There are two main reasons the winner’s curse is a common and dangerous trap in negotiations.
Worst Alternative to a Negotiated Agreement: In a negotiation, your WATNA represents one of several paths that you can follow if a resolution cannot be reached. Like its BATNA counterpart, understanding your WATNA is one alternative you can use to compare against your other options along alternative paths in order to make more informed decisions at the bargaining table.
The following items are tagged watna.
Will Your Negotiations Get Sidetracked?
Coping with Negotiator Emotion, Both Fake and Fleeting
Dear Negotiation Coach: Dealing with an Uninformed Buyer
On August 2, 2004, Barbara Cox Anthony and Ann Cox Chambers, two sisters who together owned 73% of Cox Communications, announced that they wanted to cash out the minority shareholders of their company. Their initial offer was $32 per share, or a 14% premium to the preannouncement trading price of approximately $28 per share.
Although most Americans treat those they know better than they treat strangers, Chinese behavior towards insiders and outsiders tends to be more extreme than in the United States. A guiding principle in Chinese society is guanxi – personal relationships with people from whom one can expect (and who expect in return) special favors and services. Family ties are paramount, but friends, fellow students, and neighbors can also join the inner circle. As a foreigner, you can cultivate guanxi either by hiring people with close ties to your counterpart or by developing your own relationships with key contacts.
- Learn from the Deficit-reduction Talks – The United States didn’t go over the fiscal cliff, but few Americans liked the deal that was forged to avoid it. We look at what went wrong—and right—to show you how you can do better in your own negotiations.
- To Understand Other Negotiators, Consider the Context – Negotiators are often counseled to engage in perspective taking and empathetic understanding to achieve better results. Yet new research shows that the two very different skills have different payoffs in negotiation.
- Dear Negotiation Coach: Deal with a Crowded Table – Should you limit the number of people in the room during mediation of a high-stakes dispute? Our Negotiation Coach for February, Harvard Law School and Harvard Business School professor Guhan Subramanian, suggests strength can be found in fewer numbers of participants.
Stewart recently interviewed negotiation expert and Program on Negotiation co-founder William Ury to discuss the aftermath of avoiding the fiscal cliff and the rounds of tough negotiations between Democrats and Republicans still to come.
Sometimes those on opposite sides of a bitter dispute can achieve great gains – if only they can spot the ways in which they are similar.
In 2001, the Metropolitan Intercollegiate Basketball Association (MIBA), an organization of five New York-area colleges best known for staging college basketball’s National Invitation Tournament, filed a lawsuit against the National Collegiate Athletic Association (NCAA). MIBA allege that certain NCAA rules governing team participation in preseason and postseason tournaments restricted school’s participation in MIBA tournaments, in violation of various antitrust laws. After four years of litigation, the two parties announced not only that they would settle a lawsuit but also that the NCAA would purchase the rights to the MIBA preseason and postseason tournaments.
Sometimes in negotiation we are forced to deal not only with the issues on the table but also with concerns about status.
One famous instance took place in the late 1980s, when Robert Campeau, head of the Campeau Corporation and then one of Fortune magazine’s “50 Most Fascinating Business People,” tried to acquire Federated Department tores, the parent company of the prestigious department store Bloomingdale’s.
A bidding war over Bloomingdale’s escalated between Campeau and R.H. Macy. Campeau won with an irrationally high offer – but had to declare bankruptcy shortly thereafter.
Though Congress and the President were able to reach a deal and avoid the dreaded fiscal cliff, both sides engaged in some tough negotiating which has both bewildered and captivated the United States for months. Given all of the posturing and tough talk, some may ask: Is there a method to this madness?
Launch Successful Business Partnerships
From Negotiation to Auction: The Rise of Real-Time Bidding
When Impasse Looms, Bring Them Back from the Brink