Below is the list of readings included in the course:
Thompson, Leigh, The Mind and Heart of the Negotiator, Prentice-Hall, Second Ed., 2000.
Raiffa, Howard, Lectures on Negotiation Analysis, Program on Negotiation at the Harvard Law School, 1998.
The art cannot be separated from the science of negotiation and, indeed we shall emphasize art as an indispensable partner of science in the enterprise of negotiation. However, coupling easy to use software such as EXCEL, mathematical programming and a rational approach to reasoning about what is fair, opens a window of opportunity for improving the efficiency of the negotiation dance. Raiffa's lectures are an introduction to, "...analysis that can help cooperative parties find efficient and equitable outcomes."
The importance of what Howard has to say is highlighted by our experience with many years of "laboratory" testing of negotiators. In a negotiation that involves many complex issues, negotiators who do reach agreement, more often than not fail to find a jointly acceptable efficient agreement. Ex-post analysis shows that the right kind of preparation followed by skillful use of mathematical optimization during negotiation usually leads to a better outcome for all parties to the negotiation. I will use these ideas to evaluate your performance and summarize class results. You should therefore read and understand the principal ideas that Raiffa presents. However, you will not need to implement these ideas on a computer in order to complete the negotiation exercises.
Leigh Thompson's book is easy to read and chock full of interesting insights about how to negotiate. It is full of practical advice about how to prepare, what to do at the bargaining table and how to be strategically creative. Chapters are well organized and most are self-contained. A "Take-away" paragraph summarizes each chapter's lessons.
We will begin with Chapter 1, "Negotiation, The Mind and the Heart" as retrospective reading to complement the first class. Your second assignment will include reading Chapter 11 "Tacit Negotiations and Social Dilemmas" as preparation for negotiating oil prices.
Thompson's Chapter 2 offers valuable advice about preparation. What to do at the bargaining table and how to be creative and expand the pie for everyone are covered in Chapters 3 and 4. These chapters form the core of your reading assignments when we undertake two- and multi-party integrative negotiations. Sources of negotiating power are discussed in Chapter 7. The oft-asked question "How should I behave at the bargaining table?" is addressed in Thompson's Chapter 5 treatment of negotiating style.
Luce, R. Duncan and Howard Raiffa, Games and Decisions, J. Wiley & Sons, NY, 1957.
This book offers the most elegant discussion of the foundations of modern game theory published to date. Other books are more comprehensive and cover topics not yet developed in the late 50's, but none offer a more polished and penetrating non-mathematical evaluation and critique of basic assumptions. Few are as easily readable. Everything said is accurate and proofs where presented are sound and slickly done.
Fudenberg, Drew and Jean Tirole, Game Theory, MIT Press, 1990.
This book is for those who wish a thorough mathematical treatment circa 1990 of game theory, bidding and some bargaining problems.
Binmore, Kenneth, Fun and Games, Heath & Co., 1991.
This book is full of nice discussions of zero and non-zero sum games, auctions and related topics at a more advanced mathematical level than its title suggests.
The game theory literature is enormous. Follow the references in Fudenberg and Tirole and in Binmore for special topics that interest you. Do the same thing for bidding and auctions. Some pithy analysis of the winner's curse appears in Chapter 16 of the excellent book entitled
II. Fair Division
For those of you who wish to read the latest word on analytical methods for fair division of both divisible and indivisible goods, Fair Division: Procedures for Allocating Divisible and Indivisible Goods by Steven Brams and Alan Taylor, Cambridge University Press (1996) and The Win-Win Solution: Guaranteeing Fair Shares to Everybody, Norton & Co. (1999). They offer a vigorous treatment of principles and methods that goes beyond the discussion in The Art and Science of
Negotiation. These authors state in the preface that they:
It turns out that these authors have reinvented the fair division procedures presented in Raiffa's Lectures in Negotiation Analysis.
III. Distributive and Mixed Motive Bargaining
Raiffa, Howard, The Art and Science of Negotiation, Belknap/Harvard Press (revision forthcoming).
This is the book for those who like to see easily accessible mathematical analyses of models and strategies woven into an artful discussion of real world negotiation tactics. Howard's treatment of distributive bargaining, two party integrative bargaining, fair division and coalitions is pitched at just the right level for this course. An updated edition is currently in preparation.
Lewicki, Roy, David M. Saunders, and John W. Minton, Negotiation, 3rd edition, McGraw Hill, 2001.
This book provides easy to read, well organized discussions of negotiating styles and, of particular interest to us, an excellent summary of strategy and tactics for distributive bargaining and strategy and tactics for integrative bargaining. No mathematics at all!
Lax, David and James Sebenius, The Manager as Negotiator, The Free Press, 1986.
This book is written, as the title suggests, from the perspective of the manager as a negotiator. Howard Raiffa's review captures its flavor: "...The Manager as Negotiator transcends its roots in game theory and decision analysis, asking broader more realistic questions..." The discussions of negotiating power and of linked networks of negotiated agreements (a topic we, unfortunately, do not have time to study) are particularly well done. The treatment of negotiating styles is compelling.
Bazerman, Max and Margaret Neales, Negotiating Rationally, The Free Press, 1992.
This book contains an elegant down to earth discussion of how negotiations often go wrong and how to avoid going wrong. It is full of good advice about how to conduct both distributive and integrative bargaining minuets so that all parties come out ahead. I like the way that the authors blend recommendations for analysis and for action. They offer critical insights into how typical behavioral biases and cognitive biases may negatively affect the course of negotiation and present tactics for avoidance of such biases.