Each representing a major factor assumed to affect bargaining;
General bargaining predispositions. Individual differences in bargaining predispositions may affect bargaining behavior. (bargainers may have a cooperative or a competitive)
Payoff system. Payoffs result from various aspects of the negotiated agreement.
Social relationship with the opponent. This factor refers to social relationship existing between the bargainers.
Psychological Bargaining Framework (2)
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(4) Social relationship with significant other. This factor refers to the relationships of the bargainers to significant others not participating directly in the bargaining.
(5) Situational factors. The physical and social setting of the bargaining may have an effect
(6) Bargaining strategy. This factor includes the specific actions of the bargainer during bargaining.
[Slide 8 Notes]
An Experiment in Distributive Bargaining
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Consider the following sales situation where an agreement has to be reached on the specifications of the product to be bought and the money to be paid. Both the seller and the buyer can make concession.
Only one deal is being negotiated
The bargainers are honorable people
The decisions made are binding
No arbitration or third party is available to assist bargainers
Any party can break off the negotiation and continue as before
The setting and language are not important
[Slide 9 Notes]
[Slide 10 Title]
Slide 10
[Slide 10 Content]
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An Experiment in Distributive Bargaining (2)
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For understanding bargaining and negotiations and help to merge economic considerations with psychological variables.
Contingent rewards make a difference in negotiation outcomes. The reward practices that exist today in purchasing put the buying organization at a distinct disadvantage.
Purchasing organization need to be aware of the salesperson’s reward system. A purchasing representative also can take advantage of the seller’s own motivation to maximize some element of the negotiation by seeking important concessions on other elements of the negotiation.
An Experiment in Distributive Bargaining (3)
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C. Management must develop stronger contingencies to encourage purchasing effectiveness. This can be done by concentrating on the area of purchasing that are most critical, recognizing the most important variables involved in the negotiations for any given purchase, and improving performance appraisal process to reflect purchasing effectiveness in relation to the reward system.