The Mind and Heart of the Negotiator, 5e (Thompson)
Chapter 2: Preparation: What to Do Before Negotiation
1) The fixed-pie perception is seldom erroneous.
Answer: FALSE
Explanation: The fixed-pie perception is almost always wrong. Fixed-pie perceptions very often lead to either a battle of wills, a compromise or a combination of attack and capitulation. Choosing between the three can rarely be an effective approach to negotiation.
Page Ref: 13
Difficulty: Easy
Classification: Conceptual
2) The winner's curse is attributed to an underaspiring negotiator.
Answer: TRUE
Explanation: As the underaspiring negotiator sets the target or aspiration too low, he or she opens the negotiation by requesting for something that is granted immediately by the other negotiating party. This is not regarded prudent as it eventually results in a regrettable state of affairs, which is known as winner's curse.
Page Ref: 14
Difficulty: Easy
Classification: Conceptual
3) Though a negotiation blunder, the winner's curse can be remedied in many cases.
Answer: FALSE
Explanation: The winner's curse undoubtedly is a great negotiation blunder. Unfortunately, it is nearly impossible to remedy. In a series of experiments, negotiators were given different parameters, full feedback, and several counterexamples in an attempt to counteract the winner's curse, but none was effective in eliminating the faulty behavior.
Page Ref: 14
Difficulty: Easy
Classification: Conceptual
4) Any set of terms superior to the negotiator's BATNA is not desirable.
Answer: FALSE
Explanation: It is crucial for the negotiator to determine the best alternative to a negotiated agreement (known as BATNA). BATNA is the key driving force behind a successful negotiator who ought to accept any set of terms superior to their BATNA and reject terms that prove to be inferior to their BATNA.
Page Ref: 15
Difficulty: Easy
Classification: Conceptual
5) In a negotiation, the person who stands to gain the most by changing the other faction's mind should be the most persuasive.
Answer: FALSE
Explanation: In a negotiation, the person who stands to gain the most by changing the other faction's mind should be the least persuasive. That is why it is important to develop a BATNA before commencing negotiations and to stick to it during the course of negotiations.
Page Ref: 16
Difficulty: Easy
Classification: Conceptual
6) A focal point is the pivot for successful negotiations.
Answer: FALSE
Explanation: 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 price. Such arbitrary points
are focal points which appear to be valid but have no basis in fact.
Page Ref: 19
Difficulty: Easy
Classification: Conceptual
7) The reference point, focal point, and reservation point all mean the same.
Answer: FALSE
Explanation: The reference point, focal point, and reservation point are discrete terms that have very different meanings. Reference point defines what a person considers to be a gain or a loss. Instead of weighing a course of action by its impact on total wealth, people generally "frame" outcomes as either "gains" or "losses" relative to some arbitrary reference point. Focal point is an arbitrary value that becomes a misplaced priority with the negotiator. This usually happens when the negotiator makes the mistake of not developing a reservation point before negotiating. The reservation point alludes to a quantification of a negotiator's BATNA with respect to other alternatives.
Page Ref: 21
Difficulty: Easy
Classification: Conceptual
8) Most people are risk-seeking when it comes to losses, and risk-averse when it comes to gains.
Answer: TRUE
Explanation: The statement is true as it is a fundamental human psychology that people exhibit risk-seeking behavior in the face of loss. Conversely, they become risk-averse when it comes to gains.
Page Ref: 21
Difficulty: Easy
Classification: Conceptual
9) Many people's BATNAs are uncertain because potential alternatives arrive sequentially.
Answer: FALSE
Explanation: Many people's BATNAs are uncertain because potential alternatives arrive sequentially. Rejecting an offer can mean that there may not be any forthcoming offer.
Page Ref: 22
Difficulty: Easy
Classification: Conceptual
10) The longer the temporal distance between the act of negotiation and the consequences of negotiated agreements, the better the agreement.
Answer: TRUE
Explanation: The longer the temporal distance between the act of negotiation and the consequences of negotiated agreements, the better the agreement. The reason is that parties are less contentious because the realization is in the distance.
Page Ref: 34
Difficulty: Easy
Classification: Conceptual
11) As a mixed-motive enterprise, negotiation is a two-pronged process that involves both ______and ______.
A) cooperation; coercion
B) cooperation; gut feeling
C) competition; coercion
D) cooperation; competition
Answer: D
Explanation: D) As a mixed-motive enterprise, negotiation involves both cooperation and competition.
Page Ref: 13
Difficulty: Easy
Classification: Conceptual
12) What is the key to successful negotiation?
A) motivation
B) compromise
C) preparation
D) capitulation
Answer: C
Explanation: C) Preparation is the key to successful negotiation. The work that you do prior to negotiation pays off substantially when you finally find yourself seated at the table. The 80–20 rule applies to negotiation: About 80% of your effort should go toward preparation; 20% should be the actual work involved in the negotiation.
Page Ref: 13
Difficulty: Easy
Classification: Conceptual
13) Sam and Chelsea meet to negotiate a business arrangement between their companies. Chelsea has done a lot of research beforehand and is very well prepared for the meeting when compared to Sam. Sam believes that better solutions are arrived at through intuition, spontaneity, and working hard at the negotiation table. Whom do you think will be more successful at negotiating?
A) Neither because successful negotiation requires hard bargaining and very little preparation, intuition or spontaneity.
B) Chelsea, because the 80–20 rule applies to negotiation: About 80% of your effort should go toward preparation; 20% should be the actual work involved in the negotiation.
C) Sam, because the 80–20 rule applies to negotiation: About 20% of your effort should go toward preparation; 80% should be the actual work involved in the negotiation.
D) While preparation is important, whoever has the "killer instinct " will be more successful at negotiating, because the "killer instinct" plays a much bigger role in negotiation than preparation.
Answer: B
Explanation: B) Preparation is the key to successful negotiation. The work that you do prior to negotiation pays off substantially when you finally find yourself seated at the table. The 80–20 rule applies to negotiation: About 80% of your effort should go toward preparation; 20% should be the actual work involved in the negotiation.
Page Ref: 13
AACSB: Analytic skills
Difficulty: Easy
Classification: Application
14) A positional negotiator is also known as a(n) ______.
A) underaspiring negotiator
B) visioning negotiator
C) overaspiring negotiator
D) grass-is-greener negotiator
Answer: C
Explanation: C) The overaspiring negotiator is also known as the positional negotiator. Such a negotiator typically refuses to budge from the position taken, setting a high target point while refusing to entertain any concessions.
Page Ref: 14
Difficulty: Easy
Classification: Conceptual
15) A positional negotiator is one who ______.
A) is under pressure to clinch the offer and consequently accepts the offer despite better alternatives
B) sets a low target point and is immediately granted the offer
C) selectively seeks information that confirms what he or she believes to be true
D) sets the target point too high and refuses to make any concessions
Answer: D
Explanation: D) The overaspiring or positional negotiator is one who sets the target point too high and refuses to make any concessions.
Page Ref: 14
Difficulty: Easy
Classification: Conceptual
16) Andrea, the CEO of a medium scale manufacturing company, is negotiating with the representatives of the employee's union. She accepts the demands of the union immediately to avoid a strike though the demands inflict a financial burden on the company. Andrea has acted as a(n) ______negotiator in this negotiation.
A) underaspiring
B) overaspiring
C) positional
D) grass-is-greener
Answer: A
Explanation: A) The underaspiring negotiator sets his or her target or aspirations too low. The underaspiring negotiator opens the negotiation by requesting something that is immediately granted, resulting in a regrettable state of affairs known as the winner's curse.
Page Ref: 14
AACSB: Analytic skills
Difficulty: Moderate
Classification: Application
17) Julia visits a furniture manufacturer to get a deal for furnishing her house. Julia thinks the prices quoted by him are very high and asks for a better deal. The shopkeeper is firm on the prices and refuses to give her any discount. The shopkeeper is a(n) ______negotiator.
A) positional
B) underaspiring
C) triumphant
D) grass-is-greener
Answer: A
Explanation: A) The overaspiring negotiator or positional negotiator is too "tough"; he or she sets the target point too high and refuses to make any concessions.
Page Ref: 14
AACSB: Analytic skills
Difficulty: Moderate
Classification: Application
18) Positional negotiators very often tend to be ______.
A) cynical
B) egocentric
C) accommodating
D) intuitive
Answer: B
Explanation: B) Positional negotiation reinforces egocentrism as the negotiators quickly develop ownership of the arguments and positions they make. These positions become part of people's own self-concept, making any opposition an ego threat. Ego-defensive behavior can trigger competitive communication, retaliatory behavior, negative perceptions of the counterparty, and attitude polarization.
Page Ref: 15
Difficulty: Easy
Classification: Conceptual
19) At the negotiating table, Leo and David take opposite viewpoints of the matter in discussion. Leo takes offence at David's comments because he views any opposition as an ego threat. It is safe to assume that Leo is a(n) ______negotiator.
A) cynical
B) accommodating
C) positional
D) intuitive
Answer: C
Explanation: C) The other problem with positional bargaining, is that it reinforces egocentrism. Indeed, people quickly develop ownership of the arguments and positions they make, and these positions become part of people's self-concept, making any opposition an ego threat.
Page Ref: 15
AACSB: Analytic skills
Difficulty: Easy
Classification: Application
20) The ______negotiator wants what the other party does not want to give–and does not want what the other party is willing to offer.
A) overaspiring
B) grass-is-greener
C) egocentric
D) underaspiring
Answer: B
Explanation: B) The grass-is-greener negotiator does not know what he or she really wants—only that he or she wants what the other party does not want to give—and does not want what the other party is willing to offer.
Page Ref: 15
Difficulty: Easy
Classification: Conceptual
21) Reactive devaluation negotiation behavior is exhibited by negotiators who ______.
A) know what the target is and are willing to make a few minor compromises
B) do not know what the target is and make major compromises
C) know what the target is but end up paying far more than deemed necessary
D) do not know what the target is but do not want what is being offered
Answer: D
Explanation: D) Reactive devaluation behavior is said to occur when a negotiator does not know what he or she really wants but only wants what the other party does not want to give. The negotiator, however, does not want what the other party is willing to offer. Opposition bias is a primary cause of reactive devaluation behavior.
Page Ref: 15
Difficulty: Easy
Classification: Conceptual
22) What does BATNA mean?
A) Best Alternative To Negate Aggression
B) Bargaining Assets To Negotiate an Agreement
C) Best Alternative To a Negotiated Agreement
D) Begin At The Negotiated Agreement
Answer: C
Explanation: C) The acronym BATNA stands for the Best Alternative To a Negotiated Agreement. A negotiator needs to determine his or her BATNA before getting into the process so that only those terms superior to their BATNA are accepted and vice-versa.
Page Ref: 15
Difficulty: Easy
Classification: Conceptual
23) Robert was the purchase agent of an office furniture manufacturer. While dealing with one of the vendors, he successfully negotiated the prices for items A and B. However, the vendor was firm on the price that he quoted for item C. Robert unsuccessfully insisted on a getting a discount for C also and eventually declined all the purchase terms offered by the vendor. Which of the following, if true, would contradict the reflection that Robert was engaged in a reactive devaluation?
A) The price quoted for C was much higher than the market price.
B) The vendor had not established a strong relationship with the manufacturer.
C) The vendor was directly procuring the item C.
D) The vendor had offered a lower price during an earlier purchase.
Answer: A
Explanation: A) Reactive devaluation occurs when a party remains adamant on getting what other party is not willing to offer. Here, Robert was adamant on the price of C. However, if the quoted price was much higher than the market price, Robert's action can be justified.
Page Ref: 15
AACSB: Reflective thinking skills
Difficulty: Difficult
Classification: Critical Thinking
24) Which of the following is a characteristic of BATNA?
A) inflexible
B) unrealistically optimistic
C) spontaneous
D) time sensitive
Answer: D
Explanation: D) BATNA is not something that a negotiator wishes for. On the contrary, it is determined by objective reality. It is also time sensitive, i.e., at any point in time, the BATNA can either improve or deteriorate as a result of market forces, environmental and situational conditions. Hence, it is of utmost essence for negotiators to constantly adapt and improve it.
Page Ref: 15
Difficulty: Easy
Classification: Conceptual
25) Kim is undergoing training to improve her negotiating skills and her BATNA. Kim is dynamic and hardworking; she is also prone to being unrealistically optimistic about most negotiations. What
conclusion about BATNA can we draw from Kim's example?
A) Negotiators should constantly attempt to improve their BATNAs.
B) Your BATNA should not change as a result of the other party's persuasion techniques.
C) A BATNA is not something that a negotiator wishes for; rather, it is determined by objective reality.
D) Many negotiators are reluctant to recognize their BATNAs and confuse them with their aspiration point.
Answer: C
Explanation: C) A BATNA is not something that a negotiator wishes for; rather, it is determined by objective reality. A common problem is that negotiators are reluctant to acknowledge their actual BATNAs, and they fall prey to wishful thinking and unrealistic optimism.