1 The Mind and Heart of the Negotiator, 7e (Thompson) Chapter 1 Negotiation: The Mind and The Heart 1.1 Multiple - Choice Questions 1) Anytime you cannot get what you want without the cooperation of others, you are negotiating. In simple terms, negotiati on is best described as: A) a contest of wills between opposing parties B) an interpersonal decision - making process necessary whenever pe ople cannot achieve their objectives single - handedly C) a third - party mediation D) the process of compromise so as to i nstigate conflict, with one side coming out the victor Answer: B Page Ref: 1 AACSB: Interpersonal relations and teamwork Difficulty: M oderate 2) Negotiators need to be effective in terms of maximizing all areas of potential value at the bargaining tabl e. In virtually any negotiation, two things are at stake: economic value and: A) personal reputation B) a person's ego C) relationships a nd trust D) money and scarce resources Answer: C Page Ref: 2 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 3) Within organizations, people are increasingly interdependent both laterally and hierarchically. When negotiators are descri bed as being interdependent, that means those people need to know how to: A) integrate their interests and work across functional areas B) have similar incentive structures C) be self - sufficient and self - focused D) develop different norms of communication Answer: A Page Ref: 5 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 2 4) Regarding some of the ma jor shortcomings that negotiators struggle to overcome, "lose - lose" negotiation occurs when negot iators: A) settle for too little by making concessions that are too small B) both parties make unwise sacrifices and fail to recognize and exploit opportunitie s for mutual gain C) accept all terms offered by the counterparty D) do not sign a binding contra ct Answer: B Page Ref: 4 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 5) Negotiators often struggle with several shortcomings that trap them into achieving less than optimal negotiation outcomes. When a negotiator rejects a proposal that is demonstrably better than any other option available, the negotiator is being trapped by: A) the agreement bias B) the winner's curse C) hubris D) sett ling for too little Answer: C Page Ref: 7 AACSB: Interpersonal relations and teamwork Difficult y: Moderate 6) In negotiation it is important to optimize one's strategies by attempting to achieve as much as possible. Regarding this aspirational outlook, Nobel Laureate Herb Simon distinguished optimizing from satisficing. Satisficing is best defined as: A) helping other people B) negotiating a slice of the pie that is much larger than your original aspirations C) doing just enough to reach one's minimum g oals D) setting high aspirations Answer: C Page Ref: 2 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 7) When we delve into managers' theories about negotiation, we often find that they operate with faulty beliefs. Which of the follow ing is a myth that negotiators often hold about negotiation? A) Whatever is good for one party must be good for the counterparty B) A good negotiator should always approach a counterparty as if they were of equal status C) Good negotiators play it safe and do not take risks D) Good negotiators rely on intuition Answer: D Page Ref: 10 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 3 8) Negotiation is a mixed - motive enterprise, which refers to the fact that parties: A) manage both economic and psychological dimensions B) have incentives to cooperate as well as compete C) use both deliberate thought and intuition D) balance rewards and costs Answer: B Page Ref: 9 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 9) Improvi ng your skills in your pursuit to become a successful negotiator depends on: A) learning how to "outsmart" the counterparty B) taking advantage of the counterparty's lack of preparation C) seeking feedback, analysis, and focused practice D) always letting the other party share their interests first Answer: C Page Ref: 8 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 10) A key reason why business people need negotiation skills is due to the increased specialization of ski lls. This skill specialization increases the need for negotiators to understand the motivations behind another's behavior because: A) people are less dependent on each other for project success B) people are becoming less competitive with one another in th e workplace C) people are more dependent on each other in the workplace D) managers must customize incentive and punishment structures for all employees Answer: C Page Ref: 5 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 11) Informat ion technology provides special opportunities and challenges for negotiators. One of the main challenges for negotiators is: A) disposing of old equipment B) training employees in new software programs C) troubleshooting system security issues D) working i n a culture of 24/7 availability Answer: D Page Ref: 5 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 4 12) Besides differences in language and currency issues, one of the main challenges that globalization presents for negotiators is: A) the tendenc y of people to see what they want to see when appraising their own performance B) learning and adjusting to different norms of communication between parties C) finding housing for employees D) influencing the economic forces within the foreig n country Answ er: B Page Ref: 6 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 13) Negotiators who have developed a bargaining style that works only within a narrow subset of the business world will suffer unless they can: A) act more competitively B) act more cooperatively C) take risks D) broaden their negotiation skills across businesses, industries, and cultures Answer: D Page Ref: 6 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 14) One of the major shortcomi ngs in negotia tion occurs when negotiators make too - large concessions resulting in a too - small share of the bargaining pie. This negotiation trap is called: A) egocentrism B) the confirmation bias C) the winner's curse D) the mixed - motive negotiator Answer : C Page Ref: 7 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 15) With regard to negotiation style, truly effective negotiators are neither tough or soft, but rather they: A) are friendly B) are principled C) rely on intuition D) are dignified Ans wer: B Page Ref: 10 AACSB: Interpersonal relations and teamwork Difficult y: Moderate 5 16) Negotiation experience in the absence of ________, is largely ineffective at improving negotiation skills. A) optimism B) successful outcomes C) high profile part ies D) diagnostic feedback Answer: D Page Ref: 8 AACSB: Interpersonal rela tions and teamwork Difficulty: Moderate 17) Effective negotiation involves all of the below listed strategies EXCEPT: A) deliberate planning B) thoughtful preparation C) the use of a "gut feeling" or intuition D) strategic reasoning Answer: C Page Ref: 10 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 18) A key to successful preparation is assuming the counterparty is as smart, informed, and motivated as you are. What is the name of such a perspective? A) The optimizing model B) The fraternal twin model C) The satisficing model D) The fixed - pie bias Answer: B Page Ref: 11 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 19) In negotiation, people hold tightly to several false beliefs about the process. Of these, the fixed - sum perception is defined as: A) the assumption that attacking the other party is the best way to get most of the pie B) the assumption that capitulating to the other negot iating party's demands is the best way to a win - win agreement C) the belief that whatever is good for one party must ipso facto be bad for the other pa rty D) the assumption that sticking to your demands and refusing anything but the majority of the pie is the best way to get most of the pie Answer: C Page Ref: 9 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 6 20) The process of negot iation is best described as a ________, which involves both ________ and ________. A) self - assessment; f ocus; introspection B) grass - is - greener negotiation; selectiveness; restlessness C) strategic risk; aggressiveness; gambling D) mixed - motive enterprise; cooperation; competition Answer: D Page Ref: 10 AACSB: Interpersonal relations and teamwork Difficult y: Moderate 21) Educated, smart, motivated people often do not realize their negotiating potential. Over ________ of corporate executives and CEO's leave money on the table at the conclusion of a negotiation. A) 25% B) 46% C) 66% D) 80% Answer: D Page R ef: 2 AACSB: Inte rpersonal relations and teamwork Difficulty: Moderate 22) Many negotiators approach a negotiation from the perspective of having to choose between: A) getting what they want or being liked B) a choice that puts them in a weak position o r a choice that mi ght strengthen them in the future but has an uncertain probability C) the lesser of two evils D) being aggressive toward the counterparty or being legalistic with the counterparty Answer: A Page Ref: 2 AACSB: Interpersonal relations and teamwork Difficul ty: Moderate 7 23) Negotiators often believe that if they make a personal sacrifice in the hopes of securing a business relationship rather than pushing to attain things that are important to them hope their personal sacrifice will be re membered by the cou nterparty and rewarded in future negotiations. This strategy is NOT advisable because: A) the personal sacrifice may make them look weak to the counterparty B) team members and the counterparty are not to be trusted C) the relational sac rifice a person mak es today may not be remembered or reciprocated by the receiving party tomorrow D) the only strategy of consistent success in a negotiation is being aggressive, holding one's ground, and making very few concessions to the counterparty Ans wer: C Page Ref: 2 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 24) People often struggle with which negotiation strategies to use in short versus long - term relationships. If a negotiator believes that a negotiation is a single - shot situation and that they won't need to interact with the counterparty in the future, the neg otiator will often use: A) an aggressive negotiation strategy B) a passive negotiation strategy C) an agent to represent themselves D) a contingent contract Answer: A Page Ref: 3 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 25) Agre ements where the outcome is one that creatively combines the negotiating parties' interests in a way that maximizes the joint economic value is called: A) a comprom ise agreement B) a fixed - sum agreement C) a reverse - split agreement D) an integrative agreem ent Answer: D Page Ref: 4 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 8 26) Following negotiation, there are always concerns by both parties that the agreed upon terms will be honored. It has been found that successful contract negot iations consider specific objectives when assessing the quality of contracts. Which of the following is NOT one of those objectives? A) How to maximize the likelih ood of reaching a good agreement B) How to reach an agreement that will last C) How to reach an agreement that will need several ratifications by other parties to refine terms D) How to reach an agreement that fulfills the intended purpose Answer: C Page Ref: 7 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 27) Most negotiations are ________, meaning that if parties work together, they can create more joint value than if they are purely combative. A) fixed - sum B) win - lose C) variable - s um D) focal - point based Answer: C Page Ref: 9 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 28) Of the many types of feedback that are potentially available to negotiators, information about the counterparty's ________ and ________ i s particularly important. A) interests; priorities B) experience; specialized e xpertise C) skills; failures D) reputation; honesty Answer: A Page Ref: 8 - 9 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 29) People who view negotiation as a challenge and believe that negotiation ability can be improved with experi ence and practice: A) achieve better deals when they see the negotiation as fixed - sum B) are naïve and achieve lower - quality deals than naturally gifted negotiators C) are more successful in reaching high - quality deals D) are more successful when they appr oach negotiations aggressively Answer: C Page Ref: 10 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 9 1.2 Discussion Questions 1) What are the key reaso ns why effective negotiation skills are increasingly important in the business world? Answer: They are increasingly important because of the following key reasons: (1) knowledge economy, (2) specialized expertise, (3) information tec hnology, and (4) globa lization. Page Ref: 4 - 6 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 2) With regard to how people fall short in negotiating, what are the most common "traps" of negotiation? Answer: Leaving money on the table ( also known as "lose - lo se" negotiation); settling for too little (also known as "the winner's curse"); walking away from the table (sometimes this shortcoming is traceable to hubris or pride; other times, it results from a gross miscalculation); and settlin g for terms that are w orse than the alternative (also known as the "agreement bias"). Page Ref: 7 AACSB: Interpersonal relations and teamwork Difficulty: Easy 3) What are some of the primary reasons why overconfidence can be detrimental in negotiation? Answer: People with m ore experience grow more confident, but the accuracy of their judgment and the effectiveness of their behavior does not increase in a commensurate fashion. Overconfidence can be detrimental because it may lead people to take unwise ri sks. Page Ref: 8 - 9 AAC SB: Interpersonal relations and teamwork Difficulty: Moderate 4) What are the most prevalent myths about negotiation, and how do these myths hamper people's ability to learn effective negotiation skills? Answer: The most prevalent myths are: Myth 1 : Ne gotiations are fixed - sum in nature; Myth 2 : Negotiators need to be either tough or soft; Myth 3 : Negotiation skills are something that people are born with; Myth 4 : Good negotiators rely on intuition or "gut feeling." Page Ref: 9 - 11 A ACSB: Interpersonal r elations and teamwork Difficulty: Easy 5) What is the fraternal twin model of negotiation, and why does it contribute to more successful outcomes in negotiation? Answer: The fraternal twin model assumes that the counterparty is every bit as motivated, i ntelligent, and prepared as you are. Thus, i t contributes to more successful outcomes because parties rely on simultaneously expanding and allocating the pie of resources, rather than on "outsmarting" or tricking the other party. Page Ref: 11 AACSB: Inter personal relations and teamwork Difficulty: Hard 10 6) Why does the fixed - sum myth effect the strategic choices that negotiators make and what strategy to effective negotiators follow? Answer: The fixed - sum myth gives rise to a myopic view of the strategic choices that negotiators have. Most negotia tors believe they must choose between behaving in a tough, punitive fashion to the counterparty or to the other extreme of being soft and concessionary. Effective negotiators are principled, and follow an enlight ened view of negotiation strategy. They reco gnize that to achieve their own outcomes they must work effectively with the other party and cooperate, thus leveraging their own power and strengths. Page Ref: 10 AACSB: Interpersonal relations and teamwork Dif ficulty: Hard 7) Why is it beneficial for students of negotiation to learn and practice negotiation skills in a domain or industry that is unfamiliar to them? Answer: It is beneficial for students of negotiation to learn negotiation skills in an industr y that is unfamiliar because learning negoti ation skills in a context in which one already has some expertise may lead to context - dependence, so much so that the learned negotiation skills will not transfer to other situations. Page Ref: 9 AACSB: Interper sonal relations and teamwork Difficulty: Mo derate 8) When evaluating the success of a negotiation, what post - negotiation factors should you review and consider? Answer: Post - negotiation you should consider the post - deal implementation, the durability of the agreement, how your reputation will be affected by the agreement (or lack thereof), how you and perhaps the counterparty feel about negotiating together again, and the level of trust you feel for the counterparty and if the counterparty feels they can trust you to honor the terms of your agreem ent. Page Ref: 8, Exh. 1 - 1 AACSB: Interpersonal relations and teamwork Difficulty: Hard 9) Regarding short - versus long - term relationships, how are our interactions as negotiators affected by the digital world and what precautions should we take because of this interactive medium? Answer: The networked, virtual world blurs the distinction between short and long term negotiation relationships because most of our interactions are recorded or known to others. Eve n if a negotiator does not actually meet a g iven counterparty again, by virtue of social media, a detailed account of their interactions world surely be visible for anyone to see. For these reasons, it is with caution that negotiators should assume the det ails of their communications and behavior wi ll be accessible for anyone who might be interested and consequently, act as though all negotiations have long - term implications. Page Ref: 3 AACSB: Interpersonal relations and teamwork Difficulty: Hard 11 10) Ho w has the popularity of decentralized business structures and the decline of hierarchical decision making challenged managers? Answer: The advent of decentralized business structures and the decline of hierarchical decision making provides opportunities f or managers, but also poses some daunting challenges. People must continually create possibilities, integrate their interests with others, and recognize the inevitability of competition both within and between companies. Thus managers must be in a near - c on stant mode of negotiating opportunities. Negotiation comes into play when managers participate in joint ventures, partnerships, product launches, reorganizations, and project teams. Page Ref: 5 AACSB: Interpersonal relations and teamwork Difficulty: Ha rd 1 The Mind and Heart of the Negotiator, 7e (Thompson) Chapter 2 What to Do Before Negotiation 2.1 Multiple - Choice Questions 1) In any negotiation scenario, a negotiator needs to determine what would constitute an ideal outcome, however, problems often arise such as the winner's curse. In negotiation, the winner's curse occurs when: A) a negotiator sets his/her aspirations too high B) a negotiator makes an offer that is immediately accepted by the other party C) the counterparty demonstrates retaliative behavior D) no one can be trusted Answer: B Page Ref: 14 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 2) Ma ny negotiators do not think carefully about what they want before entering negotiations. One type of problematic negotiation behavior known as reactive devaluation refers to: A) a negotiator who does not know what he or she really wants other than not want ing what the other party is offering B) a negotiator who sets the target point too high and refuses to make any concessions C ) a negotiator who overvalues the counterparty's offer D) an negotiator who opens the negotiation by setting their target too low A nswer: A Page Ref: 14 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 3) A negotiator's BATNA (Best Alte rnative to a Negotiated Agreement) determines the point at which a negotiator is prepared to: A) make larger concessions B) keep op tions open C) reject the terms of and walk away from a negotiated agreement D) identify the counterparty's alternatives Answe r: C Page Ref: 15 AACSB: Interpersonal relations and teamwork Difficulty: Easy 2 4) Your BATNA is time sensitive and is subject to market forces, thus negotiators should constantly attempt to improve their BATNAs. One strategy for improving one's BATNA in negotiation is to: A) discuss it in explicit terms with the counterparty B) identify several alternative options before going to the negotiation table C) replace it with an aspiration point D) revise it in reaction to progress of the negotiation Answer: B Page Ref: 15 AACSB: Interpersonal relations and teamwork Difficulty: Easy 5) A n egotiator's reservation point has the most direct influence on their final outcome. A negotiator's reservation point is a quantification of the negotiator's: A) target p oint B) BATNA C) bargaining zone (ZOPA) D) opening offer Answer: B Page Ref: 16 AACSB: Interpersonal relations and teamwork Difficulty: Easy 6) When facing risk, many negotiators do not weigh a course of action by its impact on total wealth, rather the y generally frame outcomes as either gains or losses relative to some arbitrary referen ce point. Instead, negotiators should consider the impact of three types of risk with regard to their alternatives. These three types of risk include: A) tactical risk, strategic risk, and overconfidence risk B) failure risk, BATNA risk, and information - sh aring risk C) contractual risk, overconfidence risk, and failure risk D) strategic risk, BATNA risk, and contractual risk Answer: D Page Ref: 21 AACSB: Interpersonal r elations and teamwork Difficulty: Moderate 7) In negotiation, buyers and sellers may adopt differing bargaining positions for an object, but their private valuations for the object should not differ as a consequence of who has possession. This situation is termed the endowment effect and is best descr ibed as: A) the difference between what sellers demand and what buyers are willing to pay B) a tendency for people to value an object more once they own it C) the intrinsic value we associate with a certain o utcome D) saving money instead of purchasing goo ds Answer: B Page Ref: 23 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 3 8) In negotiation, a dispute is best defined as a situation in which: A) parties have to resort to their BATNAs B ) parties fail to exchange resources C) a claim is made by one party and rejected by the other party D) negotiators turn down favors and rewards from others Answer: C Page Ref: 27 AACSB: Interpersonal relations and teamwork Difficulty: Easy 9) In negot iation which of the following statements is gene rally NOT true when it comes to a negotiator's BATNA? A) It is dynamic and constantly changing B) Negotiation terms less than your BATNA should be accepted C) It is determined by the negotiator's available op tions D) The counterparty has an incentive to minimize the quality of your BATNA Answer: B Page Ref: 15 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 10) A more accurate model of negot iation is to approach it as a decision - making ent erprise that is best described as a ________, which involves both ________ and ________. A) self - assessment; focus; introspection B) grass - is - greener negotiation; selectiveness; restlessness C) strategic ris k; aggressiveness; gambling D) mixed - motive enter prise; cooperation; competition Answer: D Page Ref: 13 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 11) Effective negotiation preparation encompasses three general abilities: situatio nal awareness, perspective - taking, and: A) financ ial assessment B) location assessment C) team assessment D) self - assessment Answer: D Page Ref: 13 AACSB: Interpersonal relations and teamwork Difficulty: Easy 4 12) In preparing for negotiation, a negotia tor needs to determine what would constitute an ideal outcome, or favorable set of terms, also known as a: A) winner's result B) target point C) BATNA D) reservation point Answer: B Page Ref: 12 AACSB: Interpersonal relations and teamwork Difficulty: Easy 13) In order to reach a successful negotiati on outcome, the negotiators must understand that their BATNA is: A) the outcome that the negotiator wishes to achieve B) able to be modified by persuasive o ffers C) not time sensitive D) determined by objective reality Answer: D Page Ref: 15 AACSB: Inter personal relations and teamwork Difficulty: Moderate 14) The term used to represent the quantification of a negotiator's BATNA with respect to other alter natives is known as: A) the reservation point B) the target point C) the focal point D) a sunk cost Answer: A Page Ref: 16 AACSB: Interpersonal relations and teamwork Difficulty: Moderate 15) Negotiators who make the mistake of not developing a reservation point before they negotiate often focus on an arbitrary value that masquerades as a reservation point. Such arbitrary points are called: A) personal blind spots B) focal points C) sunk costs D) linkage effects Answer: B Page Ref: 16 AACSB: Interpersonal relations and teamwork Difficulty: Easy