Negotiation theory studies decision-making processes in groups, with applications in business. It assumes rationality, willingness to reach an agreement, and self-interest. Game theory views negotiation as a strategic competition, while integrative analysis and joint gains focus on minimizing losses and maximizing gains for all parties. Bad faith can hinder successful negotiations.
Negotiation theory is a field of psychological study that examines decision-making processes within groups. Several areas of human interactions are studied within this discipline and many of the resulting theories have applications in the corporate environment. In business situations where groups of individuals have to make decisions about each other, knowledge of these theories and their implications can greatly ease tensions.
Certain conditions must be met before the principles of negotiation theory can be applied. First, all parties involved in negotiations are assumed to be rational and of average intelligence. It is also assumed that these parties actually want to reach an agreement and will actively work towards this end. Finally, it is generally assumed that each individual is working to obtain the best possible result for his or her interests.
Many who study negotiation theory have viewed decision-making in a team setting as a strategic competition. This view sees each negotiator as an adversary and is referred to as game theory. One of the guiding tenants of game theory is that opponents must try to minimize their potential for loss while maximizing their potential for profit. Since everyone involved operates with the same mindset, the interactions can get quite intricate.
Knowledge of integrative analysis practices can facilitate negotiations by changing their structure. This study of negotiation theory investigates the effects of contact between negotiators at various points in the talks. Also try to break the process down into smaller, more manageable steps. By discovering potential tense periods in your decision-making process, adjustments can be made to avoid problems in future interviews.
Theories of negotiation analysis examine situations in which negotiators are influenced by factors other than self-interest. Often, third parties are involved in these types of negotiations to counteract the effect of such external influences. This branch of trading theory focuses on joint gains rather than individual gains. In short, it strives to minimize potential losses and maximize potential gains for all parties.
The fact is that, even when all the determining criteria appear to be met, a successful conclusion of the negotiations may not be possible. This most often occurs when a negotiator acts in bad faith. Bad faith in negotiations may be unwitting, but more often it is caused by a fundamentally unreasonable party wishing to appear cooperative. These individuals usually have emotional implications that preclude compromise.
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