The Mind and Heart of the Negotiator, 5e (Thompson)
Chapter 2: Preparation: What to Do Before Negotiation
1) The fixed-pie perception is seldom erroneous.
Answer: FALSE
Explanation: The fixed-pie perception is almost always wrong. Fixed-pie perceptions very often
lead to either a battle of wills, a compromise or a combination of attack and capitulation.
Choosing between the three can rarely be an effective approach to negotiation.
Page Ref: 13
Difficulty: Easy
Classification: Conceptual
2) The winner's curse is attributed to an underaspiring negotiator.
Answer: TRUE
Explanation: As the underaspiring negotiator sets the target or aspiration too low, he or she
opens the negotiation by requesting for something that is granted immediately by the other
negotiating party. This is not regarded prudent as it eventually results in a regrettable state of
affairs, which is known as winner's curse.
Page Ref: 14
Difficulty: Easy
Classification: Conceptual
3) Though a negotiation blunder, the winner's curse can be remedied in many cases.
Answer: FALSE
Explanation: The winner's curse undoubtedly is a great negotiation blunder. Unfortunately, it is
nearly impossible to remedy. In a series of experiments, negotiators were given different
parameters, full feedback, and several counterexamples in an attempt to counteract the winner's
curse, but none was effective in eliminating the faulty behavior.
Page Ref: 14
Difficulty: Easy
Classification: Conceptual
4) Any set of terms superior to the negotiator's BATNA is not desirable.
Answer: FALSE
Explanation: It is crucial for the negotiator to determine the best alternative to a negotiated
agreement (known as BATNA). BATNA is the key driving force behind a successful negotiator
who ought to accept any set of terms superior to their BATNA and reject terms that prove to be
inferior to their BATNA.
Page Ref: 15
Difficulty: Easy
Classification: Conceptual
1
5) In a negotiation, the person who stands to gain the most by changing the other faction's mind
should be the most persuasive.
Answer: FALSE
Explanation: In a negotiation, the person who stands to gain the most by changing the other
faction's mind should be the least persuasive. That is why it is important to develop a BATNA
before commencing negotiations and to stick to it during the course of negotiations.
Page Ref: 16
Difficulty: Easy
Classification: Conceptual
6) A focal point is the pivot for successful negotiations.
Answer: FALSE
Explanation: Negotiators who make the mistake of not developing a reservation point before
they negotiate
often focus on an arbitrary value that masquerades as a reservation price. Such arbitrary points
are focal points which appear to be valid but have no basis in fact.
Page Ref: 19
Difficulty: Easy
Classification: Conceptual
7) The reference point, focal point, and reservation point all mean the same.
Answer: FALSE
Explanation: The reference point, focal point, and reservation point are discrete terms that have
very different meanings. Reference point defines what a person considers to be a gain or a loss.
Instead of weighing a course of action by its impact on total wealth, people generally "frame"
outcomes as either "gains" or "losses" relative to some arbitrary reference point. Focal point is an
arbitrary value that becomes a misplaced priority with the negotiator. This usually happens when
the negotiator makes the mistake of not developing a reservation point before negotiating. The
reservation point alludes to a quantification of a negotiator's BATNA with respect to other
alternatives.
Page Ref: 21
Difficulty: Easy
Classification: Conceptual
8) Most people are risk-seeking when it comes to losses, and risk-averse when it comes to gains.
Answer: TRUE
Explanation: The statement is true as it is a fundamental human psychology that people exhibit
risk-seeking behavior in the face of loss. Conversely, they become risk-averse when it comes to
gains.
Page Ref: 21
Difficulty: Easy
Classification: Conceptual
2
9) Many people's BATNAs are uncertain because potential alternatives arrive sequentially.
Answer: FALSE
Explanation: Many people's BATNAs are uncertain because potential alternatives arrive
sequentially. Rejecting an offer can mean that there may not be any forthcoming offer.
Page Ref: 22
Difficulty: Easy
Classification: Conceptual
10) The longer the temporal distance between the act of negotiation and the consequences of
negotiated agreements, the better the agreement.
Answer: TRUE
Explanation: The longer the temporal distance between the act of negotiation and the
consequences of negotiated agreements, the better the agreement. The reason is that parties are
less contentious because the realization is in the distance.
Page Ref: 34
Difficulty: Easy
Classification: Conceptual
11) As a mixed-motive enterprise, negotiation is a two-pronged process that involves both
________ and ________.
A) cooperation; coercion
B) cooperation; gut feeling
C) competition; coercion
D) cooperation; competition
Answer: D
Explanation: D) As a mixed-motive enterprise, negotiation involves both cooperation and
competition.
Page Ref: 13
Difficulty: Easy
Classification: Conceptual
12) What is the key to successful negotiation?
A) motivation
B) compromise
C) preparation
D) capitulation
Answer: C
Explanation: C) Preparation is the key to successful negotiation. The work that you do prior to
negotiation pays off substantially when you finally find yourself seated at the table. The 80–20
rule applies to negotiation: About 80% of your effort should go toward preparation; 20% should
be the actual work involved in the negotiation.
Page Ref: 13
Difficulty: Easy
Classification: Conceptual
3
13) Sam and Chelsea meet to negotiate a business arrangement between their companies.
Chelsea has done a lot of research beforehand and is very well prepared for the meeting when
compared to Sam. Sam believes that better solutions are arrived at through intuition, spontaneity,
and working hard at the negotiation table. Whom do you think will be more successful at
negotiating?
A) Neither because successful negotiation requires hard bargaining and very little preparation,
intuition or spontaneity.
B) Chelsea, because the 80–20 rule applies to negotiation: About 80% of your effort should go
toward preparation; 20% should be the actual work involved in the negotiation.
C) Sam, because the 80–20 rule applies to negotiation: About 20% of your effort should go
toward preparation; 80% should be the actual work involved in the negotiation.
D) While preparation is important, whoever has the "killer instinct " will be more successful at
negotiating, because the "killer instinct" plays a much bigger role in negotiation than preparation.
Answer: B
Explanation: B) Preparation is the key to successful negotiation. The work that you do prior to
negotiation pays off substantially when you finally find yourself seated at the table. The 80–20
rule applies to negotiation: About 80% of your effort should go toward preparation; 20% should
be the actual work involved in the negotiation.
Page Ref: 13
AACSB: Analytic skills
Difficulty: Easy
Classification: Application
14) A positional negotiator is also known as a(n) ________.
A) underaspiring negotiator
B) visioning negotiator
C) overaspiring negotiator
D) grass-is-greener negotiator
Answer: C
Explanation: C) The overaspiring negotiator is also known as the positional negotiator. Such a
negotiator typically refuses to budge from the position taken, setting a high target point while
refusing to entertain any concessions.
Page Ref: 14
Difficulty: Easy
Classification: Conceptual
4
15) A positional negotiator is one who ________.
A) is under pressure to clinch the offer and consequently accepts the offer despite better
alternatives
B) sets a low target point and is immediately granted the offer
C) selectively seeks information that confirms what he or she believes to be true
D) sets the target point too high and refuses to make any concessions
Answer: D
Explanation: D) The overaspiring or positional negotiator is one who sets the target point too
high and refuses to make any concessions.
Page Ref: 14
Difficulty: Easy
Classification: Conceptual
16) Andrea, the CEO of a medium scale manufacturing company, is negotiating with the
representatives of the employee's union. She accepts the demands of the union immediately to
avoid a strike though the demands inflict a financial burden on the company. Andrea has acted as
a(n) ________ negotiator in this negotiation.
A) underaspiring
B) overaspiring
C) positional
D) grass-is-greener
Answer: A
Explanation: A) The underaspiring negotiator sets his or her target or aspirations too low. The
underaspiring negotiator opens the negotiation by requesting something that is immediately
granted, resulting in a regrettable state of affairs known as the winner's curse.
Page Ref: 14
AACSB: Analytic skills
Difficulty: Moderate
Classification: Application
17) Julia visits a furniture manufacturer to get a deal for furnishing her house. Julia thinks the
prices quoted by him are very high and asks for a better deal. The shopkeeper is firm on the
prices and refuses to give her any discount. The shopkeeper is a(n) ________ negotiator.
A) positional
B) underaspiring
C) triumphant
D) grass-is-greener
Answer: A
Explanation: A) The overaspiring negotiator or positional negotiator is too "tough"; he or she
sets the target point too high and refuses to make any concessions.
Page Ref: 14
AACSB: Analytic skills
Difficulty: Moderate
Classification: Application
5
18) Positional negotiators very often tend to be ________.
A) cynical
B) egocentric
C) accommodating
D) intuitive
Answer: B
Explanation: B) Positional negotiation reinforces egocentrism as the negotiators quickly develop
ownership of the arguments and positions they make. These positions become part of people's
own self-concept, making any opposition an ego threat. Ego-defensive behavior can trigger
competitive communication, retaliatory behavior, negative perceptions of the counterparty, and
attitude polarization.
Page Ref: 15
Difficulty: Easy
Classification: Conceptual
19) At the negotiating table, Leo and David take opposite viewpoints of the matter in discussion.
Leo takes offence at David's comments because he views any opposition as an ego threat. It is
safe to assume that Leo is a(n) ________ negotiator.
A) cynical
B) accommodating
C) positional
D) intuitive
Answer: C
Explanation: C) The other problem with positional bargaining, is that it reinforces egocentrism.
Indeed, people quickly develop ownership of the arguments and positions they make, and these
positions become part of people's self-concept, making any opposition an ego threat.
Page Ref: 15
AACSB: Analytic skills
Difficulty: Easy
Classification: Application
20) The ________ negotiator wants what the other party does not want to give–and does not
want what the other party is willing to offer.
A) overaspiring
B) grass-is-greener
C) egocentric
D) underaspiring
Answer: B
Explanation: B) The grass-is-greener negotiator does not know what he or she really wants—
only that he or she wants what the other party does not want to give—and does not want what the
other party is willing to offer.
Page Ref: 15
Difficulty: Easy
Classification: Conceptual
6
21) Reactive devaluation negotiation behavior is exhibited by negotiators who ________.
A) know what the target is and are willing to make a few minor compromises
B) do not know what the target is and make major compromises
C) know what the target is but end up paying far more than deemed necessary
D) do not know what the target is but do not want what is being offered
Answer: D
Explanation: D) Reactive devaluation behavior is said to occur when a negotiator does not know
what he or she really wants but only wants what the other party does not want to give. The
negotiator, however, does not want what the other party is willing to offer. Opposition bias is a
primary cause of reactive devaluation behavior.
Page Ref: 15
Difficulty: Easy
Classification: Conceptual
22) What does BATNA mean?
A) Best Alternative To Negate Aggression
B) Bargaining Assets To Negotiate an Agreement
C) Best Alternative To a Negotiated Agreement
D) Begin At The Negotiated Agreement
Answer: C
Explanation: C) The acronym BATNA stands for the Best Alternative To a Negotiated
Agreement. A negotiator needs to determine his or her BATNA before getting into the process so
that only those terms superior to their BATNA are accepted and vice-versa.
Page Ref: 15
Difficulty: Easy
Classification: Conceptual
23) Robert was the purchase agent of an office furniture manufacturer. While dealing with one of
the vendors, he successfully negotiated the prices for items A and B. However, the vendor was
firm on the price that he quoted for item C. Robert unsuccessfully insisted on a getting a discount
for C also and eventually declined all the purchase terms offered by the vendor. Which of the
following, if true, would contradict the reflection that Robert was engaged in a reactive
devaluation?
A) The price quoted for C was much higher than the market price.
B) The vendor had not established a strong relationship with the manufacturer.
C) The vendor was directly procuring the item C.
D) The vendor had offered a lower price during an earlier purchase.
Answer: A
Explanation: A) Reactive devaluation occurs when a party remains adamant on getting what
other party is not willing to offer. Here, Robert was adamant on the price of C. However, if the
quoted price was much higher than the market price, Robert's action can be justified.
Page Ref: 15
AACSB: Reflective thinking skills
Difficulty: Difficult
Classification: Critical Thinking
7
24) Which of the following is a characteristic of BATNA?
A) inflexible
B) unrealistically optimistic
C) spontaneous
D) time sensitive
Answer: D
Explanation: D) BATNA is not something that a negotiator wishes for. On the contrary, it is
determined by objective reality. It is also time sensitive, i.e., at any point in time, the BATNA
can either improve or deteriorate as a result of market forces, environmental and situational
conditions. Hence, it is of utmost essence for negotiators to constantly adapt and improve it.
Page Ref: 15
Difficulty: Easy
Classification: Conceptual
25) Kim is undergoing training to improve her negotiating skills and her BATNA. Kim is
dynamic and hardworking; she is also prone to being unrealistically optimistic about most
negotiations. What
conclusion about BATNA can we draw from Kim's example?
A) Negotiators should constantly attempt to improve their BATNAs.
B) Your BATNA should not change as a result of the other party's persuasion techniques.
C) A BATNA is not something that a negotiator wishes for; rather, it is determined by objective
reality.
D) Many negotiators are reluctant to recognize their BATNAs and confuse them with their
aspiration point.
Answer: C
Explanation: C) A BATNA is not something that a negotiator wishes for; rather, it is determined
by objective reality. A common problem is that negotiators are reluctant to acknowledge their
actual BATNAs, and they fall prey to wishful thinking and unrealistic optimism.
Page Ref: 15
AACSB: Analytic skills
Difficulty: Easy
Classification: Application
8
26) What strategy do Bazerman and Neale recommend to improve BATNA?
A) One must have one's mind set on the target.
B) One must, if necessary, abandon the target completely.
C) One must be ready with alternative and viable options.
D) One must demand more than the determined option.
Answer: C
Explanation: C) Bazerman and Neale outline a strategy for improving BATNAs in negotiations
with the help of the "falling in love" rule, which means not falling in love with one house, one
job, or one set of circumstances, but instead, identifying two or three options of interest.
The negotiator will then have a readily available set of alternatives that represent viable options
should the current alternative come at too high a price or be eliminated.
Page Ref: 16
Difficulty: Easy
Classification: Conceptual
27) A reservation point is a ________ of a negotiator's BATNA with respect to other
alternatives.
A) modification
B) qualification
C) validation
D) quantification
Answer: D
Explanation: D) The reservation point is a quantification of a negotiator's BATNA with respect
to other alternatives and has the most direct influence on the final outcome. It is used as a
touchstone to select the best among the available alternatives.
Page Ref: 16
Difficulty: Easy
Classification: Conceptual
28) While preparing for negotiations, the negotiator fails to evaluate his reservation points. What
downside can the negotiation process have?
A) the negotiators accepting an offer worse than their BATNA
B) the negotiators rejecting an offer worse than their BATNA
C) the negotiators demonstrating behavior of reactive devaluation
D) the negotiators accepting an offer better than their BATNA
Answer: A
Explanation: A) Failure to assess reservation points can lead to two unfortunate outcomes. The
negotiator may agree to an outcome that is worse than their BATNA or he or she may reject an
offer which is in reality better than their BATNA.
Page Ref: 17
Difficulty: Easy
Classification: Conceptual
9
29) What do you understand by the term "focal point"?
A) the target of the negotiator who suffers from confirmation bias
B) the target points of the negotiator that he or she must focus on solely
C) the target of the negotiator who is egocentric
D) the target of the negotiator who fails to prepare a reservation point
Answer: D
Explanation: D) Negotiators who make the mistake of not developing a reservation point before
they negotiate often focus on an arbitrary value that masquerades as a reservation price. Such
arbitrary points are focal points which appear to be valid but have no basis in fact.
Page Ref: 19
Difficulty: Easy
Classification: Conceptual
30) ________ cost is money invested in the past which is not retrievable in the present.
A) Opportunity
B) Sunk
C) Product
D) Explicit
Answer: B
Explanation: B) Sunk cost, as the name suggests, refers to the money expended in the past
which cannot be retrieved in the present. Though the past expenditures and investments should
not influence decisions made in the present, people invariably take them into account while
negotiating.
Page Ref: 19
Difficulty: Easy
Classification: Conceptual
31) Analyze the following statements and choose the correct option.
Statement 1: Negotiators should ensure that they do not focus on a
single issue during negotiations.
Statement 2: Negotiations centered on a particular problem are purely fixed-sum.
A) Statement 2 is true but statement 1 is false.
B) Statement 1 and statement 2 are true but statement 2 does not explain statement 1.
C) Statement 1 is true but statement 2 is false.
D) Statement 1 and statement 2 are true and statement 2 explains statement 1.
Answer: D
Explanation: D) It is a grave mistake to focus on a single issue in a negotiation because singleissue negotiations are purely fixed-sum. That is, they have a win-lose orientation. Here, both the
statements are correct and statement 2 explains statement 1.
Page Ref: 19
AACSB: Reflective thinking skills
Difficulty: Moderate
Classification: Critical Thinking
10
32) Issues with single agendas are often ________ in nature.
A) fixed sum
B) integrative
C) lose-lose
D) win-win
Answer: A
Explanation: A) Many negotiators tend to focus on a single issue in negotiations. This can prove
detrimental as a negotiation revolving around a single issue more often than not proves to be
fixed sum in nature. Negotiators must identify and incorporate other issues in order to create
integrative potential.
Page Ref: 19
Difficulty: Easy
Classification: Conceptual
33) Jennifer, the sales manager of a firm, does not plan well in advance for her negotiations with
clients. Her negotiation often focuses on an arbitrary value that she fixes before the negotiation
as a reservation price. This arbitrary value is called a ________.
A) focal point
B) reference point
C) cost point
D) fleeting target
Answer: A
Explanation: A) Negotiators who make the mistake of not developing a reservation point before
they negotiate often focus on an arbitrary value that masquerades as a reservation price. Such
arbitrary points are focal points. Focal points, like anchors, are salient numbers, figures, or
values that appear to be valid but have no basis in fact.
Page Ref: 19
AACSB: Analytic skills
Difficulty: Moderate
Classification: Application
34) What does premature concession mean?
A) when a negotiator decides to make concessions in the terms before the lapse of the agreement
period
B) when a negotiator loses ground by to the other party by spelling out her or his alternative
terms before required
C) when a negotiator makes concessions in the terms before it can be ratified
D) when a negotiator makes concessions in the terms at the eleventh hour
Answer: B
Explanation: B) A negotiator must never give away his or her terms too quickly as this may
cause one to lose important bargaining ground. This way the negotiator makes implicit
concessions early in the process and moves closer to his or her BATNA. Such an act wherein the
negotiator concludes the deal quickly by conceding unwittingly to the other party is known as
premature concession.
Page Ref: 20
Difficulty: Easy
Classification: Conceptual
11
35) Should a negotiator have multiple issues in his negotiation?
A) No, as this can confuse the negotiator as to what terms must be included in the final
agreement.
B) Yes, as this way the negotiator is considered as not being positional.
C) No, as this way the negotiator is considered as being positional.
D) Yes, as this way the negotiator may end up conceding prematurely.
Answer: B
Explanation: B) By identifying multiple issues and multiple alternatives within each issue, a
negotiator does not place all eggs in one basket. This gives him or her greater elbow room in the
negotiation which can help in achieving the target. This also gives the counterparty a favorable
opinion of the negotiator in that he or she is not presumed to be positional.
Page Ref: 20
Difficulty: Easy
Classification: Conceptual
36) A reference point defines what a person considers to be a ________.
A) liability
B) break even
C) resource
D) profit
Answer: D
Explanation: D) A reference point is like a benchmark or a yardstick that helps a negotiator to
choose between multiple desirable offers. Negotiators do not always weigh a course of action by
its impact on total wealth. They generally consider outcomes as either gains or losses relative to
some point which they hold as a reference point.
Page Ref: 21
Difficulty: Easy
Classification: Conceptual
37) What risks must negotiators consider while preparing for negotiations?
A) operational risk, BATNA risk, compliance risk
B) financial risk, operational risk, BATNA risk
C) compliance risk, strategic risk, financial risk
D) BATNA risk, strategic risk, contractual risk
Answer: D
Explanation: D) It is of the utmost importance for negotiators to weigh the differential impact of
three sources of risk in any negotiation viz. strategic risk, BATNA risk, and contractual risk.
Strategic risk refers to the riskiness of the tactics used by negotiators at the bargaining table.
Contractual risk implies the risk associated with the other party to honor its terms and BATNA
risk stems from rejecting offers while being uncertain of forthcoming potential alternatives.
Page Ref: 21
Difficulty: Easy
Classification: Conceptual
12
38) Having mutually agreed to the negotiation terms put forth by each other, the negotiators of
two firms cut a deal. However, there is always the risk associated with the willingness of the
other party to honor its terms and live up to its contractual obligations. What risk is this known
as?
A) operational risk
B) contractual risk
C) financial risk
D) company risk
Answer: B
Explanation: B) There always exists a probability of loss arising from the other party reneging
on the contract. Hence, the risk associated with the willingness of the other party to honor its
terms and live up to its contractual obligations is termed as contractual risk.
Page Ref: 23
Difficulty: Easy
Classification: Conceptual
39) Negotiators' ________ may lead buyers and sellers to have different valuations for objects.
A) reference points
B) reservation points
C) focal points
D) sunk costs
Answer: A
Explanation: A) Once someone is endowed with an object, he or she tends to value it more.
However, if you ask the person to pay for it, the amount will most certainly be less than what the
he or she will be willing to sell it for right after being endowed with it. Hence, it is the
negotiators' reference points that may lead buyers and sellers to have different valuations for
objects.
Page Ref: 23
Difficulty: Easy
Classification: Conceptual
40) After clinching a deal at first shot, a person immediately begins to think of the other
alternatives that she could have exercised but did not. What is the person doing in the given
situation?
A) conceptual thinking
B) lateral thinking
C) counterfactual thinking
D) critical thinking
Answer: C
Explanation: C) Counterfactual thinking describes the tendency of people to imagine
alternatives to
reality. It is marked during the period immediately after a negotiation ends wherein negotiators
are likely to dwell on alternative antecedents and outcomes which were plausibly missed rather
than thinking about the unwanted consequences which were effectively avoided.
Page Ref: 24
Difficulty: Easy
Classification: Conceptual
13
41) What is a monolithic party?
A) a party which is entirely owned and controlled by one person at the top dictating the
negotiation terms and aspirations
B) a party whose members are unanimous in their negotiation terms and aspirations
C) a party which is owned and controlled by multiple people at the top who determine the
negotiation terms and aspirations
D) a party whose members are not unanimous in their negotiation terms and aspirations
Answer: B
Explanation: B) Monolithic refers to whether parties on the same side of the table are in
agreement with one another concerning their interests in the negotiation. Frequently, the parties
are composed of people who are on the same side but have differing values, beliefs, and
preferences.
Page Ref: 27
Difficulty: Easy
Classification: Conceptual
42) What does a one-shot negotiation mean?
A) a negotiation which leads the other party to concede in the first attempt itself
B) a negotiation in which the deal does not entail any future ramifications accruing to the parties
C) a negotiation wherein there is only one aspiration point that needs to be dealt with
D) a negotiation wherein both the negotiating parties opt for a positional stance
Answer: B
Explanation: B) A one-shot negotiation is one in which an exchange takes place but without any
likelihood of any future ramifications accruing to the parties.
Page Ref: 28
Difficulty: Easy
Classification: Conceptual
43) Two negotiators do not see eye to eye in their ideologies and fundamental beliefs. This is
known as a(n) ________.
A) agreement bias
B) vertical conflict
C) consensus conflict
D) organizational conflict
Answer: C
Explanation: C) Consensus conflict occurs when one person's opinions, ideas, or beliefs are
incompatible with those of another, and the two seek to reach an agreement of opinion.
Consensus conflict is about ideology and fundamental beliefs. It is not easy to develop a
unanimous decision in such cases as it involves values and morals rather than interests, which are
relatively easy to resolve.
Page Ref: 28
Difficulty: Easy
Classification: Conceptual
14
44) What are the two types of conflicts commonly witnessed in negotiations?
A) functional benefits and consensus conflict
B) line staff conflict and functional conflict
C) line staff conflict and scarce resource competition
D) consensus conflict and scarce resource competition
Answer: D
Explanation: D) The two major types of negotiation conflicts are consensus conflict and scarce
resource competition. Consensus conflict occurs when one person's opinions, ideas, or beliefs are
incompatible with those of another, and the two seek to reach an agreement of opinion. Scarce
resource competition exists when people vie for limited resources. Most conflicts not only
involve scarce resources but ideologies too.
Page Ref: 28
Difficulty: Easy
Classification: Conceptual
45) Negotiations can arise from either necessity or ________.
A) opportunity
B) goodwill
C) competition
D) consensus
Answer: A
Explanation: A) Negotiations can stem from either necessity or luxury. Unlike negotiations of
opportunity or luxury, those negotiating out of necessity eventually must negotiate with someone
to achieve their needs despite having better BATNAs.
Page Ref: 29
Difficulty: Easy
Classification: Conceptual
46) When the negotiation is a transaction situation, ________.
A) the parties involved take legal recourse to reach a settlement
B) the parties involved annul the negotiation
C) the parties involved take recourse to their BATNAs
D) the parties involved do not take recourse to their BATNAs
Answer: C
Explanation: C) In a typical negotiation, parties come together to exchange resource and money
is paid for goods or services. This is known as a transaction. In other situations, negotiations take
place because a claim has been made by one party and has been rejected by the other party. This
becomes a dispute. The difference between transactions and disputes concerns the alternatives to
mutual settlement. In an exchange situation, parties simply resort to their BATNAs; in a dispute,
negotiators often go to court.
Page Ref: 30
Difficulty: Easy
Classification: Conceptual
15
47) What does the linkage effect mean in negotiations?
A) the fact that some negotiations affect other negotiations
B) the effect of a negotiation done out of luxury
C) no effect of a negotiation in other negotiations
D) the effect of negotiation done out of necessity
Answer: A
Explanation: A) Linkage effects refer to the fact that some negotiations affect other negotiations
as resolutions in one situation have implications for other situations. Sometimes, indirect linkage
effects can also occur, such as when a decision made at the negotiation table affects some
interest group in a fashion that no one anticipates fully.
Page Ref: 30
Difficulty: Easy
Classification: Conceptual
48) What does ratification mean?
A) the process of rating the aspiration point on a priority basis
B) the process of getting a contract approved by some other group
C) the process of deferring the deadline for negotiation
D) the process of settling a dispute in negotiation process
Answer: B
Explanation: B) Ratification refers to whether a party at the negotiation table must have a
contract approved by some other body or group. For example, a corporate recruiter may need to
have the salary and employment packages offered to recruits ratified by the company's human
resources group or the CEO.
Page Ref: 32
Difficulty: Easy
Classification: Conceptual
49) Why do negotiators avoid revealing their deadlines?
A) because they think that it will not have any impact on the negotiations
B) because they think that the other party cannot take advantage of the situation
C) because they think that it will be construed as a strategic weakness
D) because they think that they can concede at their convenience
Answer: C
Explanation: C) A final deadline is a fixed point in time that ends the negotiations. The rate of
concessions made by negotiators increases as negotiators approach final deadlines. Negotiators
believe that final deadlines (i.e., time pressure) are a strategic weakness, so they avoid revealing
their deadlines for fear their "weakness" will be exploited by the counterparty.
Page Ref: 32
Difficulty: Easy
Classification: Conceptual
16
50) Negotiators tend to ________.
A) correctly predict the consequences of final deadlines in negotiation
B) incorrectly predict the consequences of final deadlines in negotiation
C) focus on deadlines' effect on others more than themselves
D) avoid focusing on deadlines' effect on themselves
Answer: B
Explanation: B) The reason why negotiators often incorrectly predict the consequences of final
deadlines in negotiation is because they have a general psychological tendency to focus
egocentrically on the self when making comparisons or predictions. Negotiators focus on the
deadline's effect on themselves more than its effect on their negotiating partners.
Page Ref: 33
Difficulty: Easy
Classification: Conceptual
51) What does the "time horizon" mean?
A) the amount of time till the negotiation terms will be held valid
B) the amount of time between the proposed terms and the acceptance of terms by the other party
the amount of time
C) the amount of time taken for the negotiation terms to get sanctioned before they are formally
proposed
D) the amount of time between negotiations and the realization of negotiated agreements
Answer: D
Explanation: D) As regards time constraints, another area that concerns negotiators is the time
horizon. It refers to the amount of time between the negotiation and the consequences or
realization of negotiated agreements.
Page Ref: 33
Difficulty: Easy
Classification: Conceptual
52) The presence of third parties usually ________.
A) escalates the tension in negotiation situations, if the initial parties believe that third parties
will favor their own position
B) escalates the tension in negotiation situations, if the initial parties believe third parties will not
favor the other party's position
C) defuses the tension in negotiation situations, if third parties believe that the initial parties will
favor their own position
D) defuses the tension in negotiation situations, if third parties believe that the initial parties will
not favor their own position
Answer: A
Explanation: A) In many negotiation situations, third-party intervention is commonplace. The
mere presence of third parties may escalate the tension in negotiation situations, if the initial
parties egocentrically believe that third parties will favor their own position. In other situations, it
is less common to involve third parties.
Page Ref: 35
Difficulty: Easy
Classification: Conceptual
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53) Briefly explain the overconfidence effect.
Answer: The overconfidence effect refers to unwarranted levels of confidence in people's
judgment of their abilities and the likelihood of positive events and underestimates the likelihood
of negative events. This is often seen in negotiations involving third-party dispute resolution.
Negotiators on each side believe the neutral third party will adjudicate in their favor.
Page Ref: 26
Difficulty: Easy
Classification: Conceptual
54) What is a hidden table?
Answer: A party is a person (or group of people with common interests) who acts in accord with
his or her preferences. Parties are readily identified when they are physically present, but often
the most important parties are not present at the negotiation table. These parties are known as the
hidden table. Sometimes, it is obvious who the other parties are, and they have a legitimate place
at the table. However, in other situations, the other parties may not be obvious at all, and their
legitimacy at the table may be questionable.
Page Ref: 27
Difficulty: Moderate
Classification: Conceptual
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