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.

Parking Spaces for Super Computer

SCENARIO:

Super Computer Corp. just signed its second three-year lease for office space at 100 Blue Chip Street. This office building, managed by Prime Properties, houses the regional offices of several global corporations. Tenga Tenier (Super Computer's office manager) and Rom Rosok (Prime Properties' property manager for 100 Blue Chip Street) are about to enter their annual negotiation over parking spaces.

There is an executive parking lot underneath the office building, but this lot is not large enough to accommodate all of the building's tenants. Prime Properties offers a limited number of "executive" parking spaces in the underground lot, and a larger number of "satellite" parking spaces in a lot that is about ten minutes' walking distance from the building. Because Prime Properties charges the same lease price for executive and satellite parking spaces, tenants want to lease as few satellite and as many executive spaces as possible, while Prime Properties wants to lease as many satellite and as few executive spaces as possible.

Tenga and Ron must negotiate an agreement on two issues: how many parking spaces will Super Computer lease, and how many of those spaces will be in the executive parking lot underneath the office building? Their scores will depend on the final agreement on each of these issues.

 

TEACHING POINTS INCLUDE:

the value of exploring interests; the uses of objective criteria; the effect of aspirations on results; the power of trading across differently-valued issues; and the tension between creating and claiming value.

 

Teacher's Pack (26 pages total) includes:

  • Confidential instructions for Tenga Tenier and Rom Rosok
  • Score sheets for all participants
  • Teaching Note
  • Teaching overheads

Pepulator Pricing Exercise

SCENARIO:

The pepulator market is controlled by two giant companies: Pulsar Pepulator and Consolidated Pepulator. The monthly profits of both companies are determined solely by the price each charges and how it compares to the price of the competitor. Participants in this exercise act as the board of directors for each company, determining their company's price of pepulators for each of several months. They are instructed that maximizing profits is their sole objective.

 

MECHANICS:

This is a group exercise, with several people on the board of directors of each company. It is possible to have as few as three or as many as ten members of each board, though an average of six or seven members is most manageable. This is a time-slice game played in rounds, and it takes about 2-1/2 to 3-1/2 hours to run the entire exercise with review.

 

TEACHING MATERIALS:

For all parties:

  • General Instructions and Score Sheet
  • Monthly Price Report Message Form

 

Teacher's package:

  • All of the above
  • Draft 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.

Ren the Robot

SCENARIO: 

Delivered is an app-based service that matches independent food-delivery drivers with customers who want delivery from their favorite neighborhood restaurants. While originally only available in the US, Delivered now operates in major cities all over the world. Already a globally successful company before the COVID-19 pandemic, the ensuing stay-at-home orders caused an explosion in Delivered’s popularity. Many restaurants, however, were forced to close permanently during the stay-at-home period, while others who successfully pivoted to entirely take-out-based orders had difficulty keeping up with demand. As restaurants were permitted to reopen for in-person dining, a severe labor shortage left them desperate for servers and cooks and left many establishments unable to maximize business in the face of pent-up demand. Delivered is seeking to invest some of its newly increased development budget in innovative technologies to address some of these issues.

Grubotics is a Japanese robotics company, which makes food-preparation robots. “Ren” the food-preparation robot has an internal refrigerator, which holds fresh produce and other ingredients. It can combine these ingredients into custom salads, noodle bowls, and other dishes. Prior to the pandemic, Grubotics robots were primarily used in universities, hospitals, and grocery stores. But with the onset of the COVID-19 pandemic, there has been a massive increase in their use by restaurants and convenience stores which were looking for a way to supplement human workers and a contact-less way to dispense fresh food. A relatively young company with only 20 employees, Grubotics has had some trouble scaling up and meeting the surging demand for its food-preparation robots. It is therefore beginning acquisition negotiations with Delivered and seeking an influx of capital to help meet demand and expand into new markets.

Delivered and Grubotics are meeting via online video conference to negotiate the terms of an acquisition deal.

MECHANICS:

This simulation is designed to be conducted via online video conference platform. Including preparation, negotiation, and debrief, the simulation should take approximately one and a half hours.

MATERIALS: 

  • Teaching Notes
  • Confidential Role Instructions for Grubotics
  • Confidential Role Instructions for Delivered
  • Outcome Form

MAJOR LESSONS: 

  • Negotiation process management and agenda setting.
  • Openings in a negotiation, the pre-anchoring phase, and momentum-building.
  • Defining BATNAs – assessing both your BATNA as well as the other party’s.
  • Uncovering interests.
  • Cross-cultural communication.
  • Navigating the dynamics of technology, and technological preferences of each party in a negotiation.
  • Managing relationship dynamics and the possibility of a future relationship in a negotiation.

Salary Negotiation

SCENARIO:

This case calls for fine interpersonal skills in balance assertiveness and relationship maintenance. What general guidelines seem applicable for preserving a good working relationship?

The problems of power imbalance, typical in employee relations, are highlighted.

This exercise is an excellent vehicle for comparing principled negotiation and positional bargaining. Depending on the skill of the other negotiator, both approaches can do well.

 

TEACHING MATERIALS:

Participant Materials:

  • General Information
  • Sandy Tanner, Director of Mail Order Sales
  • Pat Lynch, V.P. of Marketing

 

Teacher's Package:

  • All of the above
  • No Teaching Note currently available

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.

Sally Soprano II

SCENARIO:

Basic facts are the same as in Sally Soprano I, except that as a result of a discussion between Sally and the Lyric Opera's Artistic Director, all available information is known by both sides. The principals have left their agents to work out the details of a deal, knowing that something mutually advantageous is possible.

NOTE: This exercise is a modified and improved version of the exercise Sally Swansong II, developed by Norbert S. Jacker, Deborah Winter and Bruce Patton. Sally Swansong II is still available upon request.

 

MECHANICS:

This negotiation is best one-on-one, although two-on-two is possible. Allow 10 to 30 minutes for negotiation. Sally II is usually done as a follow-up to Sally Soprano I with 5-10 minutes preparation and a 20 minute negotiation. The language of the case does not specify whether the negotiators are lawyers or not. Allow at least a half-hour for debriefing. Discussion can extend much longer (up to two hours).

 

MAJOR LESSONS:

This case is a litmus test of what participants believe, on an unconscious psychological level, constitutes success in a negotiation. Is it "winning," doing better than the other side, or is it achieving an objectively good outcome, one that satisfies your client's interests about as well as possible? Some participants with a competitive orientation will not settle this case, although that is against the interests of both clients. The question is usually framed, before handing out the case, "Would more information make this case easier or more difficult to negotiate? Participants' answers correspond to their orientation on "success"–"good outcome" negotiators say "easier", competitive bargainers say "harder."

 

TEACHING MATERIALS:

For all parties:

  • General Instructions

 

Teacher's Package:

  • All of the above
  • Teaching Note

 

PROCESS THEMES:

Anchoring; Attorney/Client relations; Authority; BATNA; Constituents; Fairness; Interests, dovetailing; Lawyering; Legitimacy; Meaning of "success"; Misrepresentation; Objective criteria; Offers, first; Options, generating; Pareto optimization; Precedents; Risk aversion; Risk perception; Systems of negotiation

Social Services

SCENARIO:

Allied, Benevolent, and Caring Services are three nonprofit social service providers competing for state social service funding. The state funding agency has decided to increase its annual budget but will provide additional funds only to a consortium of two or more providers. Each provider must decide whether to cooperate with the other providers in order to pursue state funds, and if so, how these funds should be divided among the cooperating providers.

NOTE: The underlying mathematical structure of this exercise is similar to that of the exercises The Parking Facility Venture, Rushing River Cleanup and the Three-Party Coalition Exercise.

 

MECHANICS:

This game is designed for three participants, one per role. Game instructions require 5 minutes to read; additional preparation time is desirable. Negotiations require 15 to 20 minutes; more time is useful. A second version of the case includes a mediator as a fourth party.

Before or after the negotiation, participants should be asked to read "Coalition Analysis," Chapter 17 in The Art and Science of Negotiation by Howard Raiffa (Harvard University Press, 1982). The mathematical structure of the exercise is thoroughly and clearly discussed there.

 

MAJOR LESSONS:

  • The dynamics of coalition formation in an unstable situation are illustrated. When many groups of three are playing, outcomes can be explored illustrating the advantages and disadvantages of different negotiating tactics.
  • The power of seemingly "weak" players can be enhanced through the creation of blocking coalitions.
  • Howard Raiffa's concept of "offers that cannot readily be refused" is illustrated in this game.

 

TEACHING MATERIALS:

For all parties:

  • General Instructions

 

Teacher's Package:

  • All of the above

 

PROCESS THEMES:

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

Solar Power

SCENARIO:

The potential acquirer of a technology firm wishes to participate in a fantastically huge project for the production of renewable energy in Northern Africa and the Middle East (Desertec). The acquisition target is viable, yet its owners lack the resources to continue to compete. The exercise condenses the acquisition down to the lone issue of price. Based on a real case, the exercise is best used at the beginning of a course. It covers all basics of distributive negotiations and allows for deducting the tactics of value distributing from the participant´s results.

 

MECHANICS:

Since the acquisition target is not publically traded –the transaction is a one-off between the parties who will not work together anymore in the future— the outcome of this negotiation is determined by how successful the parties divide their proverbial pie. This serves as an eye-opener to many students, allowing them to see the structural similarities between the multi-million-dollar-transaction at hand and day to day negotiations that they may be more familiar with. At the same time it allows them to check and assess their own performance, attitude, and preferences vis-à-vis the requirements of successful value distribution. Lastly, the exercise offers a glimpse into the world of value creation and segues to the possible next exercises in the course.

 

TEACHING MATERIALS:

Role specific:
Confidential Instructions for:

  • Buyer
  • Seller

 

Teacher’s Package:

  • All of the above
  • Teaching Notes
  • Results Spreadsheet (in Excel format, emailed separately)

 

MAJOR LESSONS:

  • This exercise possesses a very large zone of possible agreement (ZOPA), the concepts of which can thereby be introduced, together with the underlying ideas of BATNA and Reservation Price.
  • Due to the large ZOPA, practically all students will reach an agreement, which is of course good on the one hand, and will allow the students to clearly see the differences in how good their achieved result is on the other hand.
  • Students thereby benchmark themselves against the others, and realize that their success was not determined by differences in information or time, but rather in different behaviors they chose to employ. This typically opens participants up for the discussion of the mechanics of value distribution, and the tactical requirements for mastering this successfully.
  • Especially in the rare cases where an agreement is found outside the ZOPA, the case also lends itself to discussing the boundaries between professional negotiation tactics and unethical behavior. It encourages students to recognize and examine their own unspoken assumptions and attitudes about pie sharing ethics and behavior.
  • The exercise includes one side item that students often catch. (Both parties in the scenario would prefer to keep the existing production site of the seller intact, including keeping his/her staff.) This item can serve as an occasion to drawn the line between distributive and integrative negotiations – and to build a bridge into this upcoming topic in the course.

 

PROCESS THEMES:

Anchoring; BATNA; Bluffing; Closure; Commitment; Compatible issues; Fairness; Information exchange; quantifying; individual gains; Legitimacy; Misrepresentation; Objective criteria; Offers, first; Reservation price; Systems of negotiation; Pie sharing; Value Distribution, tactics of

Stakes of Engagement, The

SCENARIO:

Marlene Mayberry and Jacques Parker are young adults planning their marriage. After dating for 3 years, they have prepared a list of 10 assets that they have decided to include in a prenuptial agreement. The items include a joint checking account, a car, an apartment, furniture, an art gallery, Jacques' artwork, a portrait of Marlene, California real estate, a $1 million inheritance, and a pet dog. Jacques and Marlene are given confidential instructions that outline specific point values and resistance points for these items. They will each be awarded "Tangible Points" for the assets they claim for themselves in the prenuptial agreement. There are numerous opportunities for value-creating trades among the 10 assets.

At the same time, Jacques and Marlene are instructed to consider the importance of the relationship throughout the negotiation. After the division of all the items has been decided upon, they independently fill out questionnaires that ask them to evaluate each other on five attributes to determine the amount of "Process Points" they are awarded. The five attributes are respect, trustworthiness, understanding of the other’s needs, openness to future negotiations, and general fondness. These attributes serve as proxies for assessing the future of the relationship based on their experiences during the negotiation. Marlene and Jacques aim to maximize their individual total scores, which are the sums of their Tangible Points and their Process Points. A total point minimum, or Marriage Minimum, is included for each player to gauge the overall success of the negotiation.

The primary teaching points for this simulation include the importance of balancing substantive and process/relationship concerns and the power of trading on differing interests in order to create value in negotiation.

 

Participants Materials include:

  • General instructions for both parties

 

Materials for Jacques Parker:

  • Confidential Instructions
  • Score Sheet for tangible items claimed
  • Process Evaluation of Marlene

 

Materials for Marlene Mayberry:

  • Confidential instructions
  • Score Sheet for tangible items claimed
  • Process Evaluation of Jacques

 

Teacher's Package includes:

  • All of the above
  • Teaching note

Sue or Settle

SCENARIO:

Two surgeons mistakenly amputate the wrong (healthy) leg of a patient. They were found liable in a previous trial and ordered to pay $1 million in damages.

The controlling law in this case mandates a rule of strict contributory negligence. This means that whoever is found to be more responsible for the accident will have to pay the entire $1 million judgment. This exercise represents the current suit between the two surgeons to determine who will have to pay the judgment.

Each participant in this exercise plays either a surgeon or an attorney; and each surgeon-attorney pair is matched with a second surgeon-attorney pair in the lawsuit. The outcome of the lawsuit will be determined by comparing hands of playing cards. At each stage of the litigation, the surgeons must decide (with the advice of their attorneys) whether to proceed with the litigation or attempt to settle.

 

Teacher's Pack includes:

  • Confidential Instructions for the Client
  • Confidential Instructions for the Lawyer
  • No Teaching Note currently available

Summitville Service Agreement

SCENARIO:

Summitville Service Agreement is a two-team, four-party, co-mediated, multi-issue simulation involving a property tax dispute between the small Canadian town of Summitville and the Antler Cove band living on a reservation just outside town limits.

The context of the dispute is that the Band has recently gained the right to tax non-Indian properties on its reserve land, and therefore the town can no longer tax those properties. Consequently, tax revenues are no longer available to the town to fund municipal services, and the Band and town must negotiate how those services will be provided to reserve land and at what cost to the Band. The key issue is a difference in perception regarding taxation authority. The town views this negotiation as simply defining a fee-for-service arrangement, where the Band should reimburse the town for municipal services that the town provides to Band property. In contrast, the Band perceives that the town is trying to infringe upon its sovereignty by requiring payment for town administration expenses when the Band is running its own government.

While the substantive issues related to crafting an acceptable service agreement are real and difficult, participants may discover through the mediation process that the broader relationship between the town and the Band must also be addressed.

 

MECHANICS:

Time require (5 hours total):

  • 45 minutes for preparation
  • 3.5 hours for simulation
  • 45 minutes for debrief

 

Group Size:

  • 6 participants (4 parties and 2 co-mediators)

 

Materials required:

  • General Instructions, including map and letters to the editor

 

Confidential Instructions for:

  • Mayor of Summitville B. Bolton (Town Representative)
  • Town Administrator T. Steeves (Town Representative)
  • Chief of Antler Cove Band A. John (Band Representative)
  • Band Administrator S. Robert (Band Representative)
  • Two co-mediators
  • Game logistics
  • Flip charts and Markers

 

TEACHING POINTS:

  • Zone of Possible Agreement (ZOPA) on key issues
  • Managing hierarchies within and across organizations
  • The mediators' role in framing the issues
  • Activity and style of the mediators
  • Maintaining control of the process and enforcing ground rules
  • Challenges and advantages of co-mediation

 

Super Slipster

SCENARIO:
This is a two-party negotiation between the attorney for an injured party (Adam Sidwell) and general counsel for a toy equipment manufacturer (Kiddie Craze, Inc., or KCI), regarding the possible settlement of a personal injury lawsuit. 42-year-old Sidwell was rendered a paraplegic after diving headfirst onto KCI's Super Slipster toy, a long plastic slide that becomes extremely slippery when wet. If the attorneys do not reach a settlement, the case will proceed to a jury trial.

 

TEACHING POINTS:

  • The tension between value creation and value distribution, along with basic distributive negotiation concepts such as reservation value, aspiration value, anchoring, best alternative to a negotiated agreement (BATNA), and zone of possible agreement (ZOPA).
  • The importance of preparation. Each party is given a fairly large amount of information, much of it quantitative. These materials can be used to create objective criteria that could be useful during the negotiation.
  • The effects of information asymmetries and information disclosure and/or non-disclosure on the negotiation process.
  • The benefits and challenges inherent in negotiating as a representative rather than as a principal.
  • The dynamics particular to negotiating in the shadow of the law (i.e., when the alternative to reaching agreement is clearly litigation).

 

PARTICIPANT MATERIALS INCLUDE:

General Instructions for both parties


Confidential Instructions for:

  • Kiddie Craze, Inc.'s general counsel
  • Adam Sidwell's attorney

 

Teacher's Package Includes:

  • All of the above
  • Teaching note
  • Sample Seven-Element Preparation Sheet (handout)

Telecom Services

SCENARIO:

Data Voice markets telecommunications ("telecom") services to residential and business customers. This year, a small firm called Consulting Integration needs to renew and adjust its telecom services contract with Data Voice.

This will be Consulting Integration’s second three-year telecom services contract with Data Voice. Technical specialist Robin Rigley represents Consulting Integration in the service contract negotiations, and regional sales manager Kelsey Kidd represents Data Voice.

Robin and Kelsey have to negotiate a difficult issue: the number of integrated voice/data/video workstation setups. With a large part of its business devoted to onsite client consulting, Consulting Integration does not currently require the integrated workstation packages that Data Voice offers. However, when Consulting Integration’s website improvements begin to expand its offsite consulting services, the need for integrated workstation packages may grow.

Before Data Voice expanded its telecom platforms, Data Voice lost many clients who preferred to maintain telecom service agreements with a single carrier. In response, Data Voice began to offer data and video telecom services, bundling them in package agreements like those of their competitors. Because of the additional networking hardware required to offer these services, Data Voice has had to expand its technical, operational, and customer service divisions threefold. Thus, Data Voice can no longer afford to continue contracts restricted to voice-only packages. As the regional sales manager, Kelsey Kidd is responsible for giving each client a “fair” number of voice-only packages. These "fair" numbers are based on the total number of workstations the client fits out, and on Kelsey's judgment of each client's need for voice-only setups.

Robin and Kelsey are about to meet to discuss their telecom services contract adjustment and renewal.

 

TEACHING POINTS INCLUDE:

  • Creating value in negotiation through trading on different priorities
  • Pareto optimization/ maximization
  • Tension between creating and claiming (or distributing) value
  • Effect of aspiration and reservation values on negotiated outcomes
  • Importance of responding and adjusting to new information in negotiation

 

TEACHING MATERIALS INCLUDE:

General Instructions:

  • For both parties

 

Confidential Instructions for:

  • Kelsey Kidd, Regional Sales Manager for Data Voice, Ltd.
  • Robin Rigley, Technical Specialist for Consulting Integration, Inc.

 

Teacher's Package includes:

  • All of the above

 

Theotis Wiley

SCENARIO:

Theotis Wiley is a promising young basketball player with a checkered past. Erive is a small shoe manufacturing company about to launch a new line of basketball shoes. Erive’s Vice-President of Business Development has asked to meet with Theotis’ agent regarding the possibility of an endorsement deal. Neither party knows much about the other party’s interests or alternatives. NOTE: This simulation was adapted from, and is structurally similar to, the Sally Soprano simulation.

 

MAJOR LESSONS:

  • In this case, both parties have relatively weak BATNAs (“Best Alternative to a Negotiated Agreement”). The case affords a good opportunity to discuss the relationship between BATNA and reservation value (sometimes called a “bottom line”), and the effect of one’s BATNA — and of other party’s BATNA — on the negotiation process and outcome.
  • The available data allow a number of arguments about how much money a “fair” endorsement deal would involve. Participants can practice using objective criteria both as a sword and as a shield, and grapple with the challenge of judging the applicability of multiple objective criteria.
  • The case allows for the creation of various options separate from the contract value issue, which can maximize joint gains for both parties. While the case can be negotiated in a very distributive manner, by focusing only on the salary issue, there is ample room for integrative bargaining.
  • Each party in the case is privy to relevant information of which the other party is unaware, which allows for interesting learning points around information disclosure. On the one hand, substantive information exchange can facilitate value creation. On the other hand, by revealing too much information, on runs the risk of being exploited by the other side.
  • Because the case is structured as a negotiation between representatives rather than principals, it can generate useful discussion regarding the principal-agent tension and other agency issues.

 

TEACHING MATERIALS:

Confidential Instructions for:

  • Theotis Wiley’s Agent
  • Erive’s Vice-President of Business Development
  • Appendix for both parties

 

Teacher’s Package includes:

  • All of the above
  • Teaching Note