OBJETIVOS DIDÁCTICOS: Matemáticas:

No. If you reveal your reservation price, be prepared for the other party to offer you your reservation price—but not more. Some negotiators reveal their reservation point to demon- strate that they are bargaining in good faith and trust the other party. These negotiators rely on the counterparty’s goodwill and trust their opponent not to take advantage of this informa- tion. There are more effective ways to build trust. For example, you could show a genuine concern for the needs and interests of the other party. The purpose of negotiation is to maxi- mize your surplus, so why create a conflict of interest by “trusting” the other party with your reservation point?

The most valuable piece of information you can have about the counterparty is his or her res- ervation point. This knowledge allows you to make the counterparty an offer that barely exceeds his or her reservation point and to claim the entire bargaining surplus for yourself. However, you should assume the counterparty is as smart as you are and therefore not likely to reveal his or her reservation point.

Should I Lie About My Reservation Point?

If negotiators do well for themselves by not revealing their reservation point, perhaps they might do even better by lying, misrepresenting, or exaggerating their reservation point. However, lying is not a good idea for three important reasons.

First, lying is unethical. Lewicki and Stark identified five types of behavior that some consider to be unethical in negotiations, including traditional competitive bargaining (e.g., exaggerating an initial offer or demand); attacking an opponent’s network (e.g., attempting to get your opponent fired or threatening to make him or her look foolish); misrepresentation and lying (e.g., denying the validity of information your opponent has that weakens your ne- gotiating position even though the information is valid); misuse of information (e.g., inappro- priate information gathering), and false promises (e.g., offering to make future concessions

that you know you won’t follow through on, and guaranteeing your constituency will uphold the settlement, even though you know they won’t). 43

Our examination of lying revealed that even though 40% of people believed that others in their network lied over a 10-week period, these same people admitted lying only about 22% of the time. Such egocentric perceptions often lead to lawsuits. After Bank of America reached a $150-million settlement with the Securities and Exchange Commission, they were accused of lying to shareholders in 2008 to speed the purchase of Merrill Lynch. 44

In other cases, negotiators are quick to assume that others have deceived them. For exam- ple, when John Mara, owner of the National Football League’s New York Giants, said that he was resigned to an NFL season with a salary cap in place—a full month and a half before the deadline the two sides had set for a completion of the deal—the NFL players union accused NFL own- ers of negotiating in bad faith. 45 And in another case, negotiations to prevent 167 Newark, N.J. police officers from being laid off broke down when conflict arose between the local Fraternal Order of Police and two members of its executive board over whether $9.5 million in temporary cuts to save the positions had actually been agreed upon. 46 In each of these examples, negotiators most likely held self-serving views.

Another example from the world of sports: In 2009, the Pittsburgh Pirates baseball club played hardball with two of their starting players, and the team made take-it-or-leave-it offers to Freddy Sanchez ($10 million deal for the following season) and Jack Wilson (a two-year, $8 million contract). However, both players rejected the “final” offers. The Pirates responded by immediately pulling the offers and trading both players to other teams within the week. Paul Cobbe, Sanchez’s agent at the time commented, “The scenario is not set up for a counteroffer. My understanding is, they gave us what they thought is a very strong offer, and there is no room for any significant change.” 47

If you lie about your alternatives and the other party calls your bluff, how do you get back to the table without losing face? Indeed, the most common lie in negotiation is “This is my final offer.” It is embarrassing to continue negotiating after making such a statement. Do not back yourself into a corner.

Second, lying hurts your reputation. People in the business community develop reputations that quickly spread via electronic mail, telephone, and word of mouth. People who have a reputation as tough are treated more competitively by others, and have more difficulty claiming resources. “Deceptive cheap talk” that is discovered by the other party negatively impacts a negotiator’s outcomes. 48 People who discover that they have been deceived may seek retribution, even though doing so may be costly to themselves, much like the opening example of the Facebook dispute. Experienced negotiators are able to extract more of the pie for themselves, but not when they have a reputation for being “distributive.” 49 Misrepresenting your reservation price is a poor substitute for preparation and developing strategy.

43 _{Lewicki, R. J., & Stark, N. (1996). What’s ethically appropriate in negotiations: An empirical examination of bargaining}

tactics. Social Justice Research, 9 (1), 69–95.

44 _{Popper, N. (2010, February 23). Bank of America’s $150-million settlement with SEC gets grudging approval. Los}

Angeles Times . Latimes.com

45 _{Battista, J. (2010, January 21). Union responds to Mara’s comments. New York Times , p. B27.}

46 _{Giambusso, D. & Queally, J. (2010, November 24). Negotiations break down over 167 police layoffs. Newark Star-}

Ledger . Nj.com

47 _{Biertempfel, R. (2009, July 20). Pirates pull offers to SS Wilson, 2B Sanchez, Pittsburgh Tribune Reivew. Pittsburghlive.com} 48 _{Croson, Boles, & Murnighan, “Cheap talk in bargaining experiments.”}

49 _{Tinsley, C. H., O’Connor, K. M., & Sullivan, B. A. (2002). Tough guys finish last: The perils of a distributive reputa-}

Should I Try to Manipulate the Counterparty’s Reservation Point?

No. Assuming that the counterparty is reasonably intelligent, motivated, and informed (like you), he or she is not likely to fall prey to this transparent negotiation ploy. Such attempts may actually backfire, entrenching the counterparty more steadfastly in his or her position. Furthermore, you want to discourage the other negotiator from using such influence tactics.

Some negotiators are inclined to use scare tactics, such as “If you do not sell your house to us, there will not be another buyer” or “You’ll regret not buying this company from me in 10 years when I am a billionaire.” In 2009, Microsoft Corp. Chief Executive Officer Steven Ballmer threat- ened that he would move some employees offshore if President Barack Obama enacted higher taxes on U.S. companies’ foreign profits. Obama proposed outlawing or restricting nearly $190 billion in tax breaks over a decade. Following Ballmer’s threat, the “Creating American Jobs and Ending Offshoring Act” bill died in the United States Senate in late 2010. 50 However, scare tactics may not always be effective.

Should I Make a “Final Offer” or Commit to a Position?

The phrase “This is my final offer” has much more impact when said later in a negotiation. Making an irrevocable commitment, such as a “final offer,” should be done only when you really mean it and are prepared to walk away from the bargaining table. Of course, you should only walk away from the bargaining table if your BATNA is more attractive than the counterparty’s offer. Intimidating the other party is risky. It is difficult to make “binding” commitments that are credible. Consider the threat that Newfoundland and Labrador Premier Danny Williams made to Exxon Mobil. Williams was negotiating a multibillion-dollar Hebron offshore oil deal. Williams based his position on the importance of an adequate deal to Newfoundlanders, commit- ted to it and challenged oil companies, “Well, fine. Go somewhere else. We’ll still have our oil.” Eventually, Exxon Mobil and Chevron gave in and agreed to Williams’s terms. 51 In this situation, the threat worked. However, in other situations threats don’t work, such as in the case of Yelp. In 2009, Google and Yahoo! each tried to purchase Yelp, the popular review site. Google offered Yelp $500 million, but Yahoo! came in with a financially more attractive offer of nearly $750 million. Yelp negotiators told Google they had received a better offer from Yahoo!, but Google held steady and did not top the Yahoo! bid. However, Yelp had no intention of working with Yahoo! as executives deemed the company a poor fit. Therefore Yelp came away with no deal, and no money. The underlying message is: do not reject an offer if you are not prepared to walk away. In this case, Yelp was not prepared to walk away. 52