . [This article] deals with an interpersonal aspect of negotiation: how should a negotiator approach his or her deali ngs with another? We propose that negotia­ tion behavior can be conceptual ized along two dimensions - assertiveness and empathy . .

Empathy For purposes of negotiation, we define empathy as the process of demonstrating an accurate, nonjudgmental understanding of the other side's needs. interests, and positions. There are two components to this definition. The first involves a sk1ll psychologists call perspective-taking - trying to see the world through the oth � r negotiator's eyes. The second is the non judgmental expression of the other person s viewpoint in a way that is open to correction . . . . The benefits of empathy relate to the integrative and distributive aspects of bar­ gaining. Consider first the potential benefits of understanding (but n�t yet demon � . strating) the other side's view point. Skilled negotiators often can see through another person's statements to find hidden interests or feelings, even when they

•

Copyright 1,7 1 996 by Kluwer Academic/Plenum Publisher. Reprinted with penniuion.

A.

229

Conflict Orientation

are inchoate i n the other's mind. Perspective-taking thus facil itates value-creation by enabling a negotiator to craft arguments, proposals, or trade-offs that reflect another's interests and that may create the basis for trade. Perspective-taking also facil itates distributive moves. To the extent we understand another negotiator, we will better predict their goals, expectations, and strategic choices. This enables good perspective-takers to gain a strategic advantage ­ analogous, perhaps, to playing a game of chess with advance knowledge of the other side's moves. It may also mean that good perspective-takers will more easily see through bluffing or other gambits based on artifice. Research confirms that nego­ tiators with higher perspective-taking ability negotiate agreements of higher value than those with lower perspective-taking ability.

Assertiveness By assertiveness, we mean the abil ity to express and advocate for one's own needs, i nterests, and positions. The underlying ski lls include identifying one's own interests, speaking (making arguments, explaining), and even listening. We can relate the benefits of assertiveness to the integrative and distri butive aspects of bargaining. It is well established that assertion confers distri butive benefits - assertive negotiators tend to get more of what they want. Less well under­ stood is the role assertion plays in val ue-creation. Assertiveness contributes to value­ creation because it is through direct expression of each side's interests that joint gains may be discovered. Assertion may be relatively easy in commercial negotia­ tions between strangers, but can be more difficult where conflict arises in the context of a long-term relationship. If one or both parties fail to assert their interests, both may suffer because value may be left on the table . . . .

Negotiation Styles: Competing, Accommodating, and Avoiding Our claim that empathy and assertiveness represent different dimensions can be illuminated by considering three common negotiation "styles." . Competing

A competitive style consists of substantial assertion but l ittle empathy. A compet­ itor wants to experience "winning" and enjoys feeling purposeful and in control. Com­ petitive negotiators exude eagerness. enthusiasm, and impatience. Because confl ict does not make them feel uncomfortable, they enjoy being partisans. Competitive negotiators typically seek to control the agenda and frame the issues. They can stake out an ambitious position and stick to it. and they fight back in the face of bullying or intimidation. The advantages of this style flow directly from this characterization. Competitors are not afraid to articulate and push for their point of view. With respect to distri butive bargaining, they fight hard to get the biggest slice of any pie. But this tendency also has disadvantages. Competitive negotiators risk provoking the other side and incur a high risk of escalation or stalemate. I n addition, because competitive negotiators are often not good l isteners, they have difficulty developing collaborative relationships that al low both sides to explore value-creating opportu­ nities. They may also pay a high price i n their relationships, as others. perceiving

Chapler 8.

Ne gotiator Style

them as arrogant, untrustworthy, or controlling, avoid them. We have found that competitors can be surprised by the resentment they engender, as they see their behavior as simply part of the negotiation game . . . Accommodating

Accommodating consists of substantial empathy but little assertion. An accom­ modator prizes good relationships and wants to feel liked. Accommodators exude concern, compassion, and understanding. Concerned that conflict will disrupt rela­ tionships, they negotiate in "smoothing" ways to resolve differences quickly. Accom­ modators typically listen well and are quick to second-guess their own interests. This style has straightforward advantages. Negotiators concerned with good rela­ tionships on balance probably do have better relationships, or at least fewer relation­ ships marked by open confl ict. Because they listen wel l , others may see them as trustworthy. Simi larly, they are adept at creating a less stressful atmosphere for the negotiation. One disadvantage of this tendency is that it can be exploited. Hard bargainers may extract concessions by impl icitly or explicitly threatening to disrupt or terminate the relationship. Another disadvantage may be that accommodators pay insufficient attention to the substance of the dispute because they are unduly concerned about disturbing a relationship. Accommodators, therefore, can feel frustrated dealing with both substantive and interpersonal issues. Avoiding

An avoiding style consists of low levels of empathy and assertiveness. Avoiders bel ieve that confl ict is unproductive, and they feel uncomfortable with explicit, especially emotiona l, disagreement. When faced with confl ict, avoiders disengage. They tend not to seek control of the agenda or to frame the issues. Rather, they deflect efforts to focus on solutions, appearing detached, unenthusiastic, or uninterested . . . . The greatest disadvantage of this tendency is that avoiders miss opportunities to use conflict to solve problems. Avoiders often disengage without knowing whether obscured interests might make joint gains possible - they rarely have the experience of walking away from an apparent conflict feeling better off. Even when they do nego­ tiate, avoiders leave value on the table because they refrain from asserting their own interests or flushing out the other side's. Avoiders fare poorly in the distributive aspects of bargaining. Like competitors, avoiders also have a difficult time sustaining strong working relationships. Others see them as apathetic or indifferent. . . . Each of these problematic i nteractions highl ights the importance of being able to both empathize and assert as needed in a given negotiation. If both negotiators can skil lfully empathize and assert, the pair can work toward a beneficial solution that exploits the opportunities for value-creation and manages distributive issues.

Notes

1. The Terms "Competitive" ond "CooJ>en·ntWe • Williams's dichotomy of" com­ petitive" and "cooperative" negotiators is commonly used in the negotiation

A.

Conflict Orientation

%3 1

literature. These labels can be confusing, because it is often unclear whether the person using them means to distinguish between negotiators' personal demeanor (i.e., intimidating and obnoxious versus friendly and sociable) or between the types of tactics employed to create and capture value in the negotiation itself. See Robert Condlin, " Every Day and in Every Way We Are All Becoming Meta and Meta," or How Communitarian Bargaining Theory Conquered the World (of Bargaining Theory) , 23 Ohio State Journal on Dispute Resolution 23 1 , 280 (2008 ) . A close look at the specific descriptors that Williams uses t o describe negoti­ ator types suggests that "competitive" negotiators are those who address the need to distribute with power tactics (see Chapter 5 ) , whereas "cooperative" negotiators are those who are more likely to conduct distributive bargaining on the basis of fairness norms (see Chapter 6) . Williams's subjects described as competitive such traits as "dominant," "forceful," "rigid," "used threats," and " took unrealistic opening positions" - all characteristics consistent with attempts to use power. In contrast, they described as cooperative such traits as " trustful," "sincere," "fair-minded," and "did not use threats " - all consis­ tent with using norms of fair division. Negotiators who tend toward the "cooperative" style might be more likely to engage in integrative bargaining than "competitive" negotiators, however. "Willing to share information" and "probes opponent's position " are described as characteristics of the former style, whereas "reveals information gradually" is described as a characteristic of the latter style. See Gerald Williams, Legal Negotiation and Settlemm t 1 5-42 ( 1 983) .

2. Which Approach Is More Suca!ssful? I n conducting his study, Williams asked his respondents to characterize as effective or ineffective the negotiation counterparts whom they evaluated. One notable conclusion he drew was that negotiators could be effective - at least as judged by their counterparts ­ whether they used either a "cooperative" or "competitive" style. Two decades later, Andrea Kupfer Schneider surveyed lawyers in Chicago and Milwaukee with a survey instrument similar to the one used by Williams, but she asked her respondents to describe the last lawyer-negotiator that they had negotiated against as employing a "problem-solving" or an "adversarial" style, and to rate that negotiator's effectiveness. She found that negotiators rated 54 percent of their peers whom they identified as "problem-solving" as "effective," but only 9 percent of the negotiators that they identified as "adversarial . " Andrea Kupfer Schneider, Shattering Negotiation Myths: Empirical Evidence on the Effective­ ness of Negotiation Style, 7 Harvard Negotiation Law Review 1 43 (2002 ) .

3. Is Cmrjlict Styk Consistmt Across Ctntkfd? T o what extent is the style with which a negotiator approaches a bargaining situation based on the peculiar characteristics of that situation, such as the stakes or the identity of the counter­ part, and to what extent do negotiators adopt the same stylistic approach regardless of context? Al though it is undoubtedly true that context matters to negotiators to a certain extent, some research indirectly hints that negotiators are likely to rely on a preferred style across a range of contexts. In one study, for example, experimenters asked college-student subjects to describe actual con­ flict situations involving peers and involving parents, and to assess hypothetical conflict situations. Using an expansive set of conflict resolution style categories, the experimenters found that, although different subjects used different styles,

Chapter 8.

Negotiator Stylr

individual subjects tended to use and prefer the same style regardless of whom the conflict was with and regardless of whether the conflict was actual or hypothetical. 4. 1M T/umuu.K . ilmann Instrument. The "competing," "avoiding," and "accommodating" style categories used by Mnookin and his colleagues are bor­ rowed from the Thomas-Kilmann Conflict Mode Instrument. The Thomas­ Kilmann instrument assesses the propensity of subjects to exhibit five different styles of behavior in conflict situations (not necessarily limited to negotiation) by giving subjects 30 pairs of statements and asking them to choose which of each pair best describes their approach to conflict. In addition to "competing," "avoiding," and "accommodating," the instrument identifies the styles of "compromising" and "collaborating." Kenneth W. Thomas & Ralph H. Kilmann, Thomas·Kilmann Conflict Mo Rogrr Cohrn, "Tradr: Limp Ust or Hoprs," lnlnnationai HmJJ.d Tnburu,July 9, 1 992, p. 9.

516

Chapter I I .

Multilateral Negotiations

This was not congenial obstructionism: i nstead, explicitly revealing that govern· ment would accede to a trade deal whose substance was acceptable pnor to the conclusion of the EC negotiation would alienate French farmers, who in turn. wou ld block the EC accord. Negotiating the economic and monetary union agreement first. however, would not mobilize the farmers to block the GATT deal. Thus Dumas wanted to negotiate with Baker on trade last to prevent revealing the government's actual w i l l i ngness to make the trade deal too early.

Notes I. The Slippery Slt>pe Betwem Bilateral and Multilateral NegotimUms. To this point in the chapter, we have assumed that bilateral and multilateral negotia­ tions are dichotomous categories - that is, that negotiating situations can be identified as one or the other. The world is, in fact, much more complicated. In most bilateral negotiating situations, each negotiator represents more than one constituency: a head of state represents a variety of political interest groups; a corporation's lawyer s peaks for management, labor, shareholders, creditors, and so on. Thus, bilateral negotiations can often be viewed as negotiations between two coalitions. In some circumstances, members of such a coalition have the ability, if pressed, to split off from the remainder of their coalition and negotiate their own agreement with the other party to the (formerly) bilateral negotiation. When this is possible, what appears to be a bilateral negotiation takes on many of the characteristics of a multilateral negotiation. Consider, for example, a labor-management negotiation in which the labor union represents two types of employees. Group I employees have skills that are transferable to other employers. Thus, they are in high demand in the job market. Group 2 employees have skills specific to their employer and would therefore have trouble finding work elsewhere. Although labor-management negotiations appear to be classically bilateral in nature, the divergent interests between the two groups of employees make the negotiation potentially multi· lateral. If the union demands job security and management offers high salaries in lieu ofjob security, Group I employees (who have less need forjob security) may decide to negotiate a separate agreement with management, splintering the labor coalition. For a more detailed example of this, see David A. Lax &James K. Sebenius, Thinking Coalitionally: Party Ari thmetic, Process Opportunism, and Strategic Sequencing, in Negotiation Analysis 1 53, 158-159 (H. Peyton Young ed. 1 99 1 ) , Another way of thinking about this is to realize that, just as a multi· lateral negotiation can tum bilateral if the parties form intermediate coalitions, a bilateral negotiation can tum multilateral if one or more constituencies have the ability to create their own seat at the bargaining table.

2. HtJW SolidIs Your Coalition? The fact that bilateral negotiations can easily tum into multilateral ones means that the risk of a coalition partner defecting from the coalition is one that should be considered when a negotiator is considering whether the benefits of forming a pre-agreement coalition exceed the costs of doing so. In some circumstances, the defection of a coalition partner will not leave a negotiator in any worse of a position than she would have been in had no coalition ever been formed. But if a negotiator makes concessions on behalf of a coalition partner prior to the defection, those concessions might be

B.

Fair Division

517

difficult or impossible to rescind. To use the example in the p ri r note, assume that Group 2 employees agree to accept limits on job secunty m order to cement their coalition with Group I employees. If Group I employees later defect from the coalition to fonn a separate contract with management, the Group 2 employees might find it difficult in their ongoing negotiations with management to retract their earlier concession; the concesston 1s hkely not only to have anchored management's expectations but also to have �emonst� t­ . ed to management that an agreement that fails to proVJde c�mplete JOb sec � nty . can exceed Group 2's reservation point. To assess the hkehhood of defection , negotiators should consider the trustwonhiness of their coalition partner, the reputational costs of defection, and the potential to enter into enforceable coalition agreemenlS that would prohibit defection.

B. FAIR DMSION A

discussed in Chapter 6, when two parties rely on fairness nonns to divide a cooperative surplus that is created by reaching a negotiated agreement, they are apt to rely on the principle of equality (even distributions) or on the principle of equity (distributions according to the value of their contributions) . Suppose that Alexis and Bartleby reach an agreement (Colossus does not participate) to build the Outernet. Dividing the $425 million dollars of reve­ nue into two $2 1 2.5-million-dollar shares would be consistent with the equality principle. If the parties could verify each other's reservation prices - $30 million for Alexis and $50 million for Bartleby - it also might be consistent with the equality principle to first return $30 million to Alexis and $50 million to Bartleby, and then to evenly divide the $345 million cooperative surplus created by the deal. This division might also be seen as satisfying the equil)1 principle, on the grounds that the transaction created $345 million of surplus that neither party could have created on its own, and thus the contribution to the surplus of each is identical. The parties also might plausibly divide the $425 million by giving Alexis three-eighths and Bartleby five-eighths. Although this would violate the equality principle, it could be viewed as consistent with the equity principle, since Bartleby would have invested five-eighths of the costs of the project. Fair division becomes a more complicated problem if Alexis, Bartleby, and Colossus enter into a tripartite agreement to construct the Outernet, especially if they wish to follow the equity principle. The problem is a direct result of their unstable BATNAs. Colossus might point out that if it and Alexis worked together, they could jointly create $350 million. If Bartleby then joined the coalition, the three working together could create an additional $ 1 50 million. Thus, its equi­ table share should be ( 1 /2 X $350MM) + ( 1 /3 x $ 1 50MM) = $225MM, Alexis's share should be the same, and Bartleby'sshould be only l /3 x $1 50MM = $50 MM. Bartleby likely would complain about C.olossus' perspective. It could propose th� nkmg about the problem as follows: Alexis and Bartleby can create $425 mllhon together, whereas Colossus' addition to the project would only allow the three-w.ty coalition to add $75 million in revenues. Consequently, Bartleby and

318

Chapter I I .

Multilater.d Negotiatiom

Alexis are each enti tled to ( 1 /2 x $425MM) + ( 1 /3 x $75MM) = $237.5 million, while Colossus receives ( 1 /3 x $75MM) = $25 million. Alexis migh t have a different perspective entirely. It might reason that the best Bartleby and Colossus could do without it is to create a $250 million project. Equity demands that it receive at least the additional $250 million that it creates bv, joining the coalition. Of course, the parties could split the $500 million in equal shares of $ 1 67.33 million, but Alexis is likely to feel that equal shares are inequitable given the larger amount of value it appears to add to the project than either Bartleby or Colossus. How could they divide the revenue equitably in light of the different amounts of value each brings to the table and the variety of coalitions that any two of the parties could fonn if they did not reach a three-way agreement? There is no "correct" answer to this complicated question, but one contendt>r is the Shapley value solution. A brief description of this procedure follows. For a more detailed description and analysis, see Michaelj. Meurer, Fair Division, 47 Buffalo Law Rroiew 937 ( 1 999) . The Shapley value solution imagines all o f the possible orders i n which the parties could join a three-way coalition and then calculates the average marginal value that each party would add to the project given those possible combina­ tions. For example, one possible order in which the coalition could be formed is for Alexis to be the fi rst party to commit, Bartleby to join with Alexis, and then Colossus to join the existing coalition . In this scenario, Alexis alone can create no revenue, so its marginal contribution to the project is $0. \Vhen Bartlehy joins, the coalition can create $425 million, so Bartleby's marginal contribution is $425 million. When Colossus joins, the coalition can now create $500 million, so Colossus' marginal contribution is $75 million. This distribution would hardly seem equitable to Alexis, but in other hypothetical combinations Alexis will be the second or third party to join the coalition, which will increase its average marginal value added. With three parties, there are six possible orders for fanning a coalition . The Shapley value solution is found by calculating the marginal value added hy each party in each possible order, totaling each party's marginal contributions, divid­ ing each party's total contribution by the sum of all three parties' total contribu­ tions (to find the percentage of the total revenue due to each party) , and then multiplying each party's percentage by the total revenue to calculate the fair share of each. I n our particular hypothetical, the arithmetic is as follows. Coaliticm Order

Ma-rginal Val1U' of A

so

Marginal Val1U' of B

Marginal Value of C

S425MM $ 1 50MM $0 $0 $1 50MM $250MM

$75MM $350MM $75MM $250MM $0

+ $975MM

+ $750MM

A+B+C A+C+B B+A+C B+C+A C+A+B C+B+A

$0 $425M M $250MM $350MM $250MM

Total

$ 1 275MM

Percentage

42.5 %

32.5 %

25 %

Fair Share

$212.5MM

$162-SMM

$125MM

so

=

$3000M M

C.

C.

519

Managing Communication

MANAGING COMMUNICATION

In negotiations involving two parties. communication challenges can pose obsta­ cles to achieving optimal outcomes. As the number of parties to the negotiation expands, these challenges often become downright daunting. With three or six or ten or twenty parties involved, how can the group identify whether a bargain­ ing zone exists, identify the tradeoffs that maximize cooperative surplus, coa­ lesce around a set of deal tenns acceptable to all involved (or at least the number necessary for action ) , and accomplish all of this while making sure all of the participants feel that they and their concerns have been treated with proper respect? As the number of issues involved increases, the challenge can expand geometrically. The first of the following two excerpts provides a set of principles for organizing and managing the communication process in large-group nego­ tiations. The second excerpt describes in detail a particular tactic - using a single negotiating text- that can aid in managing the substantive content of multilateral negotiations, especially those that involve many issues.

• Howard Raiffa with John Richardson & David Metcalf, Negotiation Analysis: The Science and Art of Collaborative Decision Making (2002)*

What should negotiators [working 1n a group setting] do to not only improve the qual ity of their outcomes but reduce the effort and stress required to reach them? The broadest answer is to make a greater mvestment 1n the infrastructure of the group ­ adopttng norms, establishing heuristics to guide col lective thinktng, and dividing roles and responsibilities in a way that will help the group as a whole. This is hard work, and requires both time and energy. Our belief is that for groups that need to work together, and even for negotiators facing an important dispute that will require a significant effort to resolve. that investment makes sense. We organize our prescriptive remarks in two major categories: membership and organizing the substance of the discussion. Under the latter, we include choosing purposes. using a framework, using labor efficiently, managing the conversation, and watching time.

Membership The most important rule for group membership is this: invite the people you need - and no more. Each additional person involved imposes costs: commumcation gets more diffi· cult, and the task of managing the process gets harder. But adding people can bring beneftts: more tdeas, tncreased expertise, the abil ity to contribute greater resources to an agreement. How should one decide whether or not to include a candidate? • Rt· � rinte� _hy pt' � is.'lion or the publisher rrom Ntgntiatiot� Analy.�is: Tlu> Srimrt> tmd Arl nf Cnl­ lnbomln1t>/Jmsum M�mg hy Howard Rniffa. pp . 393-397, 400-402, Cambridge, Mas. ... : The &lkna �rrs.'l or Harvard Umvenily Pres..,, Copyright 11"� 2002 by the Pft."sident and Fellows of H a rva

Lollegr.

�

320

Chapter I I .

Multilateral Negotiations

A general rule is to i nvite a person only if you can articulate a clear reason why his or her presence would help. Individuals may make a useful addition for two kinds of reasons: (1) they have something to contribute to making a better decision, or (2) any solution will need their approval or support . . . I nvolving those whose approval is needed presents a di lemma. If too many are asked, they can make the meeting unwieldy. We know of a professional partnership that tried to rewrite its compensation policy i n a meeting of more than one hundred. Even had they had the best formal process and highly skilled facil itation (which they didn't), the meeting sti l l would have been a disaster. It is difficult for more than a handful of people to draft any complex document together. It is better to have a subgroup take care of drafting. The experience led some of the leading partners to write a policy among them­ selves. They presented what they'd come up with when the other partners arrived at the next meeting, and asked for an immediate vote for approval . The plan, a good one, was resoundingly rejected. If those who must approve an agreement have no oppor· tunity to have a say in its contents, they will likely view it with suspicion. And if it is sprung on them without adequate time to consider it. they won't want to risk agreeing to something they don't understand. The solution is to disaggregate three elements: (1) contributing one's ideas and i nterests, (2) drafting, and (3) approving. Don't try to have everyone actually at the meeting where it is created - but give all partici pants a chance to offer their input indirectly before they are asked to approve. A formalizing structure allows one to break down the problem for input - the partners could have been asked to each offer a memo with their views on the firm's objectives and alternatives in creating a compensation plan. Or a group with similar interests might send a representative to the table to transmit members' suggestions . . .

Organizing the Substance of the Discussion After deciding who will come, the next question is how to use group members' time and effort in a coord inated fashion. An individual will often benefit from taking some time to organize a process to guide his thinking. For a pa ir of negotiators, agreeing on a process is even more important. For a group, it is indispensable. Choosing Purposes

Too often, the participants in large negotiations or problem-solving sessions have different purposes - and still worse, they don't even know it. Imagine a business student couple who have difficu lty choosing a city to live in after graduation. They go to marriage counseling. One spouse thi nks that the desired result is a choice of destination. The other wants them to decide whether to stay married or get divorced. They will be more successful i n solving either problem - or both - if they can agree which they are working on at any given time. The first task for a group is to establish common purposes. What would the mem· bers l i ke to get done together? . . . It can also increase motivation - each will work harder if she is convinced that there is a worthwhile end to this toi l . We offer a few general guidelines for determining a group's purposes. Articulate ideas about the purpose before the meeting. A group will make more progress if everyone comes prepared to make a useful contribution. Circulate a memo

C.

Managing Communication

SZI

to all the invitees with some preliminary thoughts about what needs to be decided and what information could help that decision. Each can do some individual preparation before coming, and possibly consult any constituents who will be concerned with the outcome. State the purpose in terms of a tangible product. Some purposes are all too easy to express without saying anything useful. "We're going to meet to talk about improving productivity." Talking about something might be usefu l, or it might not. Creating a definite product. like a list of five alternatives that can be investigated further, is more l ikely to be helpful. Set nested aspirations. Having a target to shoot for can motivate a group and give it a common object to steer for. But it can also limit productivity - when we achieve the stated target we tend to slack off. We satisfice. The effort devoted to any one project can easily expand to fill the entire time. And if we only set one goal and fai l to ach ieve it, the participants are not going to return to the same group with much enthusiasm. A way to avoid both problems is to set a series of aspirations. It is hard to know whether any particu lar one is too ambitious to accomplish in the time available. If we only get the first done, that will at least be something. And if we get that done with time to spare, we can go on to the next. Solicit input on purposes. Group members are more likely to work hard toward a purpose if they have helped to create it. They are more likely to see expecta· tions for their performance as reasonable if they have had a hand in setting them. When possible, give everyone an opportunity to offer his or her ideas about the purpose for a meeting. Doing so may risk an open disagreement over the purpose - but an open disagreement is easier to deal with effectively than a buried one. Use a Framework to Coordinate Group Thinking

The individual might get away without adopting a systematic approach to decision making, but the group cannot be so caval ier. It is even worse when dealing with very complex problems, like the ones groups typically face. One person may be able to keep a complex problem organized i n her head - the way some people can play chess blindfolded. Most will benefit from some formal structure. When one is working with a group, formal structure becomes a necessity. Using a framework helps reduce coordination loss. by keeping everyone focused on the same subject at the same time. It reduces conceptual loss as well. Using a chart to lay out a structure for the problem at hand frees up room in the participants' minds. And even the people who can play chess blindfolded play better when they can see the board - it cuts down on the effort spent keeping track of the pieces. A formal organization is like the chessboard - looking at it helps you keep all the pieces stral ght 1n your head. It doesn't channel the resolution to any particular result ­ . part1es can and will disagree at every step. But they will be disagreeing about the same thmg at the same time, so that their reasons for disagreemen t can be identified and handled.

522

Chapter 1 1 .

Multilateral Negotiations

Managing the Conversation

There remains the task of moderating the group's discussion from minute to m i nute to keep it efficient and productive. Tomes can be written about this subject. but we confine our remarks to those few ideas that seem most crucial to the task of quickly organizing a new decision·making group: 1. The need for a good faci l itator (or discussion organizer and leader) 2. The need for a good scribe (recording what is being said and what has been said) 3. The need to generate ideas. Facilitation. The facil itator can be thought of as a traffic cop whose job is to keep the discussion moving smoothly. She - or he - can direct discussions by choosing topics and making sure everyone has a chance to contribute. She can suggest sub· group divisions. A faci l itator takes on much of the work of managing the group in order to free the other participants to work on the substance. And the success of the meeting will to some degree depend on how well she plays that role. What sort of person should we be looking for? . . . We want someone with a good head for organizing a complex problem. She should be able to keep the issues straight. and know what questions are important to ask. She need not be able to solve the problem, but she should be able to see its outlines and know how to direct people toward subproblems that they can solve. She should have good interpersonal skills. She will need to deal with tough per­ sonalities and defuse tense situations. She should gently guide people back to the task at hand when their comments are off point. Negotiators are often suspicious about the motives of a facil itator. If any of the parties see the facil itator as biased agai nst them, they will resist her guidance on the process - even if her suggestions actually do no damage to their interests. It isn't a good idea to have a faci l itator who is known to have personal interests at stake in the negotiation that are at odds with those of any of the participants. Close personal relationships, or busi ness entanglements, with any of the participants are also likely to raise the hackles of the rest. If it has been decided that the facil itator will be selected from among the parties in the negotiation, it is a good idea to choose the one with the least at stake. Another approach is for the facil itator to delegate advocacy of her substantive interests to another participant with similar i nterests, and devote herself to worrying about the process. This requires a good bit of trust on the part of the facil itator of the person handling her affairs. Documentation. People often think of the person who takes notes at a meeting as the one who contributes least. Yet much can be accomplished by a skillful scribe. He - or she - needs to be good at reducing complex statements to a pithy essence that can be jotted down for all to see. He needs to be good at checking his understanding against the contributor's meaning. An ongoing visible record, especially when the group is using a formal decision framework, keeps a group moving in unison. The medium can be a chalkboard or a mass of flip charts, or a network of computers on which each participant sees the progress d isplayed. Each player knows that her contribution is being incorporated i nto a record that will be useful later on - so no one feels unnoticed.

C.

S!ll

Managing Communication

A visual representation relieves the participants of the mental effort of keeping the discussion organized in their heads. The depiction will show the relationship between the different thinking tasks - letting everyone know where the discussion came from and where it is going. This saves time that might be spent explaining the problem or repeating what has already been said. A good record shows anyone coming back from an absence (whether she was called to the phone or simply lapsed into a daydream) what the topic of discussion is and what ideas have already been discussed. A visual record also helps solve a di lemma that troubles some participants using a framework. On the one hand, if the organization of the discussion is too rigid, it may inhibit creativity. Sometimes a bright idea is sparked by a discussion of another topic. On the other hand, if the discussion is too free-flowing, it is hard to get anything done. Some get confused by conversations that jump around. The brill iant idea on one topic causes us to lose solid workmanl ike thinking on another. Recording with a framework al lows a group to get the benefits of both approaches. There is a clear rational pro­ gression for those who prefer it. and there is also a way to catch ideas that come out of order. Visual recording tends to improve the qual ity of oral communication. The scribe can gently prod a verbose participant to rework his rambling comment into an informative sentence. Someone who interjects a non sequitur can be pushed to explain the relation between her comment and the previous discussion. Over time this process tends to produce more concision and more consideration of how one uses the group's time and attention. Generating fresh ideas. . . [T]he more alternative courses of action considered by decision makers, the better the payoff to that decision is likely to be. Some alter­ natives may be available "off the shelf" - well-known solutions to similar problems. Others might be invented by the decision makers themselves. The most common method for doing so is "brainstorming". The basic elements of the practice are this: a group sets aside a period in which it will only invent ideas; criticism of the ideas is not allowed (since otherwise fear of their colleagues' poor opinion may pre­ vent some group members from offering suggestions); in fact, unworkable ideas are encouraged in the hope that they will suggest other, better ones; and the ideas are not ascribed to any individual, but only to the group as a whole. The group should seek an environment where it is safe to openly express half-baked ideas and where it is taken for granted that only some of these ideas will mature into serious contenders for later del iberation . . .

•

Donald G. Gifford, Legal Negotiation: Theory and Applications (1989)* . . . The single negotiation text is a problem-solving negotiation procedure of p� rticular value i n multiple party negotiations. I n this process, one of the negoti­ ating parties or their lawyers, or a neutral third party, drafts a proposed agreement and asks the other negotiators for their suggestions and criticisms. At this point. the other negotiators are not requested to accept the proposal or to evaluate its • Reprinlrd

1989 by Wrst

fro�

I� N'I(Dtiat":n:

Pubhshmg

Theory and Applicalioru by Donald G.

f'.o. Repnmed with pennis..'lion of Wesl Group.

Gifford. Copyrighl

·t'

324

Chapter 1 1 .

Multilateral Negotiations

overal l desirability. After receiving specific suggestions and criticisms from the other negotiators, the original author redrafts the proposal, taking into account the feedback she received and incorporating the other parties' suggestions. Then she submits the revised draft to the parties. The process of soliciting criticism and redrafting begi ns again, and may recur three or four times - or even twenty or thirty times. No single negotiator usually perceives the single negotiation text as becoming a better document at every step of the process. It is more likely that a negotiator finds that one round of modifications to the text result in a substantial improvement for her client's interests - sometimes at the expense of other parties - but that the next set of changes benefit other parties, perhaps to her client's detriment. Because the nego­ tiators all desire to reach agreement. however, they probably tolerate changes that modestly diminish their cl ients' level of satisfaction as the process moves along. Eventually the drafter bel ieves that the current draft does the best possible job of addressing the parties' interests. Accordingly, she submits it to the parties for their possible acceptance. The single negotiation text, of course, can be used even in two party negotiation. When multiple parties negotiate, however. some type of a focal point is required, and the single negotiation text is a desirable alternative. Probably the most famous use of the single negotiation text occurred during the negotiation between President Sadat of Egypt and Prime Minister Begin of Israel at Camp David during 1978. Representatives of the United States, after listening to the Egyptian and Israeli delegations, prepared an initial single negotiation text which then went through twenty-three more drafts during the next thirteen days. At that point, the American facil itators bel ieved that no further improvement was possible, and they recom mended adoption of the text. Both Egypt and Israel agreed. The use of the single negotiation text, however, is not limited to international di plomacy. Typically, comm ittee chai rpersons circu late a draft of a proposal or report to members of the committee and i nvite their feedback either prior to or during the next committee meeting. After receiving the comments of other committee members, the chair or committee staff makes revisions. For example, consider a state legisla­ ture driven to address the medical malpractice crisis by public outcry about dramat­ ically increased medical mal practice premiums. Staff of the legislature's judiciary committee, working together with representatives of a state study commission who have been investigating the malpractice crisis, draft a comprehensive reform proposa l . This i n itial draft legislation is widely circulated among key legislators, the governor's office, staff from other affected legislative committees, and representa­ tives of various interest groups including physicians, hospita ls, lawyers, insurance companies and consumer groups. As in other single negotiation text proceedings, changes are made as a result of feedback, and the process is repeated. I n most instances in the political arena, it is not possi ble to achieve the support of all the affected i nterest groups; some end up opposing the legislation. Eventually, however. after many drafts and modifications, the proposal attracts support from enough of the key legislators and interest groups, whose suggestions are now incorporated into the draft legislation. to be enacted i nto law. The single negotiation text process is most effective if the individual drafting the proposal , soliciting criticism and redrafting the agreement is a mediator or other third party. Under these circumstances, the initial proposal is l i kely to be an honest attempt

c:.

Managing Communication

5%5

manip­ to reconcile the conflicting parties' interests, and not a document drafted to by a ulate the negotiating process. Moreover. when the initial proposal is drafted . neutral mediator. the negotiators often feel more willing to offer honest cnt1c1sms and suggestions. It is understood by the participants that no one, not even the medi­ ator hired to facilitate negotiation with techniques such as the single negotiation text, is committed to the initial draft. The single negotiation text procedure does not require the negotiator to make any concessions until the final stage of the process when she is asked to accept the final version of the text. Instead, she is asked only for her input. suggestions and criticisms. With her reaction to each successive draft, thiS procedure al lows the negotiator to communicate effectively her cl ient's priorities and his level of resistance to acquies­ cence on particular issues. This is accomplished, however. without any i mage loss; the negotiator's response or lack of response to any particular provision of the single negotiation text does not communicate to the other negotiators that her bargaining resolve is being weakened or that their competitive bargaining tactics are working. The single negotiation text is only one problem-solving tactic particularly su ited for multiple party negotiation. The complexity of multiple party negotiation means that competitive negotiating tactics such as extreme proposals, bluffing, and infor­ mation concealment usually result in frustration and stalemate. at least in those negotiations in which the parties do not readily divide into two bargaining coal itions. The most important difference between multiple party and two party negotiation remains the increased use of various problem-solving tactics to determine whether there is a zone of agreement that satisfies the underlying interests of the many participants.

Notes I. 1'he Negotiator's DikmnuJ in 171,.,. Dimensions. The single negotiating text (SNT) procedure recalls the problem of the negotiator's dilemma discussed in Chapter 7 in the context of two-party bargaining. Should a negotiator criticize every aspect of the SNT that does not serve her interests, claim that the package described in the SNT is unacceptable even if the beneficial portions of the package outweigh the objectionable portions, and threaten to break off negotia­ tions if the other parties do not accede to her demands in the next draft of the SNl? Or. should a negotiator honestly disclose her range of interests, accept chan �es m the SNT that are contrary to her interest'i (so long as the SNT is supenor to her reservation point overall) in order to accommodate the interests of the other parties, and work to find a way to serve the interests of everyone at the table? Th ? i �sue is more complex in multiple-party negotiations than in two-party �egona�.1ons, because when the .nego�ator decides whether to "cooperate" or to defect (see Chapter 7 for a d1scuss1on of these terms) , she must consider the likely strategies of n�tjust .one other negotiator, but many. It might pay in the short �� ---: that 1s, •gnonng reputauonal costs- to defect in a multiple-party negot1aUon 1f �II the other parties cooperate. If there are many parties, the cooperators m1ght have the ability and willingness to accommodate the

526

Chapter 1 1 .

Multilateral Negotiations

demands of a single defector in order to reach agreement. But the more parties that defect, the more likely that the negotiator's defection will cause the parties to fail to produce an SNT satisfactory to all parties, and the chance for a ben­ eficial agreement for all might be lost. When determining how to cope with the negotiator's dilemma, a party to a multilateral negotiation must also consider coalition possibilities. If a coalition can act without the other parties, a single negotiator's attempt to defect and thereby manipulate the SNT to his singular advantage is more likely to result in his exclusion from an agreement than if no action can be taken without the agreement of every party at the bargaining table.

2. Circular LogroUing. In bilateral negotiations, integrative bargaining often focuses on identifying issues that the parties value differently and then swapping those issues, or on identifying goods, services, or terms valued less by the party that can provide them than by the other party and then compensating their provision with cash. Under either approach, a concession by one party is recip­ rocated, either in cash or in kind. With three or more parties, a modification of this approach called circular logrolling becomes possible. If Party A can provide something that Party B values highly, it is not necessary to find something that Party B can provide that Party A values highly as compensation. Instead, Party B can provide something that Party C values, and Party C can provide something that Party A values. A multi-way trade thus has the potential to make all parties better off even if no two-way trade would have been desirable for any two of tht' parties.

DISCUSSION QUESTIONS AND PROBLEMS I. Bilateral Venus Multilateral Negotiations. In your opinion, what is the single most important difference between bilateral and multilateral bargaining situations? I n what ways does the difference that you identify make multilateral situations more (or less) complicated for the negotiator? What extra steps wi11 you take, or what specific tactics wi11 you use in multilateral situations to deal with this difference from the bilateral bargaining context?

2. To Build ur Not to Build a Coalition. Suppose that you are asked to try to arrange a deal among three companies to take advantage of a newly identified business opportunity. Would you advise that all three parties sit down at the outset and negotiate a multilateral agreement, or would you advise that two of the parties first form a coalition, which would then enter a bilate �l negotiation with the third party? Why? If your answer would depend on the Circumstances, describe what additional facts you would want to know, and how these facts would affect your advice. 3. Identifying a BargrJining Zone. Using a single. negotiation text is. �ne approach to solving the probl � m of h �w to Identify �hether a barg�mmg zone exists when there are multiple parues to a negouauon. Can you thmk of other procedural tactics that might help to achieve this goal?

Discussion Questions and Problems

!1%7

4. Faimeu in Mu/tiUJUral Division. Reexamine the problem of Alexis, Bartleby, and Colossus building the Outernet from the perspective of a disinter­ ested, neutral observer. Assume that all three companies agree to work together on thejoint venture. In your opinion, what is the "fairest" division of the result­ ing $500 million? How did you reach your conclusion? 5. Building a Coalition. Country A is a landlocked nation, rich in natural resources and controlled by an unpredictable dictator known to use its relauvely small army aggressively. It is surrounded by Countries B, C, and D, all of which are traditionally friendly with one another and with A. Country Z is a very large and powerful nation on a different continent. Recently, militants in Country A stormed the local embassy of Country Z and murdered its ambassador. Country Z believes that the government of Country A was complicit in the attack. Country Z has succeeded in convincing the United Nations Security Council to impose economic sanctions against Country A as punishment. Country Z wishes to station military forces on Country A's border to prepare for a potential invasion. C..ountry Z now needs the cooperation ofB, C, and D for the economic sanctions to have maximum effectiveness (otherwise, Country A can smuggle contraband in and out) , and it needs the cooperation of either B, C, or D in order to position the troops. Countries B, C, and D all rely on Country Z for substantial amounts of trade, foreign aid, and military assistance, but each is fearful of the security conse­ quences of alienating Country A. Country B is by far the largest of the neigh­ boring countries, with a population that is twice the size of A, C, and D combined, and a gross national product that is three times the size of A, C, and D combined. C and D generally follow the foreign policies of B (as does A) , but this is not always the case. Country C has virtually no army, so it is most fearful of potential aggression from Country A. Countries B and D have relatively large armies, so they do not fear being invaded by Country A, but they do fear covt·Tt or terrorist operations. Country D is the poorest country in the region, and it would benefit most from increased financial aid from Country Z. Its citizens are of the same ethnicity as the majority of citizens of Country A, however, so the government of Country D fears how its citizens might react if it allies itself with Country Z against Country A. Country Z hopes to build a coalition of local supporters in its confrontation with Country A. It can offer the countries in the region - B, C, and D - trade concessions, financial aid, and military assistance, but it wants to provide no mort" of these inducements than is necessary. What sequencing advice would . you giVe the leaders of Country Z as they seek to build a coalition? What advice would you give the leaders of Countries B, C, and D about whether they should join Country Z's coalition and, if so, whether they should attempt to join early or late?

6. A MultUkforulont LawruiL Plaintiff has filed suit, naming X, Y, and z as defendants. Plaintiff may choose to drop one, two, or all three defendants from the suit befor� trial. If a trial i � held, attorneys' fees will cost each participating party $10. Parties that are diSmissed from the suit will not pay any attorneys' fees. If Plamuff chooses to go to trial against one or more of the defendants the ' defendanl• will be found liable for the following amounts:

528

Chapter 1 1 .

PitJintiff S""

Vndicl

X alone V alone Z alone X&Y X&Z Y&Z X, Y, & Z

$35 $25 $16 $78 $55 $52 $82

(split (split (split (split

Multilater.tl Negotiations

evenly between defendants unless they agree otherwise) evenly between defendants unless they agree otherwise) evenly between defendants unless they agree otherwi5e) evenly among defendants unless they agree otherwise)

What negotiating advice would you give to each of the four litigants prepare for settlement negotiations?

as

they

Chapter 12

The Use of Mediation in Negotiation In law school texts and courses, the processes of negotiation, mediation, and arbitration are often grouped together under the label of "alternative dispute resolution" methods, and collectively contrasted with what is implicitly identi­ fied as the "standard" method of dispute resolution: adjudication by a court of law. It is true that negotiation, mediation, and arbitration are all "alternatives" to court adjudication, but the conventional grouping of this troika of dispute resolution techniques misleadingly suggests that conceptually the "alternative" methods are equally dissimilar to adjudication and equally similar to each other. In fact, adjudication and arbitration are conceptually very similar methods of dispute resolution, and these two processes are quite distinct from negotiation and mediation, which in tum are conceptually very closely related. The most important distinction between the various conventional and alternative methods of dispute resolution is whether the terms of the dispute's resolution are arrived at through the consent of the interested parties or are imposed through a directive issued by an authoritative third party without a personal stake in the dispute. In negotiation, agreements are reached, if at all, by the consent of all principal parties, each of whom presumably has decided that the agreed-upon terms are more desirable than the option of pursuing his or her BATNA. In formal adjudication, in contrast, the resolution of a dispute is imposed on the parties by a court, which can call on the coercive power of the state to enforce its determinations. The voluntary consent of the parties to the court's directive is neither required nor even sought. Arbitration, like adjudication, resolves disputes through authoritative directive. An arbitrator (or a panel of arbitrators) hears arguments and evidence from the disputing parties and then renders a judgment. The arbitrator is not a public official, and she may follow different procedural and evidentiary rules than would ajudge, but the arbitrator otherwise act.'i like a judge. There is an element of party consent in arbitration, in that the parties must agree in advance to abide by the decision of the arbitrator (except when the parties enter into a distinct ��ess kno� as "non � inding arbitration," in which case the arbitrator's opin­ IOn Is only advtsory) . Th1s consent can be given either before there is any dispute to be resolved - such as when two parties enter into a contract to do business 329

Chapter 1 2 .

The Use of Mediation in Negotiation

with one another and include an arbitration clause as one of the elements of their transaction - or after a dispute has arisen . Once consent is given to the arbitration process, however, the arbitrator imposes the substantive terms of the dispute's resolution, and no further consent of the parties is required. The arbitrator's authoritative decision, like a judge's, is enforce­ able by the state's coercive power, subject to limited rights of appeal to the public courts. A mediator, in stark contrast, lacks the authority enjoyed byjudges and arbi­ tnitors to direct the parties to act according to her determination. The mediator can attempt to reason with, persuade, or cajole the disputing parties, but she cannot dictate any terms of a dispute ' s resolution, nor can she force the parties to reach any agreement at all. If the parties to a mediation are to reach an agreement, the consent to the substantive terms of that agreement must be given by the principal parties. In negotiation, the principal parties or their agents attempt to identify a deal desirable to all concerned. In mediation, the parties and their agents have the same goal, but they seek to achieve it with the assistance of a neutral third party. Mediation, then, is probably best understood as facilitated negotiation, rather than as a dispute resolution process that is distinct from negotiation. Like negotiation, mediation is fundamentally different from either adjudication or arbitration. As is true of negotiation, there is no single template or how-to guide for mediation that is appropriate for all circumstances. However, many mediators employ some variation of the following basic approach: First, the mediator conducts introductions and describes how she views her role in the mediation and the structure she intends to follow. Second, the parties (or their agents) are each given an opportunity to state their view of and position concerning the dispute. When the mediation concerns a litigation matter, the principal parties' lawyers will often present their assessment of the strength of their legal claims at this point. Third, the mediator and the parties will discuss possibilities for resolv­ ing the dispute or reaching some type of agreement. The mediator might ask the parties to make offers and counteroffers, or the mediator might recommend to the parties a particular deal or deals. Fourth, if an agreement acceptable to all parties appears possible, the mediator will attempt to close the deal. Negotia­ tions involving a mediator can take place in a ''joint session," in which the mediator holds discussions with all of the parties (or their agents) present, or in private "caucuses," in which the mediator meets alone with each party. Many mediations combine these methods, alternating between joint sessions and individual caucuses. Because mediation is a method of negotiating, negotiators need to determine when mediation is an appropriate tool to use to assist bargaining. Involving a mediator in negotiations adds an additional cost to the process, so it is important to think critically about when the involvement of a mediator will be sufficiently beneficial to the negotiation process to justify that cost. To address this issue, Section A considers the different types of benefits that mediation can afford negotiators. A related question for negotiators is, if mediation is employed, what specific role or roles should the parties ask the mediator t� play in order to derive the maximum possible benefit from the process? Section B addresses this question by considering the range and appropriateness of different mediator styles.

A.

The Potential Benefits of Mediation

!!I

disputes ­ Mediation is usually thought of as a process to help parties resolve . it IS Impor­ particularly disputes in which lawsuits have been filed or threatened �mployed tant to keep in mind, however, that facilitated negotiation. can also be a rela­ in transactional settings in which the parties are attemp � ng t� es �� hsh _ �he tionship rather than resolve a dispute. Because the tenn . medtato� carnes connotation of a dispute context, the third-party neutral !.n a �� ndtspute setUn � expert tract would most likely be called a "facilitator," "consulta? t, or con. rather than a "mediator," but the neutral third party m a transactional context can provide the same facilitative functions that a mediat� r can provide in a dispute context. Section C specifically addresses how m_edtators �an. be useful in the context of transactional as well as dispute resolution negotiations.

A.

TIIE POTENTIAL BENEFITS OF MEDIATION

As you learned in Part II, negotiators have a limited number of basic strategic goals: identify the bargaining zone, expand the bargaining zone (or create one when none exists) , and divide the cooperative surplus by exercising negotiating power or invoking nonns of fair division. In the following ways, a skilled medi­ ator can potentially assist the negotiators in achieving these goals or, put somewhat differently, reduce the barriers that can prevent negotiators from achieving these goals.

l.

Facilitate Introspection and Analysis

In order to determine whether there is a bargaining zone such that an agreement will make both parties better off than they would be pursuing their BATNAs, negotiators must carefully determine their reservation prices. Of course, not all negotiators do this with sufficient attention to detail prior to entering nego­ tiations. Many negotiators think only or primarily about their aspirations prior to bargaining, because this is often far more pleasant than acknowledging the shortcomings of one's BATNA and, consequen tly, determining a rational res­ ervation price. A skilled mediator can focus the parties' attention on the factors relevant to their reservation prices by asking questions about the costs and benefits associ­ ated with not reaching an agreement. For example, the mediator of a dispute might ask a party to estimate the total attorneys' fees he would have to pay if the dispute were litigated to verdict, as well as to take into account the emotional cost of litig-a tion, the amount of time he would have to spend away from his job and h•mily responsibilities, whether his relationship with the opposing party is •m �ortant �nd the effect o� litiga�on on that relationship, and the risk of losing a tnal verdtct. A good medtator will also encourage the parties to think carefully about the advantages of failing to reach a negotiated agreement, in addition to the disadvantages. Just as careful introspection is needed for parties to determine their reserva­ tion prices, and thus to identify whether a bargaining zone exists, creating a

C.hapter 1 2.

The Use of Mediation in Negotiation

large cooperative surplus through negotiation requires the parties to be intr� s �ective about t� eir interests. A party who files a lawsuit intent on vanquishing his adversary might ask for a large monetary judgment but actually care more about an injunction against future acts than about compensation for past acts, or about repairing his reputation or his relationship with the opposing party. A skilled mediator can ask questions designed to force the negotiator to think carefully about the interests underlying his stated positions and to evaluate the value of different potential resolutions, all in an effort to permit the parties to create the negotiation package with the greatest joint value. Integrative bargaining requires parties not only to be introspective about their own interests, but also to be empathetic toward and cognizant of the counterpart's interests. Mediators can assist negotiators in taking the counter­ part's interests into account and constructing offers and counteroffers that meet both parties' needs.

2.

Facilitate Communication

In addition to introspection, identifying the bargaining zone and enlarging that zone through integrative bargaining requires negotiators to communicate crit­ ical information to their counterparts. Mediators can facilitate this process by asking the parties questions in joint sessions designed to encourage them to clearly describe their interests, preferences, and desires to their counterparts. For example, if a defendant thinks that a plaintiff cares only about money, but the plaintiff is just as interested in the defendant understanding and acknowl­ edging the harm or inconvenience he has caused, a skilled mediator can elicit this information from the plaintiff and potentially enable the parties to see that a settlement is possible when they previously thought a settlement would be impossible. A skilled mediator can also help elicit information possessed by one party that is relevant to the other's reseiVation price, thus helping the parties to identify a bargaining zone. Whereas a plaintiff's claim that he is highly confident about prevailing at trial might not impress an equally confident defendant, the defendant might reassess his reservation price if the mediator can encourage the plaintiff to clearly elucidate his legal analysis or reveal facts that help his legal position. A mediator herself might also be able to help clarify to one party the other party's legal analysis or position. In litigation (or potential litigation ) situations, the relationship berween the principal parties is sometimes so damaged that emotions can interfere with rational discussion about the substance of the dispute, obscuring the possibility of reaching a mutually desirable settlement agreement. In extreme cases, the parties might find it difficult to even sit down together to begi � the �egotiation process - even with attorneys present. In some cases, the parties mtght be Will­ ing to engage one another only through a series of private caucuses, in which the mediator shuttles berween the parties and the parties do not need to directly address each other. In a Jess extreme case, the parties might be willing to meet with each other, but negative emotions might prevent the emergence of a fruitful dialogue. In that situation, the mediator might establish a basis for reaching a negotiated

A.

The Potential Benefits of Mediation

and by agreement by ensuring that each party has a full opportunity to be. heard, parues ensuring that each party treats the other respectfully, or by separau �g the and conducting the negotiation partially or enurely through a senes of pnvate caucuses. 3.

Evaluate Issues Relevant to the Parties' Reservation Prices

Litigating parties often have the same BATNA of going through the formal adjudication process but disagree about the likely �utcome of tha� pr��ess _ wtth huga­ (i.e., the value of their BATNA) . The high costs and nsks assoctated tion cause most parties to strongly prefer a negotiated settlement to a trial with the same expected value, but differences between the parties' estimates of the expected value of trial can often threaten to eliminate any possible bargaining zone. Mediators often facilitate settlement by providing a neutral evaluation of the strengths and weaknesses ofthe parties' legal positions, or even the expected value of the parties' BATNA of submitting to formal adjudication (i.e., the lit­ igation value of the dispute). If the parties have confidence in the mediator's judgment, the mediator's evaluation of the litigation value of a case can reduce or eliminate the difference between the parties' premediation assessments, thus greatly increasing the likelihood that the parties will identify a bargaining zone. In some situations, a mediator might be no better qualified than the parties themselves or their lawyers to assess the litigation value of a dispute, but in other situations mediators might be able to provide more realistic estimates for a number of reasons: First, as Chapter 3 discussed, the self-serving bias is likely to cause parties with a personal stake in a dispute to overestimate the strength of their positions. It is not clear whether a client's lawyer is likely to be substantially less affected by this bias than the client herself. Lacking any personal interest in the dispute, a skilled mediator may be able to provide a more accurate assessment of the strength of the case. Second, a mediator asked to evaluate the litigation value of a case can con­ sider the best arguments offered by each side, just like ajudge orjury would do if the case were to proceed to court. A lawyer evaluating a case on behalf of his client must attempt to imagine the best arguments of each party and rarely has the luxury that a mediator enjoys of being able to listen, with a clear mind, to the best arguments that each pany can offer. Third, if the mediation takes place before the discovery process is complete, or if the cost of discovery relative to the stakes of the case makes complete and thorough pre-trial discovery by both sides impractical, a mediator might be able to offer an evaluation based on more complete evidence than either party can consider. This will be true if either party has access to some information to which the other side lacks access and does not wish to disclose that information to the other party for strategic reasons, but the parties agree to disclose in confidence all relevant information to the mediator so that she can evaluate the evidence. If �xha�stive discovery has been completed in the dispute, of course, both pan1es m1ght have access to all of the relevant factual information ' Lhus reducing the mediator's comparative advantage in making evaluations.

Chapter 12.

The Use of Mediation in Negotiation

Fourth, if the mediator is selected because of her experience handling a parucular substanuve type of dispute, as a lawyer, a judge, or a mediator, the mediator's substantive expertise might give her an advantage over the principals or their lawyers in predicting how a court would resolve the dispute. Even if the mediator is in no better position than the parties or their attorneys to assess the litigation potential of a dispute, a respected mediator can provide a valuable second opinion to that developed by a negotiating party. As Chapter 2 demonstrates, estimating the litigation value of a dispute is a difficult and inex­ act science. A neutral opinion that deviates sharply from the negotiator's initial opinion could, at a minimum, cause the negotiator to reconsider her analysis. A neutral opinion can also help to resolve internal conflict within one of the negotiating camps, such as when a lawyer advises her client that the client's case is weak, but the client believes otherwise and demands that the lawyer maintain a high reseJVation price in negotiations. A mediator's evaluation of the litigation value of a dispute can take a variety of different forms. At the most evaluative end of the spectrum, a mediator can predict how a court would rule on the merits of the dispute if the parties fail to settle out of court. For example, the mediator could tell the parties that she believes a judge would rule for the plaintiff and award $25,000 in damages. Unlike a judge or arbitrator, however, a mediator providing a neutral evalu­ ation of a case need not predict a specific outcome. The mediator can instead provide a probability assessment of possible outcomes. For example, the medi­ ator might state that she believes there is a 75 percent chance that the plaintiff' would prevail in court and recover $50,000, and a 25 percent chance that the defendant would prevail. Again, if the parties have confidence in the mediator's ability to predict the results of adj udication, the mediator's opinion can cause the parties to reassess their probability estimates and, consequently, their reservation prices. Finally, rather than providing a global evaluation of the case, the mediator can provide more qualitative evaluations about particular aspects of the parties' cases. For example, in a negligence lawsuit, the mediator might advise the plaintiff that he is likely to prove duty and breach, but that his evidence of causation is weak. Alternatively, the mediator might advise the defendant that he stands a good chance of prevailing on liability, but should the jury find against him it would be likely to award very high compensatory and punitive damages.

4.

Filter Private Infonnation

As Chapter 7 describes, negotiators have an incentive to withhold private infor­ mation that could help the parties to reach a mutually beneficial agreement when they fear that their counterpart will exploit that information to capture the cooperative surplus that an agreement would create. For example, if a plain­ tiff's reservation price for an out-f