Basics of Negotiation Theory

(Governance is Persuasion and

Bargaining)

Negotiation
Explicit Bargaining
Implicit Negotiations
All programme and policymaking, and implementation, is
essentially indirect management. Its effectiveness requires
persuasion and implicit bargaining.

Richard Neustadt: Presidential Power

Presidential

power is the power to persuade.

Three sources of effective influence:

influence
1. The bargaining advantages inherent in his job with which to
persuade other men that what he wants of them is what their
own responsibilities require them to do.
2. The expectations of those other men regarding his ability and
will to use the various advantages they think he has.
3. Those men's estimates of how his public views him and of how
their public may view them if they do what he wants.

Richard Neustadt: Presidential Power

"A President, himself, affects the flow of power from these
sources, though whether they flow freely or run dry he never will
decide alone. He makes his personal impact by the things he says
and does. Accordingly, his choices of what he should say and do,
and how and when, are his means to conserve and tap the sources
of his power.
The outcome, case by case, will often turn on whether he
perceives his risk in power terms and takes account of what he
sees before he makes his choice. A President is so uniquely
situated and his power so bound up with the uniqueness of his
place, that he can count on no one else to be perceptive for him."

Richard Neustadt: Presidential Power

"'Powers' are no guarantee of power... Persuasion is a give and
take, a two-way street... The power to persuade is the power to
bargain... You get no help if you do not pay for it."

In a democracy power is decentralized

and responsibility shared.

Assumptions/ Features of Negotiations

Two

or more parties with an interdependent goal

There should be a conflict of interests

The parties should be voluntarily prepared to settle rather
than fight it out.
An agreement should be prima facie seem possible and
should be better than the alternative of no agreement
(better than the Best Alternative to Negotiated Agreement
(BATNA).
The Zone of Possible Agreement (ZOPA) lies between the
BATNAs of the parties to negotiation.

Assumptions/ Features of Negotiations

Any negotiation tends to an opportunistic interaction and
hence there is a possibility of parties not cooperating fully,
engaging in less than fully open motives and methods,
withholding some information, moving to stake favourable
positions, turning situation to one's advantage and seeking
to mould perceptions and aspirations to one's own
advantage.
Negotiations are always beset with dilemmas: the
dilemma of trust; dilemmas of honesty.

Assumptions/ Features of Negotiations

Negotiations are strategic interactions
Negotiations can be treated as games for which game
theories become relevant
Opportunistic behaviour being intrinsic to negotiations,
the course of negotiation is zigzag and ofter acrimonious.
Strategic sharing of information is intrinsic to negotiations.
The extent and of information to share and the mode of
sharing are important decisions.

Assumptions/ Features of Negotiations

Every negotiation has two aspects: substantive and
psychological.

Issue, Position and Interests

An issue is the item on which an agreement is sought
A position is the stand a party takes on an issue
An interest is the basic objective or concern underlying
the issue.

Position and Value

Given the opportunistic interaction inherent in the
negotiations, a party's position on an issue may not reflect
the true value that it attaches to that issue.
For negotiations to succeed we need to move from
positions to real issues that parties attach to the issues.
Principled Negotiations: Negotiations that employ
interest-based approach.

Getting to Yes (Roger Fisher and W. Ury)

Four fundamental principles of negotiation:
Separate the people from the problem
Focus on interests, not positions
Invent options for mutual gain
Insist on objective criteria
1973 David Camp Negotiations

Getting to Yes (Roger Fisher and W. Ury)

Four fundamental principles of negotiation:
Separate the people from the problem
Focus on interests, not positions
Invent options for mutual gain
Insist on objective criteria

1973 David Camp Negotiations

Land Acquisitions

Substantive and Relational Outcomes

A part of series of Negotiations
Isolated and discrete
Idea of psychological fairness
Trade off between substantive and relational outcomes
Repetitive negotiations and past relations

The Ultimate Game: A classic psychology/

economics experiment

Internal and External Negotiations

(Group A) (Group B) (A+B)
Internal Negotiations:
1. Selecting the negotiating team
2. Defining the issues
3. choosing the goals
4. Trip wire (tea break) for assessment
5. Negotiation strategy
6. Reviewing the progress
7. aligning the negotiation strategy and tactics to the evolving
situation
8. Clinch the deal or break off

Multiparty Negotiations and Coalitions Dynamics

Block-type coalitions and issue-base coalitions
Issue based coalitions are ad-hoc (threat-opportunity
coalition)
Divergence and negotiation
Multiple issues and complexity of negotiations
More contentious issues need to be dropped
A+B+C
Integrative and Distributive negotiations

Integrative and Distributive Negotiations

Integrative

Distributive

Win Win Negotiations

Win-Lose Negotiations

Cooperation for solving the problem

through value creation

Opportunistic interaction (Clash of

Interests)

Expansion of Pie

Maximization of one's share of the Pie

Cooperative Games

Zero-sum games and Noncooperative Games

Policy Negotiations should be integrative Negotiations

Game Theory and Negotiations

Adam Smith Invisible Hand
Von Neumann
Zero-Sum Games

Cooperative Games

John Nash
Cooperative Games
Non-cooperative Games
Nash Equilibrium

A negotiation may include both the distribute

as well as integrative negotiation

3 Ds of Negotiations
David A Lax and James K. Sebenius: 3 D Negotiation:
Playing the Whole Game (2003)

Savvy negotiators not only play their cards well, they design
the game in their favor even before they get to the table
Tactics
Deal design
Set up

Tactics
Interpersonal processes and the tactics at the bargaining
table
Common Barriers:
lack of trust between two parties
poor communication
Hard ball tactics
Resolution of these

Deal Design
Creating lasting value for the negotiators
Economic and non-economic value
Political and non-political value
A deal having creative concepts and structure

Negotiating Set up
Negotiations with:
Right parties
Right set of issues
Right sequence of negotiators
Right time
Right set of expectations
Right no-deal options

Thank You

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