08832323.2013.794121
Journal of Education for Business
ISSN: 0883-2323 (Print) 1940-3356 (Online) Journal homepage: http://www.tandfonline.com/loi/vjeb20
Let's Make a Deal: A Dynamic Exercise for
Practicing Negotiation Skills
Gerard Beenen & John E. Barbuto Jr.
To cite this article: Gerard Beenen & John E. Barbuto Jr. (2014) Let's Make a Deal: A Dynamic
Exercise for Practicing Negotiation Skills, Journal of Education for Business, 89:3, 149-155, DOI:
10.1080/08832323.2013.794121
To link to this article: http://dx.doi.org/10.1080/08832323.2013.794121
Published online: 06 Mar 2014.
Submit your article to this journal
Article views: 404
View related articles
View Crossmark data
Full Terms & Conditions of access and use can be found at
http://www.tandfonline.com/action/journalInformation?journalCode=vjeb20
Download by: [Universitas Maritim Raja Ali Haji]
Date: 11 January 2016, At: 20:36
JOURNAL OF EDUCATION FOR BUSINESS, 89: 149–155, 2014
C Taylor & Francis Group, LLC
Copyright
ISSN: 0883-2323 print / 1940-3356 online
DOI: 10.1080/08832323.2013.794121
Let’s Make a Deal: A Dynamic Exercise
for Practicing Negotiation Skills
Gerard Beenen and John E. Barbuto, Jr.
Downloaded by [Universitas Maritim Raja Ali Haji] at 20:36 11 January 2016
California State University, Fullerton, California, USA
Because negotiation is among the most important skills for a manager to develop, activities that
can foster its development are valuable for educators. The authors present an original exercise
that introduces three key concepts in negotiation: best alternative to a negotiated agreement,
distributive bargaining, and integrative bargaining. They review these concepts and present
the exercise and its purpose, and execution, then debrief. A unique feature of the exercise is
that instructors can configure dynamic buyer–seller dyads with varying distributions of power
between parties. A pre- and posttest using four questions to assess learning with Master of
Business Administration students and undergraduates suggest that the exercise is an effective
teaching tool.
Keywords: classroom exercises, negotiation, role play
“Never try to make all the money that’s in a deal. Let the
other fellow make some money too, because if you have a
reputation for always making all the money, you won’t have
many deals.”
—J. Paul Getty (cited in Branaghan, 2009, p. 136)
Effective managers know how to balance their own selfinterests with the interests of the other party, which is what
good negotiators do. Negotiation is “a process in which two
or more parties seek agreement on what each shall give to, and
take from, the other(s)” (Movius, 2008, p. 51). Negotiation
skills are “at the core of the manager’s job” (Lax & Sebenius,
1986, p. 2), and a key component of managerial effectiveness (Munduate, Ganaza, Peiro, & Euwema, 1999) and career
success (Melamed, 1996). Good negotiators can adjust more
effectively to their new jobs (Davey & Arnold, 2000) are better at achieving work–family balance (Buzzanell & Meina,
2007), and are promoted faster (Fiona, 2008). Negotiation is
a core topic in organizational behavior textbooks (e.g., McShane & Von Glinow, 2009; Robbins & Judge, 2010; Whetten & Cameron, 2011) and an important, though underrepresented, component of business school curriculum (Navarro,
Correspondence should be addressed to Gerard Beenen, California State
University, Department of Management, 800 N. State College Boulevard,
Fullerton, CA 92831, USA. E-mail: [email protected]
2007; Rubin & Dierdorff, 2009). Experiential learning using
deal-making exercises is the best way to develop negotiation
knowledge and skills (Lewicki, 1997).
Though a number of published negotiation exercises are
available, most if not all of these do not give students experience with dynamic power distributions between negotiators.
For instance, published negotiation exercises provide direct
exposure to Pareto efficiency (Ball, 1999), building selfconfidence (Taylor, Mesmer-Magnus, & Burns, 2008), developing critical thinking skills (Page & Mukherjee, 2007), and
negotiating cross-culturally in an online context (Volkema &
Rivers, 2008). This article provides an experiential exercise
that introduces students to the fundamental concepts of best
alternative to a negotiated agreement (BATNA), distributive
bargaining, and integrative bargaining. A unique feature of
the exercise is the instructor can create buyer–seller dyads
with symmetrical and asymmetrical power to give students
a dynamic experience with these concepts. The key lesson
students take away from this exercise is that their BATNA in
the negotiation, and the extent to which they anticipate future interactions with the other party, should influence their
negotiation strategy.
In the rest of this article, we provide a background
for understanding power in a negotiation is a function of
BATNA. Next, we explain two rudimentary negotiation
strategies—distributive and integrative bargaining. We then
describe the purpose and audience for the exercise, instructions for facilitating it, and processing guidelines to glean
150
G. BEENEN AND J. E. BARBUTO, JR.
key concepts practiced in the activity. Finally, we provide preliminary indicators that the activity is effective at
increasing students’ understanding of a BATNA, and distributive and integrative bargaining strategies– indicating that
it achieves its desired objective.
THEORETICAL BACKGROUND
rather than on rigid positions. A landlord using an integrative
strategy with a tenant may consider the search cost of finding
a new tenant, the holding cost of a vacant property, and the
benefits of a stable renter. The amount of rent is only one of
the issues to consider. An integrative strategy is usually best
if the negotiator expects to deal with the other party in the
future (e.g., a strategic supplier requiring high quality and
service). Alternatively, if the negotiator does not have the
upper hand, an integrative strategy can be considered.
Downloaded by [Universitas Maritim Raja Ali Haji] at 20:36 11 January 2016
Best Alternative to a Negotiated Agreement
(BATNA)
A manager’s power in a negotiation is defined by the BATNA
that he or she brings to the negotiating table (Bazerman &
Neale, 1992). The BATNA is what negotiators are left with
when they fail to reach a negotiated agreement. For example,
a renter and landlord who fail to agree on lease terms will
each be left with their BATNA. The renter’s BATNA may be
buying or renting another home, or moving in with family
or friends. The landlord’s BATNA may be finding another
tenant, risking a rent-free period, or selling the property. The
renter has a better BATNA and more power in the negotiation
if affordable housing is abundant. The landlord has a better
BATNA and more power in the negotiation if housing is
scare and there are a lot of eager tenants. Negotiators should
always keep in mind that expanding BATNA is an important
goal because it increases power in the negotiation.
Distributive Bargaining Strategy
The most common strategy to which the uninformed negotiator is accustomed is usually characterized as a win–lose or
fixed pie approach. Distributive negotiators are eager to win
at the other party’s expense. Distributive bargaining involves
negotiating with a focus on one’s own position rather than
the underlying issues that each party values. A landlord using a distributive strategy with a tenant maybe focused only
on getting the highest rent possible, and may overlook other
important issues (e.g., cost of finding a new tenant, benefits
of a long-term tenant).
A distributive strategy is most appropriate under two conditions. First, the negotiator has a stronger BATNA than the
other party. Second, the negotiator anticipates little or no
chance of dealing with the other party in the future. That is,
the negotiator has the upper hand and only needs a short-term
or single transaction with the other party. When both parties
have equal power and do not expect to deal with each other in
the future, a distributive strategy may be acceptable though it
can lead to an impasse. In such cases, an integrative strategy
may be more appropriate.
Integrative Bargaining Strategy
Integrative bargaining is a win–win or expanding pie approach to negotiating. Integrative negotiators focus on the
underlying issues or goals that are important to both parties,
CONDUCTING THE EXERCISE
Purpose and Audience for the Exercise
This exercise engages students in a simulated negotiation
between a buyer and seller of a used car with the following learning goals: (a) experience how a BATNA can affect
a negotiation, (b) appreciate differences between distributive and integrative bargaining strategies, and (c) develop
a vocabulary to help them discuss key concepts in negotiation The exercise can be used in undergraduate or graduate organizational behavior or negotiation courses, or for
training–consulting, professional development, or executive
education.
Preparation and Facilitation Instructions
Instructors can start with a brief lecture to introduce the concepts of BATNA, and distributive and integrative bargaining.
Alternatively, the exercise can be run first with the concepts
introduced after students reflect on their experiences. Students will be assigned to dyads as a buyer and seller of a
used car using configurations noted below as selected by the
instructor. For an odd number of students, one student can be
paired with the instructor or assigned as an observer–data collection assistant. Schedule the exercise before a brief break
or at the end of a class, with discussion after the break or
at the start of the next class. The exercise works best if students can negotiate without others interfering. The instructor
should observe dyads to ensure they understand their roles.
Plan 30–40 min to run and process the exercise.
There are two versions for each of the buyer and seller
roles—a weak BATNA (buyer needs a car now, and seller
needs to sell the car now), and a strong BATNA (buyer has
other alternatives, and seller is considering keeping the car;
see Appendix). The roles should be supplemented with a simulated Blue Book pricing chart (for an example, see Table 1).
These can be configured in various ways. For the core configuration, assign half the dyads to strong buyer/weak seller
BATNAs, and half to weak buyer–strong seller BATNAs.
The asymmetric power distribution in this configuration encourages the stronger BATNA negotiator to use a distributive
strategy. The average selling price is more likely to be higher
(lower) when the seller (buyer) has a stronger BATNA. To increase the chances for impasse, assign dyads to strong buyer
LET’S MAKE A DEAL
TABLE 1
Negotiation Exercise: Blue Book Pricing Provided to
Buyer and Seller Roles
Downloaded by [Universitas Maritim Raja Ali Haji] at 20:36 11 January 2016
Estimated market
value for 2006
Toyota Prius
National base price
Optional equipment
Color
adjustment—driftwood
pearl
Regional
adjustment—for
Southern CA
Mileage
adjustment—95,000
miles
Condition
adjustment—clean
Total
Trade-in
Private party
Dealer retail
$7,737
$0
$0
$9,207
$0
$0
$10,410
$0
$0
$−32
$−40
$−44
$−667
$−667
$−667
$0
$0
$0
$7,038
$8,500
$9,699
and seller BATNAs. Adding this to the core configuration
should provide an engaging experience. To increase cooperation and reduce contentious negotiating dynamics, assign
dyads to a weak BATNA role. Another way to facilitate an integrative strategy is to modify the roles so negotiators expect
future dealings (e.g., buyer and seller are friends).
As buyer and seller roles are given to each student dyad,
the following guidelines should be presented: (a) do not share
your role description with your negotiation partner, though
you may share information as you see fit; (b) read your role
carefully and thoroughly and think of yourself as someone
who is really buying or selling your car; (c) find a quiet place
to negotiate; (d) do not use coercion, lie, or misrepresent any
facts presented to you in order to accomplish your goals in
the negotiation; (e) try to consider issues that are important
to you in this negotiation, beyond price; (f) take 10–15 min
to plan and execute your negotiation. If you agree on a price
and other terms, record the information on a bill of sale and
return it to the instructor. If you do not reach a settlement,
note this on the bill of sale.
Processing Instructions
After doing the exercise, the instructor can display pricing
results in a template available from Gerard Beenen. This is
useful to demonstrate some of the concepts the exercise conveys. For example, if some are assigned to strong buyer/weak
seller BATNAs, and others to weak buyer–strong seller BATNAs, the average selling price should be lower for the former
and higher for the latter. Sample discussion questions include
the following: Did any of you fail to reach a final settlement? Why did this happen? What issues were important to
you during the negotiation? What challenges, frustrations or
roadblocks did you encounter while negotiating? What was
your BATNA as a buyer or seller? How did it impact how
you approached the negotiation? If you reached a settlement,
151
what was the final price? Why were there so many different
settlements?
The instructor can weave the concepts of BATNA, integrative and distributive strategies into the discussion and
debrief. For instance, when students learn some had more
or less advantageous positions (i.e., BATNAs), the instructor can guide the discussion into how these differences impacted both the dynamics and outcome for specific negotiation dyads. Students may wonder why not all negotiators with
better BATNAs received better outcomes. The instructor can
ask how much information sharing occurred between parties.
Negotiators who revealed their stronger (or weaker) power
position by signaling their BATNAs to the other party could
have been in a better (or worse) position than those who did
not. The instructor also may introduce concepts of subjective
value, emotion and personality, gender, and culture.
Subjective value suggests individuals have different utilities for different issues that affect negotiated settlements
(Curhan, Elfenbein, & Xu, 2006). Some may value a car’s
appearance, while others value reliability. These may affect
the price they pay or other final conditions (e.g., detailing the
car before delivery, mechanical inspection). Subjective value
creates opportunity for integrative agreements if parties can
identify and agree on issues that each party values more than
the other.
Regarding emotion, angry negotiators may be more able
to get what they want, while happy negotiators may be more
willing to give in. Anger in negotiation, however, has significant downsides including less willingness to deal with
the angry party in the future, greater conflict between what
negotiators want to do and think they should do, lower accuracy in judging others’ interests, and a lower likelihood of
achieving joint gains (Bazerman, Curhan, Moore, & Valley,
2000). Personality traits such as assertiveness or need for
power might have impacts on negotiated settlements, though
research has shown individual differences generally are not
effective predictors of negotiation outcomes (see Bazerman
et al., 2000).
In terms of gender differences, women obtain better outcomes than men when negotiating on behalf of others, while
men obtain better outcomes than women when negotiating
for themselves (Bowles, Babcock, & McGinn, 2005). Modifications can be made to buyer or seller roles in this exercise
(e.g., buying or selling the car on behalf of a close friend) to
see if results corroborate with these research findings. Alternatively, outcomes can be simply compared for this exercise
by gender.
Finally, relevant cultural differences can impact negotiation dynamics including collectivism-individualism, power
distance, communication context, and perceptions of time
(see Bazerman et al., 2000). Collectivistic cultures (e.g., Taiwan) may focus on protecting relationships while individualistic cultures (e.g., United States) may focus on protecting
individual rights. High power distance cultures that value societal hierarchies may rely more on authority figures to intervene in negotiations. High communication context cultures
152
G. BEENEN AND J. E. BARBUTO, JR.
(e.g., Japan) may be more attuned to non-verbal cues than low
context cultures (e.g., Germany). Finally, polychronic cultures (e.g., Asia, Middle East) process issues simultaneously
while monochromic cultures (e.g., North America, Western Europe) process sequentially. Consequently, polychronic
cultures may be more apt to tolerate interruptions and to ignore turn taking in conversation than monochromic cultures.
Students from different cultural backgrounds may be able to
illuminate some of these differences in the debrief discussion.
Sample
MBA students
Undergraduate
students
Average selling
price (strong
seller BATNA)
Average selling
price (strong
buyer BATNA)
Average selling
price overall
—
$8,940
—
$8,550
$8,627
$8,796
Note: n = 12 for strong seller BATNA, n = 7 for strong buyer BATNA.
One negotiating pair ended in impasse for undergraduate sample, two negotiating pairs ended in impasse for MBA sample, n = 42 for undergraduate
sample.
ASSESSING THE EFFECTIVENESS
OF THE EXERCISE
Downloaded by [Universitas Maritim Raja Ali Haji] at 20:36 11 January 2016
TABLE 3
Negotiation Exercise Final Sales Price for MBA and
Undergraduate Student Samples
Sample, Procedures, and Measures
To assess the exercise’s effectiveness, a four question pre- and
posttest quiz (see Appendix) was given to 22 MBA students
in an organizational behavior seminar, and 42 undergraduate
students in an introductory organizational behavior course
in a university in the western United States. The pretest was
done at the start of class, and posttest with the same questions
after the exercise and debrief were done. The undergraduate
sample was 56% male, 26% Asian, 4% African American,
44% Caucasian, 14% Hispanic, and 12% Middle Eastern,
and worked about 20 hr/week with a mean age of 24 years
(SD = 5.5). The MBA sample included full-time students
who were 48% male, 44% Asian, 16% Hispanic, 28% Caucasian, and 12% Middle Eastern, with three years of full-time
work experience with a mean age of 25 years (SD = 2.7).
ANALYSIS AND RESULTS
A paired samples t test compared the number of correct answers for the pre- and posttests for each sample as displayed
in Table 2. The MBA sample had significantly higher posttest
versus pretest scores (M = 3.64 vs. M = 1.73), t (21) = –5.93,
p < .001. The same was true for the undergraduate sample
posttest versus pretest scores (M = 3.43 vs. M = 2.26 ±
1.33) t(41) = –5.17, p < .001. This suggests the exercise
and debrief conveyed the meaning of key concepts including
BATNA, and distributive and integrative bargaining for both
TABLE 2
Negotiation Exercise Pre- and Posttest Scores for
MBA and Undergraduate Student Samples
Pretest score
Posttest
score
Sample
M
SD
M
SD
t
p
MBA students
Undergraduate students
1.73
2.26
1.20
1.33
3.64
3.36
0.79
0.73
–5.93
–5.16
ISSN: 0883-2323 (Print) 1940-3356 (Online) Journal homepage: http://www.tandfonline.com/loi/vjeb20
Let's Make a Deal: A Dynamic Exercise for
Practicing Negotiation Skills
Gerard Beenen & John E. Barbuto Jr.
To cite this article: Gerard Beenen & John E. Barbuto Jr. (2014) Let's Make a Deal: A Dynamic
Exercise for Practicing Negotiation Skills, Journal of Education for Business, 89:3, 149-155, DOI:
10.1080/08832323.2013.794121
To link to this article: http://dx.doi.org/10.1080/08832323.2013.794121
Published online: 06 Mar 2014.
Submit your article to this journal
Article views: 404
View related articles
View Crossmark data
Full Terms & Conditions of access and use can be found at
http://www.tandfonline.com/action/journalInformation?journalCode=vjeb20
Download by: [Universitas Maritim Raja Ali Haji]
Date: 11 January 2016, At: 20:36
JOURNAL OF EDUCATION FOR BUSINESS, 89: 149–155, 2014
C Taylor & Francis Group, LLC
Copyright
ISSN: 0883-2323 print / 1940-3356 online
DOI: 10.1080/08832323.2013.794121
Let’s Make a Deal: A Dynamic Exercise
for Practicing Negotiation Skills
Gerard Beenen and John E. Barbuto, Jr.
Downloaded by [Universitas Maritim Raja Ali Haji] at 20:36 11 January 2016
California State University, Fullerton, California, USA
Because negotiation is among the most important skills for a manager to develop, activities that
can foster its development are valuable for educators. The authors present an original exercise
that introduces three key concepts in negotiation: best alternative to a negotiated agreement,
distributive bargaining, and integrative bargaining. They review these concepts and present
the exercise and its purpose, and execution, then debrief. A unique feature of the exercise is
that instructors can configure dynamic buyer–seller dyads with varying distributions of power
between parties. A pre- and posttest using four questions to assess learning with Master of
Business Administration students and undergraduates suggest that the exercise is an effective
teaching tool.
Keywords: classroom exercises, negotiation, role play
“Never try to make all the money that’s in a deal. Let the
other fellow make some money too, because if you have a
reputation for always making all the money, you won’t have
many deals.”
—J. Paul Getty (cited in Branaghan, 2009, p. 136)
Effective managers know how to balance their own selfinterests with the interests of the other party, which is what
good negotiators do. Negotiation is “a process in which two
or more parties seek agreement on what each shall give to, and
take from, the other(s)” (Movius, 2008, p. 51). Negotiation
skills are “at the core of the manager’s job” (Lax & Sebenius,
1986, p. 2), and a key component of managerial effectiveness (Munduate, Ganaza, Peiro, & Euwema, 1999) and career
success (Melamed, 1996). Good negotiators can adjust more
effectively to their new jobs (Davey & Arnold, 2000) are better at achieving work–family balance (Buzzanell & Meina,
2007), and are promoted faster (Fiona, 2008). Negotiation is
a core topic in organizational behavior textbooks (e.g., McShane & Von Glinow, 2009; Robbins & Judge, 2010; Whetten & Cameron, 2011) and an important, though underrepresented, component of business school curriculum (Navarro,
Correspondence should be addressed to Gerard Beenen, California State
University, Department of Management, 800 N. State College Boulevard,
Fullerton, CA 92831, USA. E-mail: [email protected]
2007; Rubin & Dierdorff, 2009). Experiential learning using
deal-making exercises is the best way to develop negotiation
knowledge and skills (Lewicki, 1997).
Though a number of published negotiation exercises are
available, most if not all of these do not give students experience with dynamic power distributions between negotiators.
For instance, published negotiation exercises provide direct
exposure to Pareto efficiency (Ball, 1999), building selfconfidence (Taylor, Mesmer-Magnus, & Burns, 2008), developing critical thinking skills (Page & Mukherjee, 2007), and
negotiating cross-culturally in an online context (Volkema &
Rivers, 2008). This article provides an experiential exercise
that introduces students to the fundamental concepts of best
alternative to a negotiated agreement (BATNA), distributive
bargaining, and integrative bargaining. A unique feature of
the exercise is the instructor can create buyer–seller dyads
with symmetrical and asymmetrical power to give students
a dynamic experience with these concepts. The key lesson
students take away from this exercise is that their BATNA in
the negotiation, and the extent to which they anticipate future interactions with the other party, should influence their
negotiation strategy.
In the rest of this article, we provide a background
for understanding power in a negotiation is a function of
BATNA. Next, we explain two rudimentary negotiation
strategies—distributive and integrative bargaining. We then
describe the purpose and audience for the exercise, instructions for facilitating it, and processing guidelines to glean
150
G. BEENEN AND J. E. BARBUTO, JR.
key concepts practiced in the activity. Finally, we provide preliminary indicators that the activity is effective at
increasing students’ understanding of a BATNA, and distributive and integrative bargaining strategies– indicating that
it achieves its desired objective.
THEORETICAL BACKGROUND
rather than on rigid positions. A landlord using an integrative
strategy with a tenant may consider the search cost of finding
a new tenant, the holding cost of a vacant property, and the
benefits of a stable renter. The amount of rent is only one of
the issues to consider. An integrative strategy is usually best
if the negotiator expects to deal with the other party in the
future (e.g., a strategic supplier requiring high quality and
service). Alternatively, if the negotiator does not have the
upper hand, an integrative strategy can be considered.
Downloaded by [Universitas Maritim Raja Ali Haji] at 20:36 11 January 2016
Best Alternative to a Negotiated Agreement
(BATNA)
A manager’s power in a negotiation is defined by the BATNA
that he or she brings to the negotiating table (Bazerman &
Neale, 1992). The BATNA is what negotiators are left with
when they fail to reach a negotiated agreement. For example,
a renter and landlord who fail to agree on lease terms will
each be left with their BATNA. The renter’s BATNA may be
buying or renting another home, or moving in with family
or friends. The landlord’s BATNA may be finding another
tenant, risking a rent-free period, or selling the property. The
renter has a better BATNA and more power in the negotiation
if affordable housing is abundant. The landlord has a better
BATNA and more power in the negotiation if housing is
scare and there are a lot of eager tenants. Negotiators should
always keep in mind that expanding BATNA is an important
goal because it increases power in the negotiation.
Distributive Bargaining Strategy
The most common strategy to which the uninformed negotiator is accustomed is usually characterized as a win–lose or
fixed pie approach. Distributive negotiators are eager to win
at the other party’s expense. Distributive bargaining involves
negotiating with a focus on one’s own position rather than
the underlying issues that each party values. A landlord using a distributive strategy with a tenant maybe focused only
on getting the highest rent possible, and may overlook other
important issues (e.g., cost of finding a new tenant, benefits
of a long-term tenant).
A distributive strategy is most appropriate under two conditions. First, the negotiator has a stronger BATNA than the
other party. Second, the negotiator anticipates little or no
chance of dealing with the other party in the future. That is,
the negotiator has the upper hand and only needs a short-term
or single transaction with the other party. When both parties
have equal power and do not expect to deal with each other in
the future, a distributive strategy may be acceptable though it
can lead to an impasse. In such cases, an integrative strategy
may be more appropriate.
Integrative Bargaining Strategy
Integrative bargaining is a win–win or expanding pie approach to negotiating. Integrative negotiators focus on the
underlying issues or goals that are important to both parties,
CONDUCTING THE EXERCISE
Purpose and Audience for the Exercise
This exercise engages students in a simulated negotiation
between a buyer and seller of a used car with the following learning goals: (a) experience how a BATNA can affect
a negotiation, (b) appreciate differences between distributive and integrative bargaining strategies, and (c) develop
a vocabulary to help them discuss key concepts in negotiation The exercise can be used in undergraduate or graduate organizational behavior or negotiation courses, or for
training–consulting, professional development, or executive
education.
Preparation and Facilitation Instructions
Instructors can start with a brief lecture to introduce the concepts of BATNA, and distributive and integrative bargaining.
Alternatively, the exercise can be run first with the concepts
introduced after students reflect on their experiences. Students will be assigned to dyads as a buyer and seller of a
used car using configurations noted below as selected by the
instructor. For an odd number of students, one student can be
paired with the instructor or assigned as an observer–data collection assistant. Schedule the exercise before a brief break
or at the end of a class, with discussion after the break or
at the start of the next class. The exercise works best if students can negotiate without others interfering. The instructor
should observe dyads to ensure they understand their roles.
Plan 30–40 min to run and process the exercise.
There are two versions for each of the buyer and seller
roles—a weak BATNA (buyer needs a car now, and seller
needs to sell the car now), and a strong BATNA (buyer has
other alternatives, and seller is considering keeping the car;
see Appendix). The roles should be supplemented with a simulated Blue Book pricing chart (for an example, see Table 1).
These can be configured in various ways. For the core configuration, assign half the dyads to strong buyer/weak seller
BATNAs, and half to weak buyer–strong seller BATNAs.
The asymmetric power distribution in this configuration encourages the stronger BATNA negotiator to use a distributive
strategy. The average selling price is more likely to be higher
(lower) when the seller (buyer) has a stronger BATNA. To increase the chances for impasse, assign dyads to strong buyer
LET’S MAKE A DEAL
TABLE 1
Negotiation Exercise: Blue Book Pricing Provided to
Buyer and Seller Roles
Downloaded by [Universitas Maritim Raja Ali Haji] at 20:36 11 January 2016
Estimated market
value for 2006
Toyota Prius
National base price
Optional equipment
Color
adjustment—driftwood
pearl
Regional
adjustment—for
Southern CA
Mileage
adjustment—95,000
miles
Condition
adjustment—clean
Total
Trade-in
Private party
Dealer retail
$7,737
$0
$0
$9,207
$0
$0
$10,410
$0
$0
$−32
$−40
$−44
$−667
$−667
$−667
$0
$0
$0
$7,038
$8,500
$9,699
and seller BATNAs. Adding this to the core configuration
should provide an engaging experience. To increase cooperation and reduce contentious negotiating dynamics, assign
dyads to a weak BATNA role. Another way to facilitate an integrative strategy is to modify the roles so negotiators expect
future dealings (e.g., buyer and seller are friends).
As buyer and seller roles are given to each student dyad,
the following guidelines should be presented: (a) do not share
your role description with your negotiation partner, though
you may share information as you see fit; (b) read your role
carefully and thoroughly and think of yourself as someone
who is really buying or selling your car; (c) find a quiet place
to negotiate; (d) do not use coercion, lie, or misrepresent any
facts presented to you in order to accomplish your goals in
the negotiation; (e) try to consider issues that are important
to you in this negotiation, beyond price; (f) take 10–15 min
to plan and execute your negotiation. If you agree on a price
and other terms, record the information on a bill of sale and
return it to the instructor. If you do not reach a settlement,
note this on the bill of sale.
Processing Instructions
After doing the exercise, the instructor can display pricing
results in a template available from Gerard Beenen. This is
useful to demonstrate some of the concepts the exercise conveys. For example, if some are assigned to strong buyer/weak
seller BATNAs, and others to weak buyer–strong seller BATNAs, the average selling price should be lower for the former
and higher for the latter. Sample discussion questions include
the following: Did any of you fail to reach a final settlement? Why did this happen? What issues were important to
you during the negotiation? What challenges, frustrations or
roadblocks did you encounter while negotiating? What was
your BATNA as a buyer or seller? How did it impact how
you approached the negotiation? If you reached a settlement,
151
what was the final price? Why were there so many different
settlements?
The instructor can weave the concepts of BATNA, integrative and distributive strategies into the discussion and
debrief. For instance, when students learn some had more
or less advantageous positions (i.e., BATNAs), the instructor can guide the discussion into how these differences impacted both the dynamics and outcome for specific negotiation dyads. Students may wonder why not all negotiators with
better BATNAs received better outcomes. The instructor can
ask how much information sharing occurred between parties.
Negotiators who revealed their stronger (or weaker) power
position by signaling their BATNAs to the other party could
have been in a better (or worse) position than those who did
not. The instructor also may introduce concepts of subjective
value, emotion and personality, gender, and culture.
Subjective value suggests individuals have different utilities for different issues that affect negotiated settlements
(Curhan, Elfenbein, & Xu, 2006). Some may value a car’s
appearance, while others value reliability. These may affect
the price they pay or other final conditions (e.g., detailing the
car before delivery, mechanical inspection). Subjective value
creates opportunity for integrative agreements if parties can
identify and agree on issues that each party values more than
the other.
Regarding emotion, angry negotiators may be more able
to get what they want, while happy negotiators may be more
willing to give in. Anger in negotiation, however, has significant downsides including less willingness to deal with
the angry party in the future, greater conflict between what
negotiators want to do and think they should do, lower accuracy in judging others’ interests, and a lower likelihood of
achieving joint gains (Bazerman, Curhan, Moore, & Valley,
2000). Personality traits such as assertiveness or need for
power might have impacts on negotiated settlements, though
research has shown individual differences generally are not
effective predictors of negotiation outcomes (see Bazerman
et al., 2000).
In terms of gender differences, women obtain better outcomes than men when negotiating on behalf of others, while
men obtain better outcomes than women when negotiating
for themselves (Bowles, Babcock, & McGinn, 2005). Modifications can be made to buyer or seller roles in this exercise
(e.g., buying or selling the car on behalf of a close friend) to
see if results corroborate with these research findings. Alternatively, outcomes can be simply compared for this exercise
by gender.
Finally, relevant cultural differences can impact negotiation dynamics including collectivism-individualism, power
distance, communication context, and perceptions of time
(see Bazerman et al., 2000). Collectivistic cultures (e.g., Taiwan) may focus on protecting relationships while individualistic cultures (e.g., United States) may focus on protecting
individual rights. High power distance cultures that value societal hierarchies may rely more on authority figures to intervene in negotiations. High communication context cultures
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G. BEENEN AND J. E. BARBUTO, JR.
(e.g., Japan) may be more attuned to non-verbal cues than low
context cultures (e.g., Germany). Finally, polychronic cultures (e.g., Asia, Middle East) process issues simultaneously
while monochromic cultures (e.g., North America, Western Europe) process sequentially. Consequently, polychronic
cultures may be more apt to tolerate interruptions and to ignore turn taking in conversation than monochromic cultures.
Students from different cultural backgrounds may be able to
illuminate some of these differences in the debrief discussion.
Sample
MBA students
Undergraduate
students
Average selling
price (strong
seller BATNA)
Average selling
price (strong
buyer BATNA)
Average selling
price overall
—
$8,940
—
$8,550
$8,627
$8,796
Note: n = 12 for strong seller BATNA, n = 7 for strong buyer BATNA.
One negotiating pair ended in impasse for undergraduate sample, two negotiating pairs ended in impasse for MBA sample, n = 42 for undergraduate
sample.
ASSESSING THE EFFECTIVENESS
OF THE EXERCISE
Downloaded by [Universitas Maritim Raja Ali Haji] at 20:36 11 January 2016
TABLE 3
Negotiation Exercise Final Sales Price for MBA and
Undergraduate Student Samples
Sample, Procedures, and Measures
To assess the exercise’s effectiveness, a four question pre- and
posttest quiz (see Appendix) was given to 22 MBA students
in an organizational behavior seminar, and 42 undergraduate
students in an introductory organizational behavior course
in a university in the western United States. The pretest was
done at the start of class, and posttest with the same questions
after the exercise and debrief were done. The undergraduate
sample was 56% male, 26% Asian, 4% African American,
44% Caucasian, 14% Hispanic, and 12% Middle Eastern,
and worked about 20 hr/week with a mean age of 24 years
(SD = 5.5). The MBA sample included full-time students
who were 48% male, 44% Asian, 16% Hispanic, 28% Caucasian, and 12% Middle Eastern, with three years of full-time
work experience with a mean age of 25 years (SD = 2.7).
ANALYSIS AND RESULTS
A paired samples t test compared the number of correct answers for the pre- and posttests for each sample as displayed
in Table 2. The MBA sample had significantly higher posttest
versus pretest scores (M = 3.64 vs. M = 1.73), t (21) = –5.93,
p < .001. The same was true for the undergraduate sample
posttest versus pretest scores (M = 3.43 vs. M = 2.26 ±
1.33) t(41) = –5.17, p < .001. This suggests the exercise
and debrief conveyed the meaning of key concepts including
BATNA, and distributive and integrative bargaining for both
TABLE 2
Negotiation Exercise Pre- and Posttest Scores for
MBA and Undergraduate Student Samples
Pretest score
Posttest
score
Sample
M
SD
M
SD
t
p
MBA students
Undergraduate students
1.73
2.26
1.20
1.33
3.64
3.36
0.79
0.73
–5.93
–5.16