Dec

A CONSENSUS-BUILDING TOOL FOR SUSTAINING AN URBAN WATERSHED

DEC vs. RiversideDEC vs. Riverside

DebriefDebriefDebriefDebrief

env. & human affairs, sanda kaufman

sanda kaufmannegotiation fundamentals 4

game results, summer 2009game results, summer 2009

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400

500

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0 50 100 150 200 250 300 350 400

DE

CD

EC

DE

CD

EC

R IVERSIDER IVERSIDER IVERSIDER IVERSIDE

DECDECDECDEC ----RIVERSIDE AGREEMENTSRIVERSIDE AGREEMENTSRIVERSIDE AGREEMENTSRIVERSIDE AGREEMENTS

Pareto f rontier

Settlement values

XX


jessicajessica, ,

raquelraquel

staceystacey, , mikemike

christinechristine, ,

ericaerica

juliajulia,,

christinachristina & & nene’’quinnequinne

5

Summary of DEC & Riverside costsSummary of DEC & Riverside costsRiverside DEC

Technology

a. Rotoblue with no assistance 350 200

b. Technoclean with no assistance 497 0

c. Technoclean with guarantee 450 48

d. Technoclean with guarantee and subsidy of $s 450-s 48 + 2 x s

e. Technoclean with subsidy of $s 497-2 2 x s

f. No scrubber 200 1000

Plant disposition

a. Remain open 200 0

b. Closed for two months 100 50

c. Closed for six months 150 200

d. Closed permanently 7000 1100



6

Summary of DEC & Riverside costsSummary of DEC & Riverside costs

200200a.a. negative (any amount)negative (any amount)

Liability AssistanceLiability Assistance RRRRRRRR DECDECDECDECDECDECDECDECa.a. 00 270270 00

b.b. 5050 243243 5050

c.c. 100100 216216 110110

d.d. 150150 189189 175175

e.e. 200200 162162 250250

f.f. 300300 108108 390390

Public RelationsPublic Relations

b.b. none/0none/0 00 00

c.c. positive/50positive/50 (75)(75) 5050

d.d. positive/100positive/100 (100)(100) 100100

e.e. postitive/150postitive/150 (120)(120) 150150

f.f. Positive/200Positive/200 (130)(130) 200200env. & human affairs, sanda kaufman

7

Summary of DEC & Riverside costsSummary of DEC & Riverside costs

Compliance incentivesCompliance incentives RRRRRRRR DDDDDDDDa.a. 00 00 00

b.b. 5050 (50)(50) 7070

c.c. 100100 (100)(100) 160160

d.d. 150150 (150)(150) 280280

e.e. 200200 (200)(200) 400400

Reservation prices Reservation prices (max costs or go to court)(max costs or go to court)

640640 900900


8

About the gameAbout the game

scorablescorablescorablescorableintegrative (variableintegrative (variableintegrative (variableintegrative (variable----sum)sum)sum)sum)� multi-dimensional (vs. one-dimensional & distributive)

example of purely distributive situation:example of purely distributive situation:example of purely distributive situation:example of purely distributive situation:� Vicky sells a pen to Dave

� Someone offered Vicky 50 cents � Someone offered Dave a pen for $1



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Negotiation theory: Negotiation theory:

The Structure of Distributive BargainsThe Structure of Distributive Bargains

0 .5 p 1.0pen pen priceprice

Surplus Surplus for Vickifor Vicki

Surplus Surplus for Davefor Dave

VickiVicki ’’s s reservation pricereservation price

DaveDave’’s s reservation pricereservation price

Zone of possible agreements

[.5, 1.0]


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The structure of Integrative BargainsThe structure of Integrative Bargains

BB’’s s reservationreservation priceprice

AA’’s s reservation pricereservation price

Solution setSolution setSurplus for Surplus for Party AParty A

Surplus for Surplus for Party BParty B

Q

R

S

T

Pareto frontier


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DECDEC--RIVERSIDE AgreementsRIVERSIDE Agreements

East of the y axis are good for party BEast of the y axis are good for party BEast of the y axis are good for party BEast of the y axis are good for party BNorth of the x axis are valuable for party A. North of the x axis are valuable for party A. North of the x axis are valuable for party A. North of the x axis are valuable for party A. Southwest quadrant: negative value for bothSouthwest quadrant: negative value for bothSouthwest quadrant: negative value for bothSouthwest quadrant: negative value for bothIn the northeast quadrant have positive value In the northeast quadrant have positive value In the northeast quadrant have positive value In the northeast quadrant have positive value for both. for both. for both. for both. The zone of possible agreement (The zone of possible agreement (The zone of possible agreement (The zone of possible agreement (zopazopazopazopa) ) ) ) ––––the set of solutions in the northeast quadrant:the set of solutions in the northeast quadrant:the set of solutions in the northeast quadrant:the set of solutions in the northeast quadrant:� agreements are preferred by both parties to their agreements are preferred by both parties to their agreements are preferred by both parties to their agreements are preferred by both parties to their nononono----agreement alternatives (their reservation prices). agreement alternatives (their reservation prices). agreement alternatives (their reservation prices). agreement alternatives (their reservation prices).

� these agreements are known as the these agreements are known as the these agreements are known as the these agreements are known as the Pareto frontier.Pareto frontier.Pareto frontier.Pareto frontier.



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Some key termsSome key terms


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AgreementsAgreements

An agreement is considered An agreement is considered An agreement is considered An agreement is considered Pareto superiorPareto superiorPareto superiorPareto superior to another if to another if to another if to another if �� it is preferred by at least one party without it is preferred by at least one party without it is preferred by at least one party without it is preferred by at least one party without it is preferred by at least one party without it is preferred by at least one party without it is preferred by at least one party without it is preferred by at least one party without hurting any of the others, meaninghurting any of the others, meaninghurting any of the others, meaninghurting any of the others, meaninghurting any of the others, meaninghurting any of the others, meaninghurting any of the others, meaninghurting any of the others, meaning

�� it is to the northeast of that agreement, it is to the northeast of that agreement, it is to the northeast of that agreement, it is to the northeast of that agreement, it is to the northeast of that agreement, it is to the northeast of that agreement, it is to the northeast of that agreement, it is to the northeast of that agreement, because a trade that moves the parties because a trade that moves the parties because a trade that moves the parties because a trade that moves the parties because a trade that moves the parties because a trade that moves the parties because a trade that moves the parties because a trade that moves the parties northeasterly benefits both.northeasterly benefits both.northeasterly benefits both.northeasterly benefits both.northeasterly benefits both.northeasterly benefits both.northeasterly benefits both.northeasterly benefits both.

An agreement is An agreement is An agreement is An agreement is inefficient inefficient inefficient inefficient if the parties fail if the parties fail if the parties fail if the parties fail to realize some or all the available surplusto realize some or all the available surplusto realize some or all the available surplusto realize some or all the available surplus� if we can find another agreement that makes if we can find another agreement that makes if we can find another agreement that makes if we can find another agreement that makes one party better off without hurting the other. one party better off without hurting the other. one party better off without hurting the other. one party better off without hurting the other.


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Agreements Agreements (cont.)(cont.)

In a distributive bargain, all agreements are In a distributive bargain, all agreements are In a distributive bargain, all agreements are In a distributive bargain, all agreements are efficient, but efficient, but efficient, but efficient, but there are often many inefficient solutions there are often many inefficient solutions there are often many inefficient solutions there are often many inefficient solutions to an integrative negotiation. to an integrative negotiation. to an integrative negotiation. to an integrative negotiation.

� the set of the set of the set of the set of efficient agreements efficient agreements efficient agreements efficient agreements is the northeast is the northeast is the northeast is the northeast boundary of the northeast quadrant boundary of the northeast quadrant boundary of the northeast quadrant boundary of the northeast quadrant (the upper right(the upper right(the upper right(the upper right----hand border of the ZOPA) hand border of the ZOPA) hand border of the ZOPA) hand border of the ZOPA) ----the Pareto frontier; the Pareto frontier; the Pareto frontier; the Pareto frontier;

� no agreements inside the frontier are preferred no agreements inside the frontier are preferred no agreements inside the frontier are preferred no agreements inside the frontier are preferred by both parties to agreements on the frontier. by both parties to agreements on the frontier. by both parties to agreements on the frontier. by both parties to agreements on the frontier.



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MovesMoves� party A prefers agreements to the north, party A prefers agreements to the north, party A prefers agreements to the north, party A prefers agreements to the north, � B prefers moves to the eastB prefers moves to the eastB prefers moves to the eastB prefers moves to the east�� joint gains result from moves to the northeast. joint gains result from moves to the northeast. joint gains result from moves to the northeast. joint gains result from moves to the northeast. joint gains result from moves to the northeast. joint gains result from moves to the northeast. joint gains result from moves to the northeast. joint gains result from moves to the northeast.

A negotiation with a frontier that bows out is more A negotiation with a frontier that bows out is more A negotiation with a frontier that bows out is more A negotiation with a frontier that bows out is more integrative than one that is flat. integrative than one that is flat. integrative than one that is flat. integrative than one that is flat. It is impossible to make a Pareto improvement It is impossible to make a Pareto improvement It is impossible to make a Pareto improvement It is impossible to make a Pareto improvement beyond the frontierbeyond the frontierbeyond the frontierbeyond the frontierAlthough all agreements on the Pareto frontier are Although all agreements on the Pareto frontier are Although all agreements on the Pareto frontier are Although all agreements on the Pareto frontier are efficient, neither party would be indifferent between efficient, neither party would be indifferent between efficient, neither party would be indifferent between efficient, neither party would be indifferent between two such settlements:two such settlements:two such settlements:two such settlements:� Party A prefers to the north, while party B prefers to the east.Party A prefers to the north, while party B prefers to the east.Party A prefers to the north, while party B prefers to the east.Party A prefers to the north, while party B prefers to the east.One method for tracing the Pareto frontier is to One method for tracing the Pareto frontier is to One method for tracing the Pareto frontier is to One method for tracing the Pareto frontier is to plot by computer every possible agreement plot by computer every possible agreement plot by computer every possible agreement plot by computer every possible agreement between the partiesbetween the partiesbetween the partiesbetween the parties


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DECDEC--Riverside real Riverside real

Pareto frontierPareto frontier


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The basis of joint gainsThe basis of joint gains

Individuals enter negotiations to attain Individuals enter negotiations to attain Individuals enter negotiations to attain Individuals enter negotiations to attain through through through through joint action joint action joint action joint action more than they could by acting more than they could by acting more than they could by acting more than they could by acting unilaterallyunilaterallyunilaterallyunilaterally. . . . Agreement can be reached when Agreement can be reached when Agreement can be reached when Agreement can be reached when for each party for each party for each party for each party a proposed solution is superior to a proposed solution is superior to a proposed solution is superior to a proposed solution is superior to the nonthe nonthe nonthe non----agreement alternative. agreement alternative. agreement alternative. agreement alternative. � If the alternatives (If the alternatives (If the alternatives (If the alternatives (BATNAsBATNAsBATNAsBATNAs) of a party are superior ) of a party are superior ) of a party are superior ) of a party are superior to the negotiated solution, to the negotiated solution, to the negotiated solution, to the negotiated solution, that party should reject the negotiated solution and that party should reject the negotiated solution and that party should reject the negotiated solution and that party should reject the negotiated solution and take a BATNA. take a BATNA. take a BATNA. take a BATNA.



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Joint gains from negotiation can often be Joint gains from negotiation can often be Joint gains from negotiation can often be Joint gains from negotiation can often be found because found because found because found because negotiators differ from one another. negotiators differ from one another. negotiators differ from one another. negotiators differ from one another. � Since they are not identical Since they are not identical Since they are not identical Since they are not identical (in tastes, endowments, capabilities, etc.), (in tastes, endowments, capabilities, etc.), (in tastes, endowments, capabilities, etc.), (in tastes, endowments, capabilities, etc.), � each has something to offer relatively less valuable to them each has something to offer relatively less valuable to them each has something to offer relatively less valuable to them each has something to offer relatively less valuable to them than to those with whom they are bargaining. than to those with whom they are bargaining. than to those with whom they are bargaining. than to those with whom they are bargaining.

� this runs counter to the intuitive notion that common this runs counter to the intuitive notion that common this runs counter to the intuitive notion that common this runs counter to the intuitive notion that common interests are the cornerstone of good working agreements.interests are the cornerstone of good working agreements.interests are the cornerstone of good working agreements.interests are the cornerstone of good working agreements.

� Completely identical individuals may not be able Completely identical individuals may not be able Completely identical individuals may not be able Completely identical individuals may not be able jointly to improve their positions by interacting: jointly to improve their positions by interacting: jointly to improve their positions by interacting: jointly to improve their positions by interacting: � their interests conflict diametrically their interests conflict diametrically their interests conflict diametrically their interests conflict diametrically � any bargaining will be purely distributive.any bargaining will be purely distributive.any bargaining will be purely distributive.any bargaining will be purely distributive.



The basis of joint gains The basis of joint gains (cont.)(cont.)

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The basis of joint gains The basis of joint gains (cont.)(cont.)

Joint gains from negotiation can often be Joint gains from negotiation can often be Joint gains from negotiation can often be Joint gains from negotiation can often be found because found because found because found because negotiators differ from one another. negotiators differ from one another. negotiators differ from one another. negotiators differ from one another. � If differences are admitted, negotiation opens up the If differences are admitted, negotiation opens up the If differences are admitted, negotiation opens up the If differences are admitted, negotiation opens up the prospect of joint gains. Examples: differences inprospect of joint gains. Examples: differences inprospect of joint gains. Examples: differences inprospect of joint gains. Examples: differences in� interests; interests; interests; interests; � probability assessment or forecast; probability assessment or forecast; probability assessment or forecast; probability assessment or forecast; � risk aversion or attitude toward the passage of risk aversion or attitude toward the passage of risk aversion or attitude toward the passage of risk aversion or attitude toward the passage of time; time; time; time;

� initial endowments; initial endowments; initial endowments; initial endowments; � capabilities; capabilities; capabilities; capabilities; � access to technology.access to technology.access to technology.access to technology.


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Back to DEC vs. RiversideBack to DEC vs. Riverside

The potential for joint gain is found in The potential for joint gain is found in The potential for joint gain is found in The potential for joint gain is found in the partiesthe partiesthe partiesthe parties’’’’ different valuation of different valuation of different valuation of different valuation of various outcomes. various outcomes. various outcomes. various outcomes. For example,For example,For example,For example,� the imputed costs for DEC are not equal to the imputed costs for DEC are not equal to the imputed costs for DEC are not equal to the imputed costs for DEC are not equal to those for Riversidethose for Riversidethose for Riversidethose for Riverside.

The partiesThe partiesThe partiesThe parties’’’’ valuation of their expenses valuation of their expenses valuation of their expenses valuation of their expenses on a given issue is influenced by on a given issue is influenced by on a given issue is influenced by on a given issue is influenced by � precedent precedent precedent precedent � other subjective criteria.other subjective criteria.other subjective criteria.other subjective criteria.



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DEC vs. RiversideDEC vs. RiversideSubjective assessments of values of various Subjective assessments of values of various Subjective assessments of values of various Subjective assessments of values of various outcomes differ from one another outcomes differ from one another outcomes differ from one another outcomes differ from one another ��potential for mutually beneficial trading exists. potential for mutually beneficial trading exists. potential for mutually beneficial trading exists. potential for mutually beneficial trading exists. For example, For example, For example, For example, � DECDECDECDEC’’’’ssss and Riversideand Riversideand Riversideand Riverside’’’’s valuations of the compliance s valuations of the compliance s valuations of the compliance s valuations of the compliance incentive and public relations issue vary considerably. incentive and public relations issue vary considerably. incentive and public relations issue vary considerably. incentive and public relations issue vary considerably. � The first $50K spent on public relations is very valuable for The first $50K spent on public relations is very valuable for The first $50K spent on public relations is very valuable for The first $50K spent on public relations is very valuable for Riverside and not too costly for DEC; Riverside and not too costly for DEC; Riverside and not too costly for DEC; Riverside and not too costly for DEC;

� expenditures on compliance incentives are extremely costly expenditures on compliance incentives are extremely costly expenditures on compliance incentives are extremely costly expenditures on compliance incentives are extremely costly for DEC. for DEC. for DEC. for DEC.

� From these differences in real and imputed costs, there From these differences in real and imputed costs, there From these differences in real and imputed costs, there From these differences in real and imputed costs, there is potential for Riverside to trade something relatively is potential for Riverside to trade something relatively is potential for Riverside to trade something relatively is potential for Riverside to trade something relatively more valuable to DEC for something relatively more more valuable to DEC for something relatively more more valuable to DEC for something relatively more more valuable to DEC for something relatively more valuable for Riverside. valuable for Riverside. valuable for Riverside. valuable for Riverside.

• Both parties would benefit from such a trade. (mutual gains)Both parties would benefit from such a trade. (mutual gains)Both parties would benefit from such a trade. (mutual gains)Both parties would benefit from such a trade. (mutual gains)


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Mutual gainsMutual gainsGiven the potential for joint gains, the negotiatorsGiven the potential for joint gains, the negotiatorsGiven the potential for joint gains, the negotiatorsGiven the potential for joint gains, the negotiators’’’’ task is to task is to task is to task is to find the mutually advantageous trades. find the mutually advantageous trades. find the mutually advantageous trades. find the mutually advantageous trades. To establish where the differences exist, To establish where the differences exist, To establish where the differences exist, To establish where the differences exist, the parties must share information and cooperate. the parties must share information and cooperate. the parties must share information and cooperate. the parties must share information and cooperate. Some valuation differences are particularly difficult to exploitSome valuation differences are particularly difficult to exploitSome valuation differences are particularly difficult to exploitSome valuation differences are particularly difficult to exploit. . . . � parties might have identical valuations of a complex issue when that issue is considered as a whole, yet they might value its component parts differently. Mutually advantageous trades might exist with respect to some of these parts.

� to realize these joint gains, the issue must first be “unbundled”. � In the DEC-Riverside negotiation, it might be effective to “unbundle” the subsidy from the choice of scrubber.

To To To To ““““tradetradetradetrade”””” effectively parties must have good understanding of effectively parties must have good understanding of effectively parties must have good understanding of effectively parties must have good understanding of � their own interests and those of their counterparts. � exactly how much they would be willing to concede on one issue in return for concessions by their counterparts on other issues


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ExampleExampleDifferences in valuation lead to joint gain: trade to create value

IssueIssuePositionPosition Cost to Cost to

DECDECCost (Gain) to Cost (Gain) to

RiversideRiverside

Initial agreementInitial agreement

Public relationsPublic relations 00 00 00

Compliance incentiveCompliance incentive 5050 7070 (50)(50)

Total costTotal cost 7070 (50)(50)

New agreementNew agreement (with trade)(with trade)

Increase public relations to:Increase public relations to: 5050 5050 (75)(75)

Reduce compliance incentive to:Reduce compliance incentive to: 00 00

Total costTotal cost 5050 (75)(75)

NET CHANGE FROM TRADE:NET CHANGE FROM TRADE: Gain 20Gain 20 Gain 25Gain 25



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Creating and claiming valueCreating and claiming valueNegotiated outcomes are efficient if they lie on the Negotiated outcomes are efficient if they lie on the Negotiated outcomes are efficient if they lie on the Negotiated outcomes are efficient if they lie on the Pareto frontierPareto frontierPareto frontierPareto frontierFinding an agreement on the frontier requires Finding an agreement on the frontier requires Finding an agreement on the frontier requires Finding an agreement on the frontier requires cooperation and the sharing of information. cooperation and the sharing of information. cooperation and the sharing of information. cooperation and the sharing of information. The process of making Pareto improvements The process of making Pareto improvements The process of making Pareto improvements The process of making Pareto improvements (shift the outcome to the northeast on the utility (shift the outcome to the northeast on the utility (shift the outcome to the northeast on the utility (shift the outcome to the northeast on the utility map) is called map) is called map) is called map) is called ““““creating value.creating value.creating value.creating value.””””�� Example: Example: Example: Example: Example: Example: Example: Example:

�� the trade between DEC and Riverside between public relations andthe trade between DEC and Riverside between public relations andthe trade between DEC and Riverside between public relations andthe trade between DEC and Riverside between public relations andthe trade between DEC and Riverside between public relations andthe trade between DEC and Riverside between public relations andthe trade between DEC and Riverside between public relations andthe trade between DEC and Riverside between public relations andcompliance incentivescompliance incentivescompliance incentivescompliance incentivescompliance incentivescompliance incentivescompliance incentivescompliance incentives

�� the parties shared information in order to achieve joint gains. the parties shared information in order to achieve joint gains. the parties shared information in order to achieve joint gains. the parties shared information in order to achieve joint gains. the parties shared information in order to achieve joint gains. the parties shared information in order to achieve joint gains. the parties shared information in order to achieve joint gains. the parties shared information in order to achieve joint gains.

Negotiators often fail to realize the potential for Negotiators often fail to realize the potential for Negotiators often fail to realize the potential for Negotiators often fail to realize the potential for value creation because moves to create value affect value creation because moves to create value affect value creation because moves to create value affect value creation because moves to create value affect how the value is divided (pathhow the value is divided (pathhow the value is divided (pathhow the value is divided (path----dependence)dependence)dependence)dependence)


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Creating & claiming valueCreating & claiming value

Value to RiversideValue to Riverside

Value to Value to DECDEC

A

C

B

Paths to the frontier - Methods of creating value affect the division of value

Path dependence of Pareto moves


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Claiming tacticsClaiming tacticsChanging the perceived zone of agreementChanging the perceived zone of agreement(misleading, making actual changes, or making commitments)(misleading, making actual changes, or making commitments)

�� overstate oneoverstate one’’s reservation price:s reservation price:�� DEC could adamantly refuse an agreement with total costs DEC could adamantly refuse an agreement with total costs of $800K, asserting that such an agreement would be far of $800K, asserting that such an agreement would be far above its reservation price and therefore unthinkable. above its reservation price and therefore unthinkable.

�� This would influence RiversideThis would influence Riverside’’s perception of the s perception of the bargaining set and might make Riverside more generous. bargaining set and might make Riverside more generous.

�� make commitments/threats in order to claim value;make commitments/threats in order to claim value;�� such moves can revolve around reservation prices. such moves can revolve around reservation prices. �� Riverside could threaten to close its plant forever unless Riverside could threaten to close its plant forever unless DEC offered an agreement which cost Riverside < $400K.DEC offered an agreement which cost Riverside < $400K.



sanda kaufmannegotiation fundamentals 27

Claiming tacticsClaiming tacticsclass of claiming tactics only possible in integrative class of claiming tactics only possible in integrative class of claiming tactics only possible in integrative class of claiming tactics only possible in integrative bargainsbargainsbargainsbargains�mislead others about differences (in preferences, beliefs, risk,mislead others about differences (in preferences, beliefs, risk,mislead others about differences (in preferences, beliefs, risk,mislead others about differences (in preferences, beliefs, risk,time, etc.) time, etc.) time, etc.) time, etc.) to minimize the value of an opponentto minimize the value of an opponentto minimize the value of an opponentto minimize the value of an opponent’’’’s concession.s concession.s concession.s concession.�� DEC could DEC could DEC could DEC could DEC could DEC could DEC could DEC could

�� misrepresent its interests on the misrepresent its interests on the misrepresent its interests on the misrepresent its interests on the misrepresent its interests on the misrepresent its interests on the misrepresent its interests on the misrepresent its interests on the ““““““““plant dispositionplant dispositionplant dispositionplant dispositionplant dispositionplant dispositionplant dispositionplant disposition”””””””” issue. issue. issue. issue. issue. issue. issue. issue. �� feign total insensitivity to the unemployment problem in Forks, feign total insensitivity to the unemployment problem in Forks, feign total insensitivity to the unemployment problem in Forks, feign total insensitivity to the unemployment problem in Forks, feign total insensitivity to the unemployment problem in Forks, feign total insensitivity to the unemployment problem in Forks, feign total insensitivity to the unemployment problem in Forks, feign total insensitivity to the unemployment problem in Forks, claiming it wants claiming it wants claiming it wants claiming it wants claiming it wants claiming it wants claiming it wants claiming it wants to look to look to look to look to look to look to look to look ““““““““toughtoughtoughtoughtoughtoughtoughtough”””””””” to the environmental community. to the environmental community. to the environmental community. to the environmental community. to the environmental community. to the environmental community. to the environmental community. to the environmental community.

�� argue that shutting down the plant permanently or at least for sargue that shutting down the plant permanently or at least for sargue that shutting down the plant permanently or at least for sargue that shutting down the plant permanently or at least for sargue that shutting down the plant permanently or at least for sargue that shutting down the plant permanently or at least for sargue that shutting down the plant permanently or at least for sargue that shutting down the plant permanently or at least for six months, would ix months, would ix months, would ix months, would ix months, would ix months, would ix months, would ix months, would shore up the administrationshore up the administrationshore up the administrationshore up the administrationshore up the administrationshore up the administrationshore up the administrationshore up the administration’’’’’’’’s reputation on the environment. s reputation on the environment. s reputation on the environment. s reputation on the environment. s reputation on the environment. s reputation on the environment. s reputation on the environment. s reputation on the environment.

�� demand concessions from Riverside on other issues in return for demand concessions from Riverside on other issues in return for demand concessions from Riverside on other issues in return for demand concessions from Riverside on other issues in return for demand concessions from Riverside on other issues in return for demand concessions from Riverside on other issues in return for demand concessions from Riverside on other issues in return for demand concessions from Riverside on other issues in return for accepting a plant accepting a plant accepting a plant accepting a plant accepting a plant accepting a plant accepting a plant accepting a plant closure of only two months: closure of only two months: closure of only two months: closure of only two months: closure of only two months: closure of only two months: closure of only two months: closure of only two months: it would then effectively be getting paid to accept an outcome iit would then effectively be getting paid to accept an outcome iit would then effectively be getting paid to accept an outcome iit would then effectively be getting paid to accept an outcome iit would then effectively be getting paid to accept an outcome iit would then effectively be getting paid to accept an outcome iit would then effectively be getting paid to accept an outcome iit would then effectively be getting paid to accept an outcome it prefers. t prefers. t prefers. t prefers. t prefers. t prefers. t prefers. t prefers.

�� Riverside might claim it does not want to be shut down, hoping tRiverside might claim it does not want to be shut down, hoping tRiverside might claim it does not want to be shut down, hoping tRiverside might claim it does not want to be shut down, hoping tRiverside might claim it does not want to be shut down, hoping tRiverside might claim it does not want to be shut down, hoping tRiverside might claim it does not want to be shut down, hoping tRiverside might claim it does not want to be shut down, hoping to o o o o o o o sacrifice two months for other concessions.sacrifice two months for other concessions.sacrifice two months for other concessions.sacrifice two months for other concessions.sacrifice two months for other concessions.sacrifice two months for other concessions.sacrifice two months for other concessions.sacrifice two months for other concessions.

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Creating vs. claimingCreating vs. claimingCompetitive moves to claim value tend to Competitive moves to claim value tend to Competitive moves to claim value tend to Competitive moves to claim value tend to impede the learning and ingenuity necessary to impede the learning and ingenuity necessary to impede the learning and ingenuity necessary to impede the learning and ingenuity necessary to create value. create value. create value. create value. � Need to share information to create joint gains� If one shares too much information about one’s preferences, one becomes vulnerable to claiming tactics.

Creating value is the integrative component in Creating value is the integrative component in Creating value is the integrative component in Creating value is the integrative component in negotiations: negotiations: negotiations: negotiations: � the parties strive for an efficient outcome. Claiming value is the distributive component: Claiming value is the distributive component: Claiming value is the distributive component: Claiming value is the distributive component: � the parties must distribute gains created.


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The negotiatorThe negotiator’’s dilemmas dilemma

(claim, (claim, create)create)

(create, (create, create)create)

(create, (create, claim)claim)

Value to Value to DECDEC

Value to RiversideValue to Riverside

(claim, (claim, claim)claim)



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Creating vs. claimingCreating vs. claiming

If the parties had complete information about If the parties had complete information about If the parties had complete information about If the parties had complete information about their counterparts, one would expect the their counterparts, one would expect the their counterparts, one would expect the their counterparts, one would expect the negotiators to reach an efficient agreement. negotiators to reach an efficient agreement. negotiators to reach an efficient agreement. negotiators to reach an efficient agreement. The complicating factor in the game is that The complicating factor in the game is that The complicating factor in the game is that The complicating factor in the game is that � the parties are bargaining under incomplete information about each other’s preferences.

�They must learn about their differences before they are able to exploit them.


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The negotiatorThe negotiator’’s dilemmas dilemma

Action of DECAction of DEC

CreateCreate ClaimClaim

Action of Action of RiversideRiverside

CreateCreate (Good, (Good, Good)Good)

(Worst, (Worst, GreatGreat

ClaimClaim (Great, (Great, Worst)Worst)

(Bad, Bad)(Bad, Bad)


Dec

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