<story><title>A better way to divide the pie</title><url>https://insights.som.yale.edu/insights/better-way-to-divide-the-pie</url></story><parent_chain><item><author>reggieband</author><text>One thing I learned in a class on negotiation was that many people look at negotiation as a one-time thing. Examples like buying a car happen for most buyers once every 5 to 10 years. It is also a negotiation that most often happens with a new sales agent &amp;#x2F; sales manager combo for every transaction.&lt;p&gt;However, a large number of negotiations in business happen with the same group of people over and over again. The example was a set of directors in a large org negotiating over budget. That kind of thing might happen every single business quarter between a stable set of peers.&lt;p&gt;Whenever I see strategies like these I consider those two cases since they have influence on how negotiations are done. In the car-sales case, there is an incentive to get the most out of the individual negotiation since you almost certainly will never see each other again. In the business case you are incentivized to prioritize the relationship with your peers over any individual negotiation.&lt;p&gt;So I don&amp;#x27;t agree with the simplistic conclusion in the article. It seems to only consider fairness within the context of a single transaction&amp;#x2F;negotiation. It does not consider what happens when this strategy is repeated between actors across multiple negotiations.</text></item></parent_chain><comment><author>PragmaticPulp</author><text>&amp;gt; Whenever I see strategies like these I consider those two cases since they have influence on how negotiations are done. In the car-sales case, there is an incentive to get the most out of the individual negotiation since you almost certainly will never see each other again. In the business case you are incentivized to prioritize the relationship with your peers over any individual negotiation.&lt;p&gt;Very insightful point.&lt;p&gt;The biggest salary negotiation mistake I see is when people assume the negotiation is of the first type (one-off, never see people again) instead of the latter type (part of an ongoing relationship).&lt;p&gt;If a company works hard to minimize someone&amp;#x27;s compensation expectations and convince them to accept below-market salary, they&amp;#x27;re going to pay for it later when the person wises up and leaves for something better. This scenario is well-known.&lt;p&gt;The less discussed scenario is when a candidate aggressively negotiates a very above-average compensation but subsequently performs in a below-average manner. This is one of the most common complaint scenarios in a private manager forum that I&amp;#x27;m part of: Managers who get wowed by people with excellent interviewing and self-selling skills who end up underperforming their lesser-paid peers later. It generates a lot of guilt and anxiety for managers when they realize they&amp;#x27;ve been duped into inverting the contribution:reward relationship in their compensation structure.&lt;p&gt;These people are the first to go in any downsizing, reorgs, and layoffs (and rightly so), but they&amp;#x27;re often great at talking their way into the next highly paid job almost immediately. This is one of the main reasons experienced managers will go extra deep on reference checks for people with job-hopper resumes.</text></comment>
<story><title>A better way to divide the pie</title><url>https://insights.som.yale.edu/insights/better-way-to-divide-the-pie</url></story><parent_chain><item><author>reggieband</author><text>One thing I learned in a class on negotiation was that many people look at negotiation as a one-time thing. Examples like buying a car happen for most buyers once every 5 to 10 years. It is also a negotiation that most often happens with a new sales agent &amp;#x2F; sales manager combo for every transaction.&lt;p&gt;However, a large number of negotiations in business happen with the same group of people over and over again. The example was a set of directors in a large org negotiating over budget. That kind of thing might happen every single business quarter between a stable set of peers.&lt;p&gt;Whenever I see strategies like these I consider those two cases since they have influence on how negotiations are done. In the car-sales case, there is an incentive to get the most out of the individual negotiation since you almost certainly will never see each other again. In the business case you are incentivized to prioritize the relationship with your peers over any individual negotiation.&lt;p&gt;So I don&amp;#x27;t agree with the simplistic conclusion in the article. It seems to only consider fairness within the context of a single transaction&amp;#x2F;negotiation. It does not consider what happens when this strategy is repeated between actors across multiple negotiations.</text></item></parent_chain><comment><author>jka</author><text>&amp;gt;  One thing I learned in a class on negotiation was that many people look at negotiation as a one-time thing. Examples like buying a car happen for most buyers once every 5 to 10 years. It is also a negotiation that most often happens with a new sales agent &amp;#x2F; sales manager combo for every transaction.&lt;p&gt;You may have been implying this already, but just to reinforce the message: it&amp;#x27;s an asymmetric event frequency.&lt;p&gt;For the buyer, it occurs once every few years.  For the seller, it&amp;#x27;s occurring on a weekly or perhaps daily basis.&lt;p&gt;That means that the seller is fairly likely to know most of the common weaknesses and opportunities for buyers, and the ways in which those buyers communicate (or fail to communicate) them.  Sellers can choose to do what they want with that information advantage.&lt;p&gt;To me the question is a broader one: why are Alice and Bob accepting to enter into some byzantine challenge where they have to co-operate in order to receive a larger amount of pizza?  And why is there an entire book for sale on the topic, when at first-glance it seems to closely (~80%) resemble what can be defined as the prisoners&amp;#x27; dilemma within a paragraph?&lt;p&gt;I think Alice and Bob should publish the ridiculous situation they&amp;#x27;ve been faced with at the pizza restaurant and find somewhere else to go to eat, and I don&amp;#x27;t think they require a book to teach them that.</text></comment>