Appleton vs. Baker

SCENARIO:

The Appletons and Bakers own homes on adjacent parcels of land. The Appletons are selling their house, and they also want to sell the half-lot which rests between their home and the Bakers'. The purchasers of their home are not interested in buying the lot. The Bakers are interested in the lot. There is a large bargaining zone ($5,000 to 20,000), but neither party knows of the other party's interests.

Note: After debriefing, it is an option to have a five-minute re-negotiation once everyone knows the actual constraints placed on the other party.

 

TEACHING MATERIALS:

Role specific:

  • Appleton
  • Baker

 

Teacher's package:

  • English version: Copies of both participant roles plus teaching notes
  • Non-English versions: Copies of both participant roles only

 

MAJOR LESSONS:

  • When several pairs negotiate simultaneously, the sale prices vary dramatically, which provides for a good discussion of the results of different strategies.
  • The advantages and disadvantages of making the first offer can be explored, as well as techniques for doing so.
  • Advantages and disadvantages of disclosure are also illustrated.

 

SIMILAR SIMULATIONS:

 

Consultant, The

SCENARIO:

S. Smith, of the town Riverton, has been assigned the task of overseeing the reprogramming of the town's computerized municipal operations and the training of those employees. Smith, after careful review, has selected J. Brown of Northeast Computer Services for the sizable job. The problem, however, is that Brown has offered to do the job for $20,000, somewhat below the corporate rate, and Smith, due to a restricted budget, is constrained to spending no more than $10,000. The two have agreed to one last meeting in hopes of reaching an acceptable solution.

 

Teaching Materials:

For all parties:

General Information

Teacher's Package:

All of the Above

Teaching Note (from the Tendley Contract)

 

PROCESS THEMES: Anchoring; BATNA; Constituents; Constraints; Fairness; Interests, dovetailing; Objective criteria; Offers, first; Options, generating; Pareto optimization; Precedents; Risk perception

MAJOR LESSONS:

The available data allow a number of more or less equally persuasive arguments about what a "fair" contract would be. This is at a minimum good practice in developing and using objective criteria. Beyond that, the case presents the more difficult challenge of finding an objective basis with which to judge the applicability of alternative objective criteria.

GE International Contract

SCENARIO:

Several years ago, GE International purchased a networked computer system to serve all of its operating departments. Unfortunately, the computer system has become utterly ineffective. GE International's Senior Manager of Information Management Operations has been charged with finding an expert to divide and reprogram the computer system, rewrite the manuals, and maximize the value of the existing high-quality hardware and software.

The Senior Manager has located a computer consulting company that seems to be far better equipped than any of the alternative companies to handle this project. The consulting company, in turn, is eager for the publicity of working with a world-renowned company like GE International. At the last minute, the Senior Manager and the computer consultant realize that they have been exploring this contract without knowing that the other party had an enormously different idea regarding the appropriate price for the project. The parties are meeting one last time to see if there is a way to salvage the deal.

This case is similar to The Tendley Contract but takes place in a more corporate setting.

 

MAJOR LESSONS:

  • This case is an excellent vehicle for comparing principled negotiation to positional bargaining.
  • What are the advantages and disadvantages of revealing one's BATNA in this situation? How do the parties' BATNAs — and their disclosure or nondisclosure of them — affect the negotiation?
  • The fact that there is such a huge discrepancy in what the two parties want GE International to pay for the job makes it very difficult to come up with a contract without generating creative options. What can the parties do to facilitate option generation?
  • This case often generates discussion around "fair" pricing for the contract. What are some criteria for determining a fair price? Are the parties' initial expectations regarding the price relevant to what the price should be? Do the parties' BATNAs have any bearing on what the price should be?

 

TEACHING MATERIALS:

  • Confidential Instructions for:
    • Computer Systems Consultant
    • GEII Team
  • Teacher's Package includes:
    • All of the above
    • Teaching Note

Oil Pricing Exercise

SCENARIO:

Alba and Batia are two unfriendly oil producing nations that sell a significant amount of their production to nearby Capita. Anti-dumping agreements and Capita's alternate supply options limit Alba and Batia to prices per barrel of $10, $20, and $30. Each country's monthly profit can vary from $2 to $18 million per month, depending on the two country's relative prices and consequent Pricing Board of Alba or Batia. They are instructed that maximizing their own country's profits is their sole objective.

 

MECHANICS:

This is a group exercise, with several people on each country's Oil Pricing Board. It is possible to have as few as three or as many as ten members of each Board. The exercise is run in 8 or more rounds, corresponding to months, and takes 2 1/4 to 3 1/2 hours to run and review.

 

TEACHING MATERIALS:

For all parties:

  • General Instructions and Score Sheets
  • Monthly Price Report Message Forms

 

Teacher's Package

  • All of the above
  • Teaching Note (English version only; non-English versions do not include teaching note)

 

PROCESS THEMES:

Assumptions; Commitment; Communication; Competition v. Cooperation; Compliance; Constituents; Credibility; Decision analysis; Education, as a means; Ethics; Game theory; Group process; Group-think; Joint gains; Managing uncertainty; Meaning of "success"; Message analysis; Misrepresentation; Recurring negotiations; Risk aversion; Risk perception; Trust

 

MAJOR LESSONS:

This is a so-called "social trap" exercise, in which long-term maximization requires unenforced mutual trust where significant short-term gains are possible by breaking that trust. In most rounds, communication must be implicit, and is hence highly ambiguous and subject to misinterpretation, usually by the projection of negative and adversarial intentions that don't actually exist. At certain points, the parties are given the opportunity to communicate explicitly, and may choose to reach pricing agreements or not (and subsequently, to honor those agreements or not).

The exercise highlights the frequency with which we make imprecise and inadequately supported assumptions, suggesting the importance of making and keeping assumptions explicit and testing them periodically.

The danger of self-fulfilling assumptions is also illustrated. Parties can turn cautious competitors into the cutthroat adversaries they fear by proceeding with pre-emptive ruthlessness.

The difference between reacting to the other side's moves (or one's perception of what those moves mean or will be), and acting purposefully to influence the other side to (re)act constructively, is easily illustrated by comparing the experience of different teams. The monetary variation tends to be dramatic between cooperative and competitive games, and analysis usually suggests that to establish the former, some teams have to take a risk. Players face the tension between seeking high short-term gains and low short-term risk inherent in a competitive strategy, and lower but more stable long-term gains inherent in a cooperative strategy.

The exercise presents rich opportunities to observe, analyze, and critique intra-group dynamics and decision making.

Negotiation Pedagogy Video Series, Part III
This unscripted video, available separately, shows PON faculty member Sheila Heen running and debriefing the "Oil Pricing" exercise, interspersed with excerpts from a post-workshop interview with the instructor.
Order the video here.

Parker-Gibson

NEW – ALL-IN-ONE CURRICULUM PACKAGE 

If you are new to teaching negotiation or are looking to go in-depth on the fundamental negotiation concepts, the Parker-Gibson All-In-One Curriculum Package will provide you with everything you need to teach negotiation.

The All-In-One Curriculum Package makes it easy to teach negotiation, track learning outcomes, and includes materials for the instructor as well as for students.

Materials include: 

  • Instructor’s Guide – Guide for instructors on negotiation concepts, simulation logistics, and debriefing simulation participants.
  • Instructor Background Reading List – List of background readings for instructors to complete before using the simulation to gain a better understanding of the negotiation concepts.
  • Student Background Reading List – List of background readings for students to complete before the simulation to gain understanding of the negotiation concepts.
  • Confidential Role Instructions – Confidential role-specific materials for participants in the exercise.
  • Pre-Negotiation Surveys – After completing the background reading and/or presentation of the negotiation concepts, participants complete the online Pre-Negotiation Survey to benchmark their understanding of the key learning points the game is intended to teach.
  • Agreement Outcome Form – Participants reporting the results of any agreements reached in the simulation.
  • Post-Negotiation Survey – After finishing the simulation, but before the debrief, participants fill out the Post-Negotiation Survey so Instructors can gauge participants understanding of the issues and concepts.
  • Class PowerPoint Presentation – The first part of the PowerPoint slide deck is for the instructor to use to introduce negotiation concepts, how to participate in a negotiation simulation, and Parker-Gibson. The second part is for the instructor to use in debriefing the simulation with participants.
  • Feedback Survey – At the conclusion of the exercise, participants can give feedback on the process and outcomes.

The Parker-Gibson All-In-One Curriculum Package requires a minimum of 90 minutes of class time, but is best run in a two and half or three-hour class. To order this package, you must purchase a minimum of ten copies. A separate copy must be purchased for every participant in the exercise. The materials are all single use and must be re-purchased for subsequent uses.

SCENARIO:

The Parkers and the Gibsons own homes on adjacent plots of land. The homes are separated by a 1/2 lot the Parkers purchased years ago in hopes of building a tennis court, which they never got around to. The Parkers are now moving out of state and are interested in selling the half lot, as the buyer of their home is not interested in it. The Parkers have approached the Gibsons (who have interest in the lot for home improvements they have planned) about purchasing the lot. Neither party knows much about the other’s interests. The Parkers and Gibsons are meeting to explore whether a mutually beneficial transaction is possible.

NOTE: This exercise is a modified and improved version of a former exercise titled Appleton v. Baker (Appleton v. Baker is still available, upon request). This exercise is also analytically similar to the exercises The Book Contract (with a different setting) and Bradford Development (without the linkage payment).

 

MECHANICS:

The exercise is best run as a one-on-one exercise. Preparation should require 5-10 minutes. Negotiations can take from 10-30 minutes, and review from 30 minutes to 1 1/4 hours.

 

TEACHING MATERIALS:

  • Role specific:
    Confidential Instructions for:

      • Parker
      • Gibson

     

  • Teacher’s package:
    • All of the above
    • Teaching Note (English version only)

 

PROCESS THEMES:

Anchoring; BATNA; Fairness; Information exchange; Interests, dovetailing; Joint gains; Objective criteria; Offers, first; Pareto optimization; Quantitative analysis; Risk aversion; Trust

 

MAJOR LESSONS:

When several pairs negotiate this game at the same time, the resulting sale prices vary dramatically. Participants can then discuss how and why different negotiation strategies led to different outcomes.

Concepts of “fair prices” often surface in post-negotiation discussions. If participants do not take a “principled” approach to the negotiation, one side or the other often feels “taken,” especially when other players with the same role appear to do better.

The advantages and disadvantages of making the first offer can be explored, as well as techniques for doing so.

The advantages and disadvantages of truthfully revealing your BATNA can also be illustrated, especially when several pairs negotiate the exercise.

 

ENHANCED VERSION AVAILABLE:

A digitally enhanced version of this simulation is available through the iDecisionGames platform and includes the following features:

  • An Instructor’s Guide summarizing the negotiation concepts covered in the simulation, a quick review of simulation logistics, and a ready-to-use set of debriefing slides;
  • Highlights from background readings that will help both students and instructors gain a better understanding of negotiation concepts and methods covered in the simulation;
  • Pre- and post-simulation questionnaires instructors can use gauge each student’s grasp of the core concepts before and after participating in the simulation;
  • PowerPoint slides that introduce key concepts before the simulation and highlight lessons for debriefing;
  • Real time, interactive, data analytics provided via the iDecisionGames platform.

To order the Parker-Gibson Enhanced Package click here.

Sally Soprano I

NEW – ALL-IN-ONE CURRICULUM PACKAGE 

If you are new to teaching negotiation or are looking to go in-depth on the fundamental negotiation concepts, the Sally Soprano All-In-One Curriculum Package will provide you with everything you need to teach negotiation.

The All-In-One Curriculum Package makes it easy to teach negotiation, track learning outcomes, and includes materials for the instructor as well as for students.

Materials include: 

  • Instructor’s Guide – Guide for instructors on negotiation concepts, simulation logistics, and debriefing simulation participants.
  • Instructor Background Reading List – List of background readings for instructors to complete before using the simulation to gain a better understanding of the negotiation concepts.
  • Student Background Reading List – List of background readings for students to complete before the simulation to gain understanding of the negotiation concepts.
  • Confidential Role Instructions – Confidential role-specific materials for participants in the exercise.
  • Pre-Negotiation Surveys – After completing the background reading and/or presentation of the negotiation concepts, participants complete the online Pre-Negotiation Survey to benchmark their understanding of the key learning points the game is intended to teach.
  • Agreement Outcome Form – Participants reporting the results of any agreements reached in the simulation.
  • Post-Negotiation Survey – After finishing the simulation, but before the debrief, participants fill out the Post-Negotiation Survey so Instructors can gauge participants understanding of the issues and concepts.
  • Class PowerPoint Presentation – The first part of the PowerPoint slide deck is for the instructor to use to introduce negotiation concepts, how to participate in a negotiation simulation, and Sally Soprano. The second part is for the instructor to use in debriefing the simulation with participants.
  • Feedback Survey – At the conclusion of the exercise, participants can give feedback on the process and outcomes.

The Sally Soprano All-In-One Curriculum Package requires a minimum of 90 minutes of class time, but is best run in a two and half or three-hour class. To order this package, you must purchase a minimum of ten copies. A separate copy must be purchased for every participant in the exercise. The materials are all single use and must be re-purchased for subsequent uses.

SCENARIO

Sally Soprano is a distinguished soprano who is now somewhat past her prime. She has not had a lead role in two years but would like to revive her career. The Lyric Opera has a production scheduled to open in three weeks, but its lead soprano has become unavailable. Lyric’s representative has requested a meeting with Sally’s agent to discuss the possibility of hiring Sally for the production. Neither knows much about the other’s interests or alternatives. There is a wide range of possible outcomes.

NOTE This exercise is a modified version of the exercise Sally Swansong I, developed by Norbert S. Jacker and Mark N. Gordon. Sally Swansong I is still available upon request. The Spanish, Swedish, and Dutch translations are based on the original Sally Swansong exercise. See also Theotis Wiley, a variation of this simulation set in the context of a potential endorsement contract between a basketball player and an athletic shoe company.

TEACHING MATERIALS 

Materials for the standard version include:

  • Confidential Instructions for:
    • Sally Soprano’s Agent
    • Lyric Opera’s Business Manager
  • Post-negotiation handouts:
    • Some possible criteria for establishing salary
    • Some creative options
  • Teacher’s Package includes:
    • All of the above
    • Teaching Note

PROCESS THEMES Anchoring; Attorney/Client relations; Authority; BATNA; Bluffing; Confidentiality; Constituents; Fairness; Information exchange; Interests, dovetailing; Lawyering; Legitimacy; Meaning of “success”; Misrepresentation; Objective criteria; Offers, first; Options, generating; Pareto optimization; Precedents; Risk aversion; Risk perception; Systems of negotiation; Trust

MAJOR LESSONS

This exercise is an excellent vehicle for comparing principled negotiation and positional bargaining.

The knowledge that one’s BATNA is weak often leads people to negotiate much less vigorously than they otherwise would. Is this ever justified? If so, under what conditions? The case affords a good opportunity to point out that any such analyses should be based on a consideration of the parties’ relative BATNAs.

The available data allow a number of more or less equally persuasive arguments about what a “fair” salary would be. This is at a minimum good practice in developing and using objective criteria. Beyond that, the case presents the more difficult challenge of finding an objective basis with which to judge the applicability of alternative objective criteria.

Good negotiators put the distributive issues in this case in perspective and reduce their importance by dovetailing interests with creative options that expand the pie. This case has an enormous potential range of such creative options.

Since the case does have a strong competitive element, there is ample opportunity to explore techniques for indirectly and directly extracting information from the other side. Likewise, techniques of protecting oneself from “giving up” the possibility for gains that were unforeseen can be explored and discussed.

SIMILAR SIMULATIONS

 

ENHANCED VERSION AVAILABLE

A digitally enhanced version of this simulation is available through the iDecisionGames platform and includes the following features:

  • An Instructor’s Guide summarizing the negotiation concepts covered in the simulation, a quick review of simulation logistics, and a ready-to-use set of debriefing slides;
  • Highlights from background readings that will help both students and instructors gain a better understanding of negotiation concepts and methods covered in the simulation;
  • Pre- and post-simulation questionnaires instructors can use gauge each student’s grasp of the core concepts before and after participating in the simulation;
  • PowerPoint slides that introduce key concepts before the simulation and highlight lessons for debriefing;
  • Real time, interactive, data analytics provided via the iDecisionGames platform.

To order the Sally Soprano Enhanced Package click here.

Three-Party Coalition Exercise

NEW – ALL-IN-ONE CURRICULUM PACKAGE 

If you are new to teaching negotiation or are looking to go in-depth on the fundamental negotiation concepts, the Three-Party Coalition All-In-One Curriculum Package will provide you with everything you need to teach negotiation.

The All-In-One Curriculum Package makes it easy to teach negotiation, track learning outcomes, and includes materials for the instructor as well as for students.

Materials include: 

  • Instructor’s Guide – Guide for instructors on negotiation concepts, simulation logistics, and debriefing simulation participants.
  • Instructor Background Reading List – List of background readings for instructors to complete before using the simulation to gain a better understanding of the negotiation concepts.
  • Student Background Reading List – List of background readings for students to complete before the simulation to gain understanding of the negotiation concepts.
  • Confidential Role Instructions – Confidential role-specific materials for participants in the exercise.
  • Pre-Negotiation Surveys – After completing the background reading and/or presentation of the negotiation concepts, participants complete the online Pre-Negotiation Survey to benchmark their understanding of the key learning points the game is intended to teach.
  • Agreement Outcome Form – Participants reporting the results of any agreements reached in the simulation.
  • Post-Negotiation Survey – After finishing the simulation, but before the debrief, participants fill out the Post-Negotiation Survey so Instructors can gauge participants understanding of the issues and concepts.
  • Class PowerPoint Presentation – The first part of the PowerPoint slide deck is for the instructor to use to introduce negotiation concepts, how to participate in a negotiation simulation, and Three-Party Coalition. The second part is for the instructor to use in debriefing the simulation with participants.
  • Feedback Survey – At the conclusion of the exercise, participants can give feedback on the process and outcomes.

To order this package, you must purchase a minimum of ten copies. A separate copy must be purchased for every participant in the exercise. The materials are all single use and must be re-purchased for subsequent uses.

SCENARIO:

Three independent organizations, “A,” “B” and “C,” have sent representatives to a three-way negotiation. The representatives have learned that there are benefits to working together. If all three groups reach an agreement, benefits totaling 121 points will be split three ways (to be determined by the participants). If only two of the organizations reach an agreement, the total benefits to be split will be less than 121 (varying, depending on which two organizations join together) and the third party will be left with nothing.

You can see students practicing the Three-Party Coalition Exercise negotiation game in this free video:

MAJOR LESSONS:

  • The concept of BATNA can be examined, since each participant has the information he or she needs to calculate the expected value of various deals.
  • The power of seemingly “weak” players can be enhanced through the creation of blocking coalitions.
  • When played by several groups at the same time, the comparison of outcomes is effective.
  • The exercise can also be used to raise questions about the basis for arbitrating multi-party disputes.

 

ADDITIONAL NOTES:

For more information on the lessons of this game, see Howard Raiffa’s book “The Art and Science of Negotiation” (Harvard University Press), also available from the TNRC.

 

MECHANICS:

Time Requirements:

  • This exercise is designed for three participants. Preparation should take 5-10 minutes. Negotiations require 15-20 minutes; more time is useful.

 

Facility Needs:

  • Room with seating for multiple groups of 3. An overhead transparency projector is useful since some of the materials include transparencies.

 

TEACHING MATERIALS:

For all parties:

  • General Instructions

 

Teacher’s Package:

  • All of the above
  • Teaching Note
  • Overhead transparency masters

 

KEYWORDS/ THEMES:

BATNA; Closure; Coalitions; Competition v. Cooperation; Creativity; Currently perceived choice analysis; Decision analysis; Options, generating; Quantitative analysis

 

SIMILAR SIMULATIONS:

The Parking Facility Venture

Social Services

Rushing River Cleanup

Win as Much as You Can

SCENARIO: This exercise is analytically similar to both the Oil Pricing and Pepulator Pricing exercises. Participants sole objective is to maximize their own points with complete indifference to the other participants. Participants are to play either an X or a Y and, depending on other participants' choices, a payoff is awarded each round. Only before rounds 5, 8 and 10 are players allowed to confer with each other.

MECHANICS: This exercise is played in ten quick rounds. Players are grouped into fours. Explanation of the exercise should take no more than 5 minutes. The ten rounds should take about 15 minutes, while debriefing can take from 30 to 45 minutes.

TEACHING MATERIALS:

    • For all parties:
      • General Instructions

 

  • Teacher's Package:
    • All of the above
    • Teaching Note

 

PROCESS THEMES: Assumptions; Commitment; Communication; Competition v. Cooperation; Compliance; Credibility; Decision analysis; Game theory; Group process; Joint gains; Meaning of "success"; Message analysis; Risk aversion; Risk perception; Trust

MAJOR LESSONS:

This is a so-called "social trap" exercise, in which long-term maximization requires unenforced mutual trust where significant short-term gains are possible by breaking that trust. Communication must be implicit, and is hence highly ambiguous and subject to misinterpretation, usually by the projection of negative and adversarial intentions that don't actually exist.

The exercise highlights the frequency with which we make imprecise and inadequately supported assumptions, suggesting the importance of making and keeping assumptions explicit and testing them periodically.

The difference between reacting to the other side's moves (or one's perception of what those moves mean, or will be), and acting purposefully to influence the other side to (re)act constructively, is easily illustrated by comparing the experience of different teams. The monetary variation tends to be dramatic between cooperative and competitive games, and analysis usually suggests that to establish the former some team has to take a risk.

The danger of self-fulfilling assumptions is also illustrated. Parties can turn cautious competitors into the cutthroat adversaries they fear by proceeding with pre-emptive ruthlessness.