Mastering Negotiation Strategy and Behavioral Psychology

DAY 1 -Introduction & the Deal-Making Mindset 

- Negotiation : "A form of decision making in which 2 or more parties talk with one another in an effort to resolve their opposing interests" - Lewicki, Barry & Saunders (2016) (A technique for resolving conflicts and overcoming differences.

                - 3 Goals of effective negotiation

1. Achieve a wise outcome - agreement satisfies the interests of both parties, is fair, and is sustainable over time (Eg: 2 parties explore alternative payment plans or service bundles that better meet both sides' needs

2. Preserve or enhance the relationship - strengthens trust, respect & ongoing collaboration

3. Be efficient - time, energy & resources are limited - a good negotiation reached agreement without wasting them

HEXACO personality Test - 6

1. Honesty - Humility(謙遜) - which a person is genuine, fair, free from self-serving(追逐私利的) motivation in their dealings with others (sincerity, fairness, greed avoidance, modesty) 

In negotiation, Honesty - Humility is the primary predictor of ethical conduct as it shapes whether a negotiator will use deception, misrepresentation or strategic manipulation and whether they will honour commitments even when breaking them would be advantageous

2. Emotionality- captures how a person is able to understand their own emotional experience and to emotional threat (fearfulness, anxiety, dependence, sentimentality)

It shapes how a negotiator responds to pressure, silence and whether they can sustain calmness when tactics are designed to provoke.

3.EXtraversion - (social self-esteem, social boldness, sociability, liveliness)

Extraverted negotiators tend to be more assertive(堅定自信的) in opening offers, more comfortable in multi-party settings, more likely to lead agenda0setting and more persuasive when pitching proposals.

4. Agreeableness - (forgiveness, gentleness, flexibility, patience)

(In negotiation, this means I can claim value without being aggressive about it. In leadership, it means people know they can push back with me and get a genuine hearing, but that I will also hold firm when I believe I am right

5.Conscientiousness - (organisation, diligence, perfectionism, prudence) 

Highly conscientious negotiators are less likely to be caught off-guard, more likely to track issue trade-offs systematically, and more likely to honour agreed commitments.

6.Openness to Experience - (aesthetic appreciation, inquisitiveness, creativity, unconventionality)

the curiosity about counterpart interests and the willingness to reframe impasses rather than accept them.

interstitial (間隙的) Altruism -(無私) ()

DAY 2  Biases, Blind Spots & the Psychology of Negotiation 

- Prisoners Dilemma - a paradox in decision analysis in which 2 individuals acting in their own self-interests do not produce the optimal outcome

• Perception is actively constructed not just receiving information, it is often shaped by our expectations, experiences and emotions 
• Gestalt psychology is about how we organise what we see, the same pattern seeking behaviour leads us to make assumptions (often the wrong ones) about the other party's intentions, emotions and offers
  • Closure: We complete incomplete shapes/ information (we assume someone's silence means "they're upset"
  • Similarity: We group things that look alike (we assume a confident tone= expertise)
  • Continuity We see patterns even in randomness (we expect the next offer to follow a predictable path)
• System 1 thinking - source of most of out biases, jumping straight to conclusions, relying on stereotypes, misreading emotions (AUTOMATIC, NON-CONSCIOUS THINKING, FAST, FREQUENT)
• System 2 thinking -slower, controlled thinking, requires conscious attention, think through offers, exhausting to uses, but it is what we need to catch our biases, the problem is that negotiation conditions are specifically designed to exhaust it.
• Bounded rationality - we make the best decisions we can within limits as we limited by time pressure, imperfect information (we rarely have the full picture), cognitive overload (our brains to cope), emotional noise (stress and mood distort clarity) =the solutions is "good enough" or that meets an acceptable level of performance
• Intuition - fast, pattern-based judgment from experience (accurate in experts, risky in novices)

13 Cognitive biases

1. Anchoring Bias - rely too heavily on the first piece of information encountered when making decisions

2. Confirmation Bias - the tendency seek/favour info that confirms one's pre-existing beliefs, while ignoring info that contradicts them

3. Overconfidence Bias — the tendency to overestimate one's own abilities, the accuracy of one's judgments, and the favorability of one's outcome relative to what the evidence actually supports

4. Negativity Bias- focus more on negative information, experiences and outcomes than to equivalent positive ones

5. Loss Aversion - the pain of loss is 2 times more intense than pleasure of an equivalent gain.

6. Availability Bias - judge the likelihood of events based on how easily examples come to mind, rather than on statistical evidence

7. Reactive Devaluation — discount/devalue a proposal, idea simply because it comes from the counterpart (Ross & Stillinger, 1991)

8. Framing Effect — respond differently to identical info differently depending on how it is presented (specifically describes in terms of gain/loss)\

9. Fixed-Pie Bias — assume negotiation is zero-sum (every gain for 1 party must come at an equal and opposite cost to the other), miss mutual-gain trades.

10. Self-Serving Bias - divide resources or assess fairness in ways that systematically favour oneself (from deliberate dishonestly- people are unaware that their perception of fairness has been shaped by their own interests

11. Status Quo Bias — prefer current state even when change is objectively better. (comes from loss aversion, inertia (缺乏活力，惰性 ), and the tendency to treat the current situation as a reference point from which departures feel like losses

12. Escalation of Commitment — sunk-cost fallacy; keep investing in a failing course of action since what has already been spent, rather than making rational assessment of future prospects

13. Fundamental Attribution Error - explain others' behavior via character/personality, our own via situation (Lee Ross, 1977). Since we have direct access to our own situational pressures but only observe others' behavior so we fill the gap with character inferences

BiasExample given in lectureAnchoringA car's sticker price is $45,000 — even buyers who know it's inflated end up offering/countering near that number. Salary negotiation: whoever names $120,000 first pulls the conversation toward that figure even if the employer's real budget was $95,000.Confirmation BiasAn investor who believes a stock will rise only reads positive analyst reports and dismisses bad signals as noise.Overconfidence BiasMost drivers rate themselves as "above average" (statistically impossible). In negotiation: overestimating your BATNA's strength and being blindsided by impasse.Negativity BiasIn a performance review, one critical comment is remembered far more vividly than several genuine compliments.Loss AversionHomeowners refuse to sell below what they paid, even when holding the property is costing them money — "locking in a loss" feels worse than the rational math.Availability BiasAfter a plane crash gets media coverage, people overestimate flying risk and choose to drive instead — even though driving is statistically more dangerous.Reactive DevaluationVoters oppose a policy they'd otherwise support once they learn it came from the opposing political party.Framing EffectA treatment described as "90% survival rate" is rated more favourably than the identical "10% mortality rate."Fixed-Pie BiasTwo siblings fight over one orange, assuming they both want the same thing — when actually one wanted the juice and one wanted the peel.Self-Serving BiasBoth sides leaving a mediation genuinely believe the mediator favoured the other side, because each person's sense of "fair" is unconsciously shaped by their own interests.Status Quo BiasMost people stick with their default super fund or energy provider long after better options exist, purely because switching takes effort.Escalation of CommitmentA government keeps funding an over-budget infrastructure project because stopping would mean "wasting" the money already spent — even though that money's gone either way.Fundamental Attribution ErrorA driver cuts you off and you think "rude, aggressive person." When you cut someone off, it's because you're late for something important — same behaviour, different explanation depending on who's doing it.

• Emotion in negotiation: the double-edged sword

negative emotion → more likely to reject offers, make threats, escalate conflicts 

positive emotion → higher creativity, collaboration, flexibility but also overconfidence/premature concessions.

• Emotional leakage:  True feelings "leak" through body language/tone despite trying to hide them.  (involuntary)
• Mood spillover — unrelated moods (traffic, hunger) affect into negotiation judgment/decisions
  • emotional contamination - when something external (bad coffee, loud commute) carries into the negotiation room

- Using strategic emotion as a tactic:

• some negotiators intentionally display anger or sadness to extract concessions or test the other side's limits (work best when subtle and credible)
• If the other part detects insincerity, trust erodes fast

Misattribution of arousal —we often misinterpret the source of our emotional or physiological arousal (性欲激起 ) , we attribute it to who we're with or what we're doing even when it's unrelated

Bridge study (Dutton & Aron, 1974) — the results found that men who walked across the scary bridge were most likely to call the women, asking for a date than men who walk the safer bridge - they had misattributed their arousal from the bridge towards the women, making her seem more attrative

DAY 3 — Distributive Negotiation, Part I (Power & Persuasion)

Distributive negotiation:  also known as win-lose negotiation( 1 party gains only of the other party loses something) /zero-sum bargining (a situation in which 1 person or group can win something only by causing another person/ group to lose it), competing over fixed value, positions not interests, short-term relationship focus. 

Integrative bargaining - parties can work together to make the pie bigger, so there is enough got both parties to have as much as they want

• Reservation price — your absolute minimum/ maximum you're willing to accept before walking away (walk-away point); never reveal it.
• Target price — your realistic, planned goal. (negotiate toward your target instead of anchor on your reservation price) 
• Aspiration point — your best-case ceiling; used to anchor high. (BUTcan lead to overconfidence bias and make you overestimate your power, especially if your BATNA is weak.
• ZOPA (Zone of Possible Agreement) — overlap between both parties' reservation prices; no overlap = no deal.
• BATNA (Best Alternative to a Negotiated Agreement) — your plan B, the most advantageous course of action a party can take if no agreement is reached int he current negotiation; determines real bargaining power; never reveal early.(strengthen it before the negotiation)
• Anchoring: first offer sets psychological reference point as humans unconsciously adjust around the first number they hear— make the first offer if you're the better-prepared party.  ANCHORING SHOULD BE AGGRESSIVE BUT CREDIBLE -(risk: being ignored/laughed off, damaging trust, triggering a defensive or angry reaction
  • Your aggressive counteroffer should be based upon the same information you would use to construct a first offer: you ideal outcome and your opponent's alternatives and reservation point

Concessions —when 1 party offers/ gives up something of value during a negotiation in ofer to move closer to agreement, encourage reciprocity, maintain momentum (the force that keeps an objectmoving )

- Parties must make concession to bring the bargining range within the ZOPA with goal fo ultimately at a settlement point

1. Label your concessions: let them know what you have given up, emphasis the benefits to the other side

2.Demand/define reciprocity: whenever you make a concession (give something up), you explicitly require or define what the other party must give up in return before the deal moves forward. 

3. Make contingent concessions:  You do not actually make the concession yet. Instead, you offer a potential concession that only becomes real if the other side meets a specific condition first. 

4. Make concessions in instalments: giving away small pieces of what you are willing to offer over multiple rounds, rather than making a single large drop all at once. 

DAY 4- Distributive Negotiation, Part II (Fairness, Ethics, Closing)