2020-2 Applied Negotiation Seminar.fex

theory
===

preferences:
	rational prefences:
		totality (a < b ^ b < a)
		transitivity (a < b & b < c => a < c)
	intransitive preferences:
		can be used as a money pump
		"give me 1$ so I accept a > b"
		"give me 1$ so I accept b > c"
		"give me 1$ so I accept c > a"
		...
	condorcet paradox:
		if indivial preferences are transitive
		collective preference might not be transitiv
	arrows impossiblity theorem:
		when voters have three alternatives
		no voting system can convert into collective preference
	agenda setting:
		discussion set depending on first introduced themes
		vote option1 vs other options
	three-vote strategies:
		sincere voting (vote always for most preferred solution)
		strategic voting (vote such in the end win)
	alternatives:
		look for alternative solutions
		but probably have to reevaluate mandate

cognitive bias:
	used in decision making instead of strict totality & transitivity
	lot of different biases exist
	anchoring effect:
		irrelevant information used to estimate unknown value
		while not being aware of it
		bc depending on value, thinking of different aspects
		like "cars & 100k -> ferrari" vs "cars & 30k -> renault"
	realistic start value:
		creates environment in which bargaining unfolds
		if honest bargaining, leaks your zone of agreement
		might want to avoid making the first move
	random start value:
		when completely unclear in which area offer will be
		can get other party to cling to this number
		bc under (wrong) assumption other side has reasoning
		defend self by being well prepared, wiping number from mind
		like initial price offer as reference
		like higher price estimated for owned goods than reasonable
	framing:
		if formulated as loss, prefer more risky option
		to avoid loss at any cost, risk-seeking
		if formulated as gain, prefer more save option
		to guarantee payoff, risk-averse

automated negotiation:
	unknown utility function of other parties
	too many combinations to simply calculate all
	but potential to simulate coarse grained
	then with additional information, improve models
	libratus (pocker AI):
		too many states to calculate all possibilities
		needs to adapt to individual player's style
		before the game:
			pre-calculate NE of simplified version of game
			like permutation of suits, fewer denominations
		during the game:
			calculation of endgame strategies "on the go"
			exactly postcompute probabilities after choices of players 
		overnight:
			adapt strategies to actions of players

fairness:
	distribute continuous good over members
	distributions:
		total equality (each gets same absolute share)
		mainmonides rules (each same share, but max investment)
		equal losses (each suffers same absolute loss)
		proportional to claim
		proportional to utility
		lottery proportional to claim
	sharpley value:
		each party takes until claim fulfilled or empty
		try out all combinations
		each party gets mean over all combinations
	CO2 application:
		equity (each state gets same amount)
		grandfathering (each state gets same share as now)
		capability (each state gets inv. proportional to GDP)

rationality:
	complex, many different forms
	the neoclassical orthodoxy
	on nature of rationality
	on economic theory
	neoclassical economy:
		distribution of goods in market through supply/demand
		mediation by maximizing utility by income contrained individuals
		homo economicus (rational, defined preferences, maximises own benefit)
	rationality:
		substantive (what decisions are taken)
		procedural (how decisions are tkane)
	decisions:
		some preferences are revealed through past decisions
		some seemigly irrelevant alternatives may has effects (like moral)
	probability interpretations:
		physical probability (like dice rolling)
		evidential probability (p assigned to hypothesis & test)
	small worlds:
		the limited environment in which games of game theory work 
		but enough if all players successfully predict other strategies

prospect theory:
	certainity effect (risk averse sure gains, risk seeking unsure gains)
	reflection effect (risk seeking sure losses, risk averse unsure losses)
	isolation effect (shared components between options ignored)
	editing phase:
		prospects are reformulated and reorganised
		coding (evaluated relative to reference point)
		combinations (probability of equals are combined)
		segregation (separate risky and riskness components)
		cancellation (specifics evaluated, isolation effect)
		simplification (simplify probabilities / options themselves)
		dominance detection (high probability options detected)
	evaluation phase:
		value of prospect = weight of probabiliy * subjective value of x
		overall highest valued prospects is selected
	probability weighting function pi(p):
		higher p perceived lower than real
		overweighting low probabilies
		subcertainity (two certain outcomes together are still perceived as uncertain)
		subproportionality (smaller p perceived as closer together than high)
	value function v(x):
		value perceived in terms of changes it introduces
		hence deviation of reference point perceived
		concave for gains (smaller values overproportionate)
		convex for loss (stronger slope than gains)
	interpretation:
		for value function, reference point is very relevant
		like framing used in marketing, sales, insurance, ...
		coding of options might changes perceived value
		like reformulating loss to gain, small to high probability, ...
		
negotiation science:
	at the table:
		to negotiate or not:
			continue talking if constructive effects / sideeffects
			some external changes might make agreements more pressing
		dual effects of alternatives:
			more alternatives lead to more creative solutions
			but many options expensive to develop thouroughly
		information exchange:
			might prefer to work with information available
			as more info could lead also to new incompatabilities
		on flexible bargaining:
			quick concessions could lead to suboptimal agreements
			even for both parties (and even for if mutually agreed upon)
		on emotional expressions:
			usually rational expressions preferable
			but anger (targeted at tasks) could lead to better outcomes
			first stance at first, then later concessions
			too many compliments may lead to manipulation fears
	around the table:
		representative:
			inform masters but keep them away from the table
			as less concessions can be reached
			more involved => easier to get to agree to result afterwards
			but less involved => easier to actually get a result
		on risk perception:
			publicity surrounding (pressure to finish vs no concessions)
			time pressure (increase risk perception)
		on the medium:
			over internet more effective if task specific
			but empathy of negotiatiors lower
			mediation equally more effective but not perceived positive
		configuration of furniture:
			archive more agreements when talking without tables
			(but not observed in the real world)
		third party inputs:
			view from outside might help develop options
			but bias must be avoided
	away from the table:
		context:
			matters at lot
			broader conflict affects process / durability of agreement
		mutual pain:
			might be important to get parties to negotiate
			but might only lead to "cease-fire" rather than long-term solution
		power imbalance:
			low-powers have been found to threaten more
			but high powers can actually escalate and force settlement
		equality:
			long-lasting agreements generally follow adhere to equality

turkey vs armenia case study
===

mediation partner:
	helps to solve conflicts two sides can not
	powerful states with economic & other powers
	less powerful states that supply constructive proposals

switzerland as mediator:
	not in european union, not own party
	too small to hurt / influence
	credible statement that switzerland has no hidden agenda
	one of the external politics goal is peace-keeping
	money invested well

involved countries:
	azermbaijan AZ (mulimic country, turkish language)
	armenia AR (christian country, different language/culture)
	turkey TK (muslim country, allay AZ)
	russia (allay AR, controls regions)

setting of conflict:
	turkey vs armenia:
		closed border to turkey, no diplomatic relations
		armenian people likely not interested on solution
		azerbaijan no interest to have turkey make peace
	past problems:
		disagreement over end of ottoman emipre in april 1915
		armenian claimed genocide of population
		deeply rooted in national culture
		turkey disagrees, percepts tragic events during war
	geopolitical situation:
		turkey member of NATO
		used to be EU candidate, wanted to solve neighbourhood problems
		but not realistic candidate at the moment
		armenia ex russian part
	nagomo-karabach:
		part of azerbaijan, but armenian language/culture
		armenia tried to overtake region
		but azerbaijan defended, cease fire followed
		but now (summer 2020) conflict escalated again
	unsatisfactory situation:
		turkey (faced with genocide accusation, neigbourhood problems)
		armenia (poor, closed border, conflict with AZ)

2007 negotiation/mediation:
	asked for by one party to mediate between turkey / armenia
	switzerland started to be facilitator / mediator
	bilaterial meetings (getting to know parties, problems, interests)
	confidential trilateral meetings:
		bring "watchdogs" with them; they check statments of officials
		before meeting, ask officials without oversign how to facilitate
		good start; switzerland does not impose view
		very long meeting, some shouting
		in the end asked "how to continue"; checked at home
		confidential talks continued four times
	further meetings:
		further talks, at convenient locations
		like WEF, berlin, ...
		2. april 09 initialling (start of talks)
		6. april 09 approval of USA
	negotiations:
		bad history, bad feelings / shouting but contructive spirits
		what points to address? how to frame? which formality?
		armenia wants border open (turkey used it as leverage)
		turks wants working group of international, independent historians
	negotiation result:
		agreed to border opening & establishing of working group
		armenian demanded first move (very well hidden in signed document)
		signed in aula of university zurich
		but not ratified by turkey (likely bc azerbaijan interviened)

business negotiations talk
===

trends:
	degree of freedom reduced due to additional rules
	like WTO (world trade organisation)
	like GPA (government procurement agreement)
	like technical rules (interopability, standards)
	like safety, disability, discrimination rules
	consequences:
		increasingly formal negotiations with public authorities
		tender process detached from relations
		legal issues increasingly important
		influencing tender decisions harder
		instead influence at creation of tender

negotiation:
	culture:
		goal (contract vs relationship)
		attitude (consensus vs confrontation)
		style (formal vs informal)
		communication (direct vs indirect)
		like USA vs eastern countries
		time and punctionality (high vs low sensitivity)
		emotions (high vs low)
		agreement form (general vs specific)
		building of agreement (bottom-up vs top-down)
		team (leader vs team consensus)
		risk taking (high vs low sensitivity)
	choosing a leader/senior:
		attitude (collaboration vs confrontation)
		form (general vs specific)
		building (top-down vs bottom up)
		internal leader might be different
	team:
		everyone knows their position / influence
		be prepared to have escalation levels
		(hence avoid senior being always present)	
	the others:
		firm (areas of business, strategy)
		people (background, position in firm /  negotiation team)
		intangibles (flexibility, risk-averseness, decision-making)
		governmental / private sector
	approach:
		get to know other side, including personally
		prefer formal at start, less formal as talks go on
		have escalation levels ready (senior, ...)
		dont trust too much (go by contract)

conflicts:	
	acting:
		intelligent (but too smart could backfire) 
		dumb (but too naive unbelievable)
	defending:
		only contract counts in the end
		defend globally vs defend each critique by its own

free trade negotiations (FTA) talk
===

why FTAs useful:
	trade to exotic places:
		trading to far away places should not be difficult
		artificial factors (border) make no economic sense
		like licensing restrictions, discrimination
	why trade is useful:
		lack of resorces (energy, goods, ...)
		highly specialised market overproduces (watches)
		niche products (specialized but only very few customers)
		small domestic market (makes specialization harder)
	target:
		FTA should remove artificial factors

swiss FTA network:
	contries:
		with basically all europe
		some america (mexico, canada; but not US)
		some asia (japan, china, ...)
		40 countries in total
	agents:
		bilateral with japan, china, eu, EFTA
		EFTA states agreed upon the others
		under negotiation with malaysia, vietnam, ... (6 more)

organisations:
	WHO:
		mostly stuck to find new regulations
		unoperational by US actions
		still valuable, but more and more in doubt

negotiation objectives:
	reliable & enforceable rules:
		to complement (beyond) WTO regulations
		to supplement EU relations
	improvable maret access:
		dismantle artificial obstables (discriminatory)
		eliminating / lowering custom duties
		reducing discriminatory regulations
		protection of intellectual property rights (IPR)
	compatability with sustainability:
		to proect environment, labour standards
	formalised cooperation:
		with custom offices, market/ competition authorities 
		like connections to move container if needed, ...

FTA with china:
	history:
		1950 CH recognises PRC (founded in 1949)
		since 1978 opening up to more trade
		1980 first joint venture in china with swiss company
		2002 china joins WTO
	negotiation process:
		2008 - 2010 exploration (visits, workshops, feasibility study)
		minister for commerce pro, but many others needed to be convinced
		organized workshops with industry representations from both sides
		first switzerland-only created feasibility study & sent to china
		included all wishes but without deterrence
		china never responded, but helped to align incentives internally
		2013 after 9 rounds of negotiations FTA signed
		2014 ratification
	coverage & content:
		tarif reduction altough agricultural sector stays protected
		with long introduction period, 95% reduction
		flexible rules of origin (like coffee; OK if beans imported raw)
		intellectual property protection as china more specialiced
		international labour provision similar as newseeland

how negotiate successfully:
	know your file (examples, comparisons, statistics, ...)
	relationship of trust (consistent argumentation, credibility)
	understand other side (political / legal system, culture)
	preparation (find preceding cases, exploratory process)
	anticitate reactions (conceive future steps)
	overcome resistance (ask questions, be patient/creative)
	keep momentum (avoid untimeply concessions)
	two-front affair (convince own lord & masters too)
	"nothing is agreed until everything is agreed"

how to anticipate reactions:
	intuition and experience
	learn reaction
	informal talks help to understand how culture / person works

personal experience talk
===

general recommendations:
	do not fight the rules of the game
	eg structure, mandate, people, ...
	analysis:
		before asking for, accepting or refusing negotiation
		perform analysis to avoid sending wrong signal
	confidence:
		be polite, create confidence, do not play dirty
		but do not trust; play tit for tat strategy
	coherence:
		be consistent with actions & scientific background
		argument consistently unless new objective facts appear
	careful:
		do not disclose red lines (resistance points, reservation prices)
		if disclosed for tactical reasons, might lose credibility later
		do not burn bridges (as position might needs to be reversed)
	demands / counter demands:
		assure they are well founded
		include realistic assessment of capabilities of other side
		does not need to coincide with offers made from other side
		"do A?", "yes, but I think we should do B" (so A + B are done)
		cross-concession bear much value (if own cost < other value)
	negotiation engineering:
		facilitate negotiation by formulazing as mathematical problem
		use models to find good alternatives
	link dossiers:
		creates more possiblities for cross-concessions are created
		archive value of controversial > cost of less controversials
	proposals:
		if strong interest for negotiated conclusion & in weaker position
		create proposals to solve problems of other side too
		upon rejection for comprehensible reasons keep improving
	phases:
		fix the immediate result (orally, written)
		declare non-intention to backpedal and expect same of other side
		but also declare "nothing is agreed until everything is agreed"
		allows to keep overview of longer negotiations 
		start negotiating with small & difficult, or large & easy
		to create optimal incentive to solve remaining issues in the end

round of negotiation:
	3 questions:
		what do you want to archive
		how do you want to proceed
		which follow-up
	organization:
		team (who speaks?)
		where (appropriate setting?)
		style of negotiation?
		protocol & communication to the outside?
	in short:
		be well prepared
		generate options
		stay goal oriented
		argue coherently
		be positive
		be polite with sense of humour