Introduction to Distributive Negotiations

Kara Northcutt: Okay, it looks like it's starting to slow down just a little bit. So just to be mindful of time, we'll go ahead and get started. And as I mentioned before, we'll generally use the chat and throughout. I'll just go ahead, sorry. So my name is Kara Northcutt. I'm a Senior Director of Admissions here at Chicago Booth. And on behalf of the Executive, Full-time, Evening and Weekend get admissions teams thrilled to welcome you to today's negotiations masterclass with Professor Emma Levine. Our goal with these master classes is really to, as much as we can give you a real classroom experience, so faculty tend to focus on actual lectures they do in their classes across a lot of the programs they're very similar material because we know it's not always an option to come visit us in person during the summer. You know, class visits just aren't necessarily available. So we really wanna, as much as we can give you that experience, and of course help you get to know some of our faculty who are a huge part of your community as you're a student and an alumni as well. So this session's gonna be a little different than others you might have joined. We're gonna try to be as a little bit more interactive so in advance, so last Friday, and yesterday evening, I sent out a pre-work. So essentially split the group in half. Half of you got to be the case to represent the buyer whom, which is called Plural or you got the case to represent the seller. The seller is Sunset and I can type that in if anyone's not sure, hopefully you get a chance, if not, not the end of the world. You can totally follow along. So the professor will have a poll that you'll then respond to that. So just keep an eye and an ear out for that throughout the presentation. Again, if you didn't get a chance, no big deal, you'll definitely be able to follow along. So with that, I will go ahead and turn it over to Associate Professor of Behavioral Science and a Charles E. Merrill faculty Scholar, Professor Emma Levine. Emma, go for it, thank you so much.

Emma Levine: Thank you, and thanks for having me. It's great to have a chance to do this. I love teaching negotiations. I've been teaching it here for seven years, and so I love when prospective students visit my classroom, but in the absence of that, this will do. So I'm excited to share some content with you today. I wanna just give an introduction a little bit of myself. So I've been here for the past seven years. I got my PhD at Wharton in Decision Sciences. And before getting my PhD, I had worked at Procter and Gamble in Sales and Marketing. So a little bit of experience negotiating in a sales role on my own. But I decided to get a PhD because what I found really interesting was kinda the interpersonal processes involved in negotiations. The psychology of how do we figure out how to compete versus cooperate, how do we decide whether we can trust each other, what are the strategies that help us get to agreement both in negotiations and beyond? And so that's kind of the lens I took to my PhD and where a lot of my research still continues to focus. So I research ethics, trust, and cooperation, and then I bring a lot of my research into my negotiations class, which I think makes it fun for me, but hopefully also makes it fun for my students. I wanna share just one piece of my research before diving into the negotiations masterclass because I start every quarter off by sharing this research with my students to just help set the tone for their time at Booth, but also in my class. So one of my favorite studies that I've run in my career is theories of three day honesty experiments, where I had participants come to the lab and they had to take an oath that for the next three days, today, tomorrow, and the following day, they would have to be honest in every conversation with every person they talked to, even though it would be difficult, right? They should try their best to be honest. And participants actually take this really, really seriously. So through my studies, I've seen declarations of new love, I've seen family conflict and deep held secrets arise, I've seen breakups. But importantly, even with breakups, you see people recognizing that this was a good thing to happen and it was useful to get this off my chest. And across my studies, what I find is when I have people kind of forecast, so some participants forecast what honesty is gonna be like, and then some people actually go on to do this experience, people systematically underestimate how much they will enjoy and to the extent that their well-being will be benefited by being honest. And this is unique to honesty, people don't have kind of mis-calibrated expectations about being kind to others or just communicating as they normally would. And so I think it's important to start the study of negotiations with thinking about honesty because negotiations is a place where people seem to think the rules of honesty don't apply. This is a game, it's okay to lie. This might be like poker, but through lots of my own and others research, it's important to note that honesty is more beneficial than you think, in both negotiations and beyond.

Emma: So I just wanted to share that with you as a way to think about negotiations. Negotiations isn't just about competing for resources, but really about reaching effective agreements. And at Booth, I think the negotiations classes are so wonderful and engaging because they really combine art and science. So I and my colleagues spend a lot of time teaching you the strategies of negotiations, like learning from the latest research, what is the science of effective negotiations. But then every week you also get to learn the art through experience. You do experiential learning, you do a negotiation every single class where you learn different skills and get to put into practice these different strategies that are rooted in science. And so my goal for my students is to help you reach more effective agreements and get what you deserve, not just get as much as possible, but think about fairness, think about honesty and cooperation to reach effective agreements that allows all parties to get what they deserve. Now typically, if this were my classroom in Harper Center, I would now pass out the cases and we would actually take a stab at negotiating. You would be assigned to role, I would pair you up. You would have anywhere from a 10 minute to an hour and a half long negotiation with your peers where you're learning and practicing reaching agreements. We can't do that in full here. So we're gonna try to get as close as we can in the webinar format. As Kara mentioned, we sent out materials. You were each assigned a role buyer or a seller. This is a case I actually do in my class called Plural-Sunset. And I want you to just take a minute, I'm gonna launch the poll. If you have your material, refer to them, spend, I'll just give kind of three minutes of silence, three to four minutes, for you to look at your materials again and think about these questions and then answer them in the poll. I'm gonna launch the poll now, think about your role, just the first question is specific to your role. So you'll either answer a question as Plural, the buyer, or as Sunset the seller. Answer these questions only if you have your materials and answer them based on what you expect from your materials. And then anyone can answer questions two and three, which are kind of general negotiations. So I'll give you a just a few minutes to think through that. I see lots of responses coming in. That's great. Give it about 40 more seconds and then I'll end the poll. All right, I set a little timer on my end, so I'm gonna end the poll now. I see, okay, what oh, few people sneaking in their last minute responses. All right, I'm gonna end the poll.

Emma: I'm gonna come back to these results. This is like a very abbreviated little exercise to help you at least think through, how you might go into a negotiation, right? In our actual class, this would be replaced by 25 minutes to actually negotiate this case. Nonetheless, in my class when we have negotiations or just what we're doing now, I always collect data from my students to understand their intuitions and understand the strategies they use. And then we can do your intuitions or the strategies map on to what we know from science, right? What we know from negotiation research. So let's begin to unpack that. Today we're gonna spend a bit of time thinking about this Plural-Sunset case that you read. And then I'll kind of go backwards to spend the rest of the time thinking systematically how to prepare and execute negotiation. So once you've done a case, I always tell you, well guess what? This is re rooted in reality, most of our cases are. And so Plural-Sunset is based on the 2004 acquisition of AT&T and what happened, they actually kept the name AT&T, but Cingular acquired AT&T. And what happened was that for four days, the two largest wireless companies were vying to acquire AT&T Cingular and Vodafone. So that is replaced by Plural and Zenith in your case. And there was a bidding war. And what happened is that in the end, Cingular ends up paying a lot 40 billion, that's close to the 40 million marker in your case. And it was argued that they paid too much because they could have gotten similar additional spectrum from distressed assets for only 10 billion. But because they faced the fear of this competitor, they ended up spending a lot more, which is actually similar to the Plural case that you just read, right? The fear of losing market share leads you to overvalue buying Sunset, which can drive up the price. And so we can think about each negotiation case by starting with the question of should you make a deal in the first place, right? This deal actually happened in real life. This deal went through. Most of my students in this first case will have made a deal, but should they? One way we can answer that is simply by thinking about the interests of both party, are both parties interested in doing this deal? And we can analyze what are the motivations of each parties? And we know from the cases, so this should be familiar as you see your own side, yes, I'm familiar with this information, but what we'll now learn is what the other side thought and that should be new and help you realize where you might have thought incorrectly about the case. And so what were the motivations of Plural in this case? Well, they wanna secure more spectrum. They wanna prevent Zenith from buying Sunset and they wanna avoid a long bidding process. So they wanna do this deal. Clearly there's a clear motivation to make this happen and does Sunset wanna sell to them. It turns out, yes, their facing in customer complaints increasing competition, but they wanna build their reputation and avoid a long bidding process. Both parties, which isn't always the case, they're motivated to do this deal, which is a good question to answer as you think about negotiating. But then the second question is, well at what price? Is there an overlapping set of prices that would make this deal financially attractive to both parties? And to understand that you want to think about what is the ZOPA, we have a lot of acronyms in negotiations. ZOPA is the first one, and that stands for the Zone Of Possible Agreement. What are the range of possible prices that you would both be happy to make a deal at? So the ZOPA ranges from the seller's reservation price, the lowest value that the seller would sell at to the buyer's reservation price, the buyer's maximum willingness to pay, right? If there is a positive space between those two numbers, there is a positive ZOPA and there is a deal to be done. When you go into a negotiation, you're trying to, and I'll unpack this in a little bit, you should be trying to figure out what is the ZOPA, what is my reservation price and what do I think my counterparts reservation price is? And so I can look at your data right now and tell you what you were likely going to go into this case thinking.

Emma: So I'm sharing the results now. And if we look at Plural, that's the buyer. Their perception of the sellers reservation price is the most common response was 11 to 20. So in the 11 to 20 million range is kind of what they think the sellers reservation price is. We'll learn in a second whether that's correct. And if you are the seller, what do you think is the buyer's maximum willingness to pay? Here we see actually that the most common response is also in the 11 to 20 million, there's more variants. So almost as many people, 25% of people think 31 to 40, but 27% of people saying 11 to 20. So if you just think about that for a minute, buyers think the seller's minimum is, let's say 15, then the 11 to 20 range. And sellers think that buyers maximum is also that range. Now, if that's the case, you are going to have a very narrow bargaining range, a very narrow ZOPA. We think we're both in the same kind of confined $10 million space to find a deal, right? And if you go in as the seller thinking the buyer's only gonna spend 11 to 20, and I'm only willing to go down to that range, I'm gonna have to fight pretty hard, right? This is going to be kinda war or wills over that small pie. But is that correct? Is the seller's perception that the buyer will only spend 11 to 20 million, correct? It turns out that that's actually not, and this is a systematic mistake people make, so I'm glad to see it pan out here too. That means we have a lot to learn, which is great. But the actual LOPA here was 10, the seller's reservation price was 10, but the buyer's reservation price is actually a lot higher, it's 40. And so the people, the 25% of people who estimated that Plural's reservation price was the 31 to 40 million range, they were correct. The 27% of people who thought it was more in the 11 to 20 range, were incorrect. And that's a common mistake that we think the bargaining range is more narrow than it actually is. But what we know now and what you would know in a negotiation debrief is actually they're quite a broad range of prices that were possible, anywhere between 10 and 40 million dollars is a good deal to both parties. Because the buyer would actually happily go up to 40. We're gonna come back to kind of how to think through this, but this is useful data just to think about whether you would've approached with correct information in this case. But a question, once you have the ZOPA or your perception of the ZOPA is should you then dive in with a first offer, right? Even if I recognize, okay, the buyer can go up to 40, should I name the first price then and should it be 40, should it be 45? Should it be 30? What should it be? This slide right here is what I see typically in my class, both among all negotiators and experienced negotiators. This is just pool data from the last couple years of my teaching, but most people think, no, I should not make the first offer, right? I don't want to kind of name a price and be stuck in some web where I'm now undersold myself or done something too aggressive. So no, I'm gonna wait. That's how I'm gonna figure out how to make the best deal, is see what they say and react to it. Let's see what you said. The majority of you also said, no, I should not make the first offer. Small majority, 55% said no. 45% said yes. Also, great evidence that people come into negotiations with this intuition that, no first offers are bad. But I spent a lot of time my first week just saying that actually, "yes", you should make the first offer. There's lots of science, lots of research showing that making the first offer is beneficial even though it tends to make people a little bit nervous. So why should you make the first offer? One reason is anchoring. Anchoring is a basic psychological effect that happens when there's uncertainty about some value, say a price or a number, and then some anchor, right? Just some value is floating in the air that draws your attention to it and psychologically we insufficiently adjust away from it. So when someone makes the first offer that functions as an anchor, it draws the attention of the counterpart and they're unable to adjust fully away from it, meaning the entire negotiation then starts at whatever that first number is. Ideally, you want control of that first number.

Emma:  So let me provide a little bit of evidence of intuition behind anchoring. This is a basic psychological phenomenon that's actually taught in a lot of our classes at Booth, but some of the evidence of anchoring comes not from negotiations, but from basic trivia questions where participants would be asked a question like, what's the population of Beijing? And in that question would be embedded in anchor. So is it greater than 1 million? Some participants would answer this, some participants would answer a slightly different question like, is it greater than 10 million? And what you tend to see is that participants' estimates of the population are anchored on these numbers. So when I ask, is the population of Beijing greater than 1 million? It's not meant to convey that it is one million, or it is 10 million, but implicitly people are using that number and adjusting away from it. And so I think it's only eight and a half versus 15, right? When I see a smaller versus a larger anchor embedded in the question. Similar evidence, you ask how many hospitals are there in the United States? But in this study, people actually choose a random number before giving the answer to the question. So they explicitly know they're choosing a random number, and yet answers are still influenced by that random anchor. People know this isn't supposed to provide the answer to the question, and yet just because my mind has been attracted or attentive to this number, I insufficiently adjust away from it. So we can see evidence of anchoring in negotiations as well. One classic study shows that a scenario in which the seller reads that they engage in a negotiation in which they're working with a translator. The translator was difficult to understand, but said the buyer was willing to pay either $12 or $32, in that range. When you ask the translator to repeat this, they say, "I didn't mention a price. You must have misunderstood or misheard me. I want you to propose, propose a price." So there's this number floating out there, it's supposed to be ignored, but what happens? In this study, they find that negotiation prices end up clustering around the anchor, right? So deal prices end up clustering around the $12 anchor in that condition versus the $32 anchor in that condition, even though you're supposed to ignore it. But once some number is out there, it's really hard to avoid attending to it. So one takeaway from kind of the first case you might do in a negotiations class is make the first offer, the first offer anchors the negotiation. Again, I have up here just a regression from the last couple years of my data where you can see in Plural-Sunset the relationship between the first offer and the deal price. And right, you see a positive significant correlation providing of the anchoring effect, right? Whatever your first offer is influences the deal price, the higher you start, the higher you finish. So beyond the anchoring effect, there are other reasons based in psychology why first offers matter. So the anchoring effect isn't specific to negotiations or interpersonal dynamics. That happens anytime there's some number and an uncertain valuation. But in negotiation, you're also like having a conversation and you're expecting truth, right? You're expecting that the information that someone shared has some value. It's not a random number you generated in your head. And so there's also an information there. If you name a first offer that causes me to update my beliefs about the value, of this good, service, or company, right? I don't assume it's random, I assume it has information in it, you're pricing it with some valuation in mind. And so it's going to update my beliefs. Beyond the information effect, we're also just social beings. And so even if I think it's possible that you are naming a completely random or really aggressive price, I don't wanna go too far away from it because I wanna seem like a reasonable negotiation partner. It feels really uncomfortable if you say, I will only sell for a hundred billion for me to say 10, right? That makes me feel and seem unreasonable, even if I'm not sure there's information in your offer just based on social dynamics, we're uncomfortable veering too far away from that first offer.

Emma: So first offer have a lot of weight in negotiations. But implicit in this advice that you should make this first offer and have an effective anchor, is that it needs to be ambitious in your direction, right? You want to make a first offer that benefits you. And so in an ideal world, if you were the seller, if this is a graph of who makes the first offer, we should see deal prices being higher when the seller makes the first offer, and lower when the buyer makes the first offer. If parties are doing it optimally. The seller wants to sell high, so they should be naming a high anchor and getting higher deal prices. Buyers wanna buy low, right? So they should be leaning lower anchors first offers and getting lower deal prices as a result. But does that typically happen when we start negotiation before we've learned how to prepare for this? Again, the answer is no. This is results from my classes in the past. And you see kind of this reverse anchoring effect, where actually the buyers who make the first offer Plural to make the first offer end up spending more and Sunset who make the first offer, sellers end up selling lower. So they're actually underselling themselves, they're making the first offer incorrectly. And typically you might make your first offer thinking about what your partner's reservation price is, right? So we can go back again to the poll data and think about, well, if you were Plural, you might make your first offer at kind of the lowest, pushing your partner to the limit. So the lowest they would be willing to accept. And again, we see that 11 to 20 million range. So maybe, let's say in this class we might see Plural, you know, naming a first offer around 15 and doing pretty well, that's actually buying for pretty low, which is good. But Sunset, those of you who thought the highest price that Plural is willing to buy with also the 11 to 20, might have also made a first offer in that range. That's as much as I'm going to get from them, in which case, it's also gonna be in that, just as we see here, 11 to 20-15 range, where it's not clear, right? You would have benefited that's in this section here, would've benefited from making the first offer because it wasn't ambitious enough, right? Pushing to the buyer's actual maximum, which was closer to 40. So another takeaway we typically have in our first negotiations class is we're not aggressive enough with our first offer. And so this just gives you a sense of kind of how a case can help show you where your intuitions might be not well calibrated, right? Should you make the first offer? Most people go into class thinking, "no", but I'm gonna suggest the answer is "yes". What should it be? It should be the most ambitious number you can justify, because the higher you start, the better you finish. And what we see is when we start negotiation classes before we're trained on how to properly prepare, we end up underselling ourselves, which it seems like it would've happened here as well, at least for those in the role of Sunset. So hopefully this gives you a little bit of sense of kind of what a case looks like and what you might learn from it. Typically, we spend some time in class doing that in the real class, it would be a much, much longer experience, but then would back up a little bit and think about, okay, well what do we need to know to get to those insights? How would we actually figure out what the ZOPA is and what that first offer should be? And today I wanna spend the rest of our time together thinking about preparing for negotiation, right? How to get yourself ready for both of those decisions. How to anticipate the possible deal, how to set the first offer. Okay, with most important life decisions, the first thing you need to do is to decide whether to engage in the first place.

Emma: So we spend time thinking about, as a first step, you have to decide whether to negotiate, and we can think about the decision of whether to negotiate similar to other production decisions. Which is, I should negotiate, or I should produce, I should engage, as long as the marginal benefits of doing so exceeds the marginal cost, right? Similar to a production function, you think about are the benefits of producing outweighing the costs? If so, keep going. So when I think about negotiation in the same way for different types of interactions, there might be different benefits and different costs, and they might change differentially over time. And that should influence how likely you are to start a negotiation and how quickly you are to exit it. I wanna think about just three very mundane examples to help build some intuition for how you would think about these different negotiation decisions, right? So imagine one situation you're getting on the bus, one thing we talk about in my class, you can negotiate anything. So one thing you could negotiate is a bus fare. In another situation, you know, you're doing improvements on your home. You're thinking about whether to negotiate with a contractor. Another situation we're looking at a sink full of dirty dishes and deciding like, do I wanna ask my roommate or partner, you know, to do it instead of me? Do I wanna negotiate who's gonna do the dishes tonight? And we can think about mapping out the marginal benefits and marginal costs for all of these decisions just based on kind of the X-axis being the time, the additional moments you spend negotiating, and the Y-axis being the utility you would get from negotiating. Let's start by thinking about a bus fare. The marginal benefit is pretty low, right? When you that first ask, maybe if the bus driver says yes, your utility is a maximum of let's say $2, so it's low and it goes down quickly, you ask again, they're probably not gonna change their mind, then it goes to zero, right? So low marginal benefits starts low, it goes to zero very quickly. The marginal costs are high, right? It's embarrassing to negotiate a bus fare. And as you negotiate more, and more, and more, the people behind you waiting to get on the bus are gonna get more angry, and more angry, and it's going to be more uncomfortable and more upsetting. And so here for me, the marginal benefit never outweighs the marginal cost. For some people it might, maybe it's worth that first ask, but this would suggest, no, this is not a place where I would negotiate, right? But these curves might look different for you. We can think about now negotiating with a contractor, I'm in the midst of a very long home improvement project where I've done many negotiations with my contractor and the benefits are high. My contractor pricing tends to be flexible. You're paying for services and time, and often if you negotiate, you can cut quite a bit of cost. And so the benefits are high. Over time they decrease because as you lower the prices more and more, eventually you kind of get to their bottom and the benefits shrink. The costs are low because this is a context in which negotiation is normative or there's not kind of psychological costs, and it doesn't take that much research to understand, right, how much you could ask for, but the costs increase over time, and you might be a kink at some point, right? I need to move into the house in three months. So as time goes on, suddenly the costs are escalating. But you might write negotiation to a point as long as the marginal benefits outweigh the cost. Thinking about negotiating, who does the dishes? I hate doing dishes. This also might look different for different people, but the utility of me winning that battle is very high. It is always worth asking if I can get out of doing the dishes, but it declines quickly, right? We can maybe have one back and forth between me and my husband, and then it's like, okay, there are no more benefits of asking. And the costs are low the first ask is fine, but they also increase quickly, because we don't wanna escalate a conflict, we don't wanna have the stalemate. So always worth asking to get out of doing the dishes once, but then, that's about it. And so I think these are helpful examples just to think about what are the different social and financial dynamics in different situations that help you think about the cost and benefits.

Emma: Mostly in my class, we're gonna spend time in situations like this in which there is a benefit of negotiating, at least up until this point. But as you approach your life, you wanna be aware of, maybe there are more situations to negotiate in, in which you normally opted out and that can be beneficial to recognize. So when to negotiate, step one. Consider what the benefits out outweigh the cost. Don't just shy away from negotiations because you're afraid it will be awkward. That is a common mistake people make. People come into this class kind of fearful of engaging in the conflict they associate with negotiations. I wanna help de-bias that, kind of get over the fear of awkwardness and focus really on the material costs and benefits. Once you've decided whether to negotiate, and the answer is "yes", you then need to prepare. And the first question you want to ask yourself is, what do I want? Or what is the goal of this negotiation? And not just what I want, but why do I want that? We think about a framework of positions, issues, and interests. This is actually a really fundamental part of the negotiation process that I think people fail to appreciate. I wanna walk you through it in thinking about a salary negotiation. If I spend a lot of time with students consulting on their salary negotiations, helping them work through various outcomes, and so you can imagine having a position in a salary negotiation or compensation negotiation of a $210,000 salary. So a position is as stated, highly defined view on a particular issue, right? The issue is salary, your position is 210k. But salary is only one of several different issues on which you could negotiate when starting a job, right? So it's not just salary, you could also negotiate for benefits or time off, or work from home flexibility, or equity in the company. The issues are all the possible means by which we achieve our interests. Interests are what motivates us psychologically. And it's important because if you think about what is your actual interest, you'll realize the different issues might satisfy them differentially. So imagine your goal of 210,000 was motivated by the desire to feel respected, right? You wanna be a top earner at your company, you want your company to show you that you are valued and you are a key player. And to you, that means being in the highest salary range, which is 210k. Now, if your motivation were respect, then if your company were able to show you respect through other issues, you should be willing to sacrifice salary for that. For example, if your company came back and said, well, actually the highest we can possibly go is 180, but we actually value our top performers with equity, not additional salary or bonus, right? If your goal was feeling respected, you should be willing to trade salary for equity or bonus to the extent that also satisfies that interest. But instead, imagine your interest was purely financial, You crunched the numbers, you're starting a new job, and you've determined that to support your family in New York City, you need 210,000 of take home pay. If that's the case then you should not be as willing to trade salary for other issues, because those other issues like time off, like benefits, like equity can't satisfy your financial interests that you've focused on in this moment. So being aware of your interest is really important for understanding where you can make trades on what and how.

Emma: Once you've thought about what your interests are, and those positions that satisfy your interests, you can think about your BATNA. This is our next acronym. Your BATNA stands for your Best Alternative To a Negotiated Agreement. What are you left with if you do not strike a deal? So I don't get this salary at this company, we don't come to an agreement on this compensation package, what am I left with, right? Maybe it's my current job, maybe it's an offer from another job. Maybe it's going to grad school. Any of those could be your BATNA. It's your alternative to a negotiated agreement. Your BATNA is going to help you figure out your reservation price. Your reservation price is the expected value of your BATNA. What is the financial or utility value of this alternative that influences your walkaway price, your reservation price. I'm gonna go through two examples of how to think about reservation prices and BATMA. So you can read along with me. Imagine you're selling real estate. You must sell a piece of commercial property that you purchased for 27 million several years ago. You only care about price. So your interest is price. Since your purchase, property prices have gone up, suggesting the market value is 35 to 40 million, potentially worth up to 45. You've received several offers so far, the best guaranteed offer is from Quincy for 38 million. They're respected and your best guess is you could get up to 10% more from them if you negotiate. Right now though, you're going into a negotiation with Alpine Condominiums. So before you go back to Quincy, you're negotiating with Alpine Condominiums who has expressed interest in the property. If the negotiation doesn't work out, you plan on going with Quincy. So what is your reservation price for the negotiation with Alpine? It's gonna give you a moment to think through this and then I'll answer it. So here, the reservation price is that 38 to 41.8 million. The 38, you know, plus the potential 10%, right? Every other number is an irrelevant kind of distraction, an anchor, right? The the potential value of the property, that's not your alternative. You have not secured that yet. How much you paid for in the past, irrelevant. Going into this negotiation, all you need to know is what is my alternative if this deal falls through, I am going with Quincy, and from Quincy I could get at least 38. And so that means with Alpine, the minimum you should be willing to settle for is that 38, your reservation price. Okay, let's go through another example. So now imagine you're selling a used car, you listed the car at 3000 online and someone expressed interest, and you're gonna meet with them to negotiate. If you don't come to an agreement with this person, you have a few options. One, you can sell the car to your little brother for a one-time offer of 1500, or two, you can continue to list a car and hope for another buyer. Your best guess is there's a 50% chance that no other buyer's express interest, and you have to give the car to a junkyard who will pay you $1,000. You think there's also a 25% chance that you'll find someone to pay you full price for the car, and a 25% chance that you'll be able to get someone to pay $2,000 for the car. However, this option also requires that you pay $200 to continue for the listing. So assuming your risk neutral, and your time discount rate is zero, what would be your reservation price for the current negotiation? Again, I'm just gonna give you a moment to think about it while I take a sip of water and then I'll go through the answer. Okay, so here, it's 1550. If we calculate the value of B, I mean 50% chance of the 1000, 25% chance of the 3000, 25% chance of the 2000, minus the fixed cost of 200, that's greater than the alternative of 1500. And so that's our reservation price, 1550. Financially, option B is better if you're risk neutral. But we can also think about, given that we bring in a lot of psychology to negotiations, what if there's a psychological benefit associated with option A? Maybe after seeing this and realizing, well, technically rationally, my alternative, my best alternative should be B, realize, but for $500, won't I rather just give it to my brother? That's valuable information. You can integrate that preference into your valuation, The question you should ask yourself is, do you value selling to your brother at more than $50, right? If so, maybe the actual, the utility of option A is greater than the utility of B. So you could try to do a calibration exercise. Maybe you realize, well, I would sell it to my brother as long as doing so is not gonna lose me more than $150. In which case then the real kind of reservation price you'd put on option A is 1650. So this is gonna be person dependent, but I wanna encourage my students and people in general to try to bring in right psychological factors in a rational, calculating way to figure out, okay, do you actually value this and can we put a number on it so that you can perform your best given your true interest.

Emma: In this case, if you decided that option A was all said really worth 1650, that would become your reservation price. Once you've figured out your reservation price, you want to try to estimate the other party's reservation price. And if there's more than one party, all of them, and this is very hard, right? Because you don't have access to their case materials or their brain, you don't know what their alternative is, but you need to do research to get the best possible estimate of that number. So for example, right? Doing your research of comparables, what have cars like this sold for in the past? Or what has asked deals by this negotiator looked like? What is the reputation of this company, right? In preparing write down why you think their reservation price is what it is. So actually filling out a preparation sheet, this is what I think their reservation price is and why, so that you can then ask them questions and test those assumptions at the table and update your beliefs about the reservation price. You need to get an estimate of their reservation price to figure out, back to what we talked about earlier, the ZOPA, the range of possible prices, right? You will know your reservation price, your goal then is to estimate your counterparts reservation price so you can paint your own picture of the ZOPA and figure out, okay, what are the possible prices I think we might land at. Once you have your best estimate of that, and you can actually update this as you talk at the table. And you know, we would spend lots of future weeks thinking about how to actually structure a conversation at the table to get better estimates of the reservation price and their alternatives so that you can have the best possible information before making a first offer, but kind of at an higher level, right? Once you think you've gotten there, you have an estimate of their reservation price, then you want to plan to make the first offer. As I alluded to, there is enormous value in making a first offer. Typically, buyers get less than half the pie, so 31% of the pie, but when they make a strong first offer, they go up, they get 37% of the pie, and when they make a better than medium first offer, they're able to actually claim the majority of the pie, kind of get on similar standing as the seller. Given that first offers are beneficial, what should your first offer be, particularly relative to the ZOPA? And we thought about in Plural-Sunset, that we know the ZOPA is between 10 million, the seller's reservation price and 40 million, the buyer's reservation price. So as the seller, what should you give as your first offer? If you had estimated this. What I'm gonna suggest is that it should be just outside the ZOPA. So as the seller, just a little past 40, as the buyer, just a little under 10. And the reason that you want to go just outside the ZOPA is first, you don't want to concede any of the pie before you've actually started, right? So if your first offer is in the ZOPA, let's say at 35, you've already conceded $5 million as the seller of potential pie, right? So assuming that you're gonna have some back and forths, you're starting at 35, you're probably gonna give up more. So you're starting at a place where you're competing part of the pie. If you go just outside the ZOPA, then when you start negotiating, you're negotiating into the bargaining zone. You're not giving anything up when you name your first number. And then ideally, you're gonna have some exchanges that push you very close to your partner's reservation price, getting you the maximum amount of pie as possible. Now, it shouldn't be too far outside the ZOPA because it's also really important that first offers are justified and credible. One for ethical reasons, which I spend a lot of time in my class talking about, but also just for psychological, and cooperative, interpersonal reasons, right? If you name an outrageous number, they will think there's no information in that, that is unjustified. They might discount it completely or be offended and walk away. But if it's just outside of the ZOPA, let's say 45, then Plural would probably hear that and say, "Okay, well I can't go to 45, but that's not crazy. And so let's, let's play ball, let's figure out something that works." You want to be ambitious but not aggressively so, not offensively so, just outside the zone. You also want to justify the offer. The art and science of negotiation isn't just kind of naming high numbers and going back and forth, but actually using psychological influence to make that number stay. And one source of influence is justification and fairness. This is some great example from the book "Getting To Yes", which many of my colleagues assign in their class, the classic negotiations book updated every year. But this is a very simple example in which just a person, Tom is negotiating with an insurance adjuster for getting money to buy a car after his was totaled. And so he's asking the adjuster, you know, how much he is entitled to, and the adjuster just kind of keeps throwing out numbers, Well, I'm gonna say it's 6,600. It's like, well, how did you get that? And the adjuster just kind of keeps pushing back, but not giving a lot of information. And Tom, it's just very clear, right? I'm not asking for 8k, or 6k, or 10k, I want fair compensation. I want this to be justified. Do you agree it's fair to get enough to replace the car. Still facing some resistance, Tom pushing back again, that may be fair, 7k could be fair, I don't know. I understand you're bound by policy, but unless we can talk about what's fair, I think I'll do better in court. And so eventually, getting the adjuster to kind of come to a reasonable standard, which is looking at a comparable car and then they bargain from there. And so by kind of setting up this justification, that gives you a lot of power and influence in negotiating because if you do it reasonably, then you can get your counterpart to agree to the idea before even naming the number, right? So if you can say, do you agree that justified to get enough to replace the car? The other person says, "Yes, that's reasonable." Well, based on my research, this is the number. Then you've already got buy-in to that high anchor, that is nonetheless justified. Justification is really powerful. One takeaway from lots of psychology research is even if it's not the best possible justification, a justification is better than no justification.

Emma: So classic social psych study from the 70s demonstrates this by just having people do this experiment at a copy machine. So a research assistant comes in to a line of people at a copier, real people waiting in line to use the copy machines, a field experiment. And in one condition the researcher just says, "Excuse me, may I use the Xerox machine?" Just their request. In another condition, they say, "Excuse me, I have five pages. May I use the Xerox machine because I'm in a rush?" So it not a great reason, but it's a legitimate reason. I'm in a rush, kind of vague, but give the reason of why they wanna skip. And in version three, the experimenters comes and says, "Excuse me, I have five pages. May I use the Xerox machine because I have to make copies." So it still gives a reason, but it's not a very... It's an even worse reason. It's not legitimate because everyone is there, they have to make copies. But what the researchers find is that any reason increases compliance significantly relative to giving no reason. Like just saying, I need to make copies kind of completing the script we have in our heads for how acts are made leads people to comply, and it's not all that worse than giving a reason that is more relevant. And so when you're asking for something in negotiations and beyond, but especially in negotiations, when you're giving a first offer, when you're asking for a concession, always provide a justification. Ideally it's a well researched and fair justification, but certainly at least back up your request by any means however. So the benefits of making the first offer, we talked about anchoring, it also provides information or people assume it provides information and they wanna be reasonable. So it makes first offers sticky. But the reason you probably came in, 55% of you came in thinking I should not make that first offer, is because you're focused on these costs, which is one, you might make an offer that is not aggressive enough, and then miss seeing an offer that would've been extremely appealing. That's kind of what we see happen in Plural-Sunset, at least for some people. The sunsets in this class, is that you undersell yourself, you make the first offer realizing you didn't know what the reservation price was, and so you don't do it ambitiously enough. Or you might think, well, I don't wanna make a first offer because I'm going to be too aggressive, and that could offend them and then everything could shut down, so I don't wanna do that. So it's worth thinking about, those two potential costs and how we can overcome it. One, what if you know nothing, right? I'm afraid I'm gonna undersell myself because I don't actually know their limit. And so I don't wanna make a mistake that causes me to not get my fair share. The way to overcome this is research. People forget the importance of research. We just talked about this with preparation, but for most negotiations, it is possible to do research. You can always go to your peers, or past Booth graduates and ask them salary information at different companies. You can find out the range of possible salaries, you can find out the range of possible prices, you can adjust for inflation or the reputation of a company or the markets, right? There are ways to do research to get a well calibrated estimate of a counterparts reservation price. You can also begin negotiating to get a sense of a range. This is how you might do a car negotiation. Right before going to one dealership, you go to a different one, and you see the best price you can get for a Subaru Outback, and then you go to another dealer, and get their best price. You do that a few times, you get the range of possible prices, then when you're ready to actually do the deal, you have a good sense of what different sellers reservation prices are, and that should help you be re-calibrate. The other caveat is what if I might offend them, if I'm too aggressive or if I say it wrong, it might kind of set the tone incorrectly. There are ways to overcome that. The one idea is to try a non-offer offer. This is a strategy put forth by Lax and Sebenius, negotiation scholars and consultants at Harvard. And the idea is that you're not making a clear offer, but you're still dropping a number that can set an anchor and have that effect of steering the negotiation and test the water. For example, instead of saying, you know, my desired salary is 90,000 or 95,000, you might say, "Well, I know that people with these qualifications tend to be paid in the 85 to $95,000 range." That feels a lot less aggressive. It still has the benefit of being a very strong anchor, but instead it's just phrased as like, here's some information, that I'm gonna put out there to steer the conversation.

Emma: Similarly, you know, company bonuses were good last year, but tough this year, and so when asking for a bonus, you might say, well, you know, "I know bonuses were 50% of salary last year. I know we're in a tough spot, but this is what it's been in the past." And so it's recognizing I am flexible, nonetheless, I'm gonna throw out this anchor because I want this to steer the conversation. You could also try a range offer. Typically, this is a question I ask my students in the first class, should they make a single price or range offer? Most people think a single price offer. We're gonna see what you said. Love it. Most of you majority, 56% of attendees here also said single price offer. So the majority of my students across years, including all of you, seem to think a single price offer is optimal. And it's interesting because in thinking about the anchoring effect, that might be correct, right? A single number kind of steers your attention the most. And yet people who say we should make a single price offer also don't make the first offer. So they're kind of inconsistent. But what I wanna suggest to you is that a range offer can still set an anchor, but it can also let you seem flexible and less aggressive. So beautiful paper came out just a few years ago that looked at the effect of range offers in negotiations and shows they don't give up any monetary outcome. In fact, they can improve your monetary outcomes and they allow you to seem more flexible and less aggressive. So let me walk you through this table for a moment. This was just a simple kind of negotiation for a used product. And the counterpart either makes a point offer a $100 for the product, or they say a bolstering range. So I would like a 100 to $120. So this is what the seller is naming the price at, or they do a back down range of I would like 80 to a $100, or what the authors here call a large width range. I would like 80 to $120. And so what we see is that participants in this study, when they hear a point offer of 100, they assume, okay, we're probably gonna settle around 80, 79.3. You know, knowing that the a $100 offer is probably the seller's aspiration, they can probably compete a little, So I'm going to anticipate that we're gonna settle right around 79. If the seller says 100 to 120, so a range that goes upward from that single price, now the participants think the settlement will be higher, if I hear a 100, 120, I think that's the range from their reservation price to their aspiration. So I actually think, okay, well we're not gonna get, you know, they said a hundred to 120, I'm not gonna get them that much lower than a hundred. So now I actually think the reservation price is higher, we're gonna settle higher. Interestingly, a large width range that goes just around that point offer of a hundred also doesn't cost sellers, more than just the point off. However, both bolstering ranges and large width ranges lead the sellers to be seen as less stubborn, significantly less stubborn, less aggressive, and more flexible. And so a takeaway here is that range offers make you seem more flexible, less aggressive, and if you do a bolstering range, so think about the point offer you would've made and create a range that goes upward or in your favor from that, you can actually seem really flexible and kind, but also get the maximum financial outcome. So bolstering ranges are effective. Another caveat, beyond these potential costs, being not ambitious enough or being too aggressive, is well, what if you wanted to make the first offer, but they got to it first? What can you do? Is it just hope lost?

Emma: Well, you can actually just ignore their offer on anchor and make a new first offer, right? You want to still make the offer that you thought would be most in your favor get justified even if they get to it first. You can try to sidestep that and still name your number so that you are now kind of negotiating between those two anchors. So one example of resisting a strong anchor, again, comes from our friends Lax and Sebenius. This is from their experience advising a software service consulting firm in the sale of a company. So the owner was hoping for 40 million, but they were willing to sell for as low as 20. Their reservation price was 20. So you could imagine their perception, the seller's perception of the ZOPA is, I will go as low as 20. I'm hoping the buyer can go up to 40. However, the buyer comes in and says, we've made 19 acquisitions this year, and we've never paid more than 10, 12 times earnings. The implied price of that anchor, this is just a justification, but it still sets an anchor because anyone can do the calculation. In this case, the implied price was 15 to 18 million, which is lower than the seller's reservation price. So that leads the seller to update, oh no, right? Like they can probably go higher than 18, but we can't walk them up very high, right? That really shrinks the ZOPA, this is not good for us. Lax and Sebenius advised the seller to just ignore this metric. Instead of now kinda quibbling over this 15th to 18 and try to getting them up to 25, let's think about is there another reasonable way to value this company? And so they prepare an aggressive discounted cash flow analysis, which throws out the old anchor and now argues down from a new high price instead of up from the old anchor. And this isn't specific advice on how to use a certain metric, whether to use DCF or PE, but rather just to showcase for most good services companies, et cetera, there are multiple reasonable standards for valuing, that good or service. And so think about the standard that is justified but also advantageous. And then you can use different standards to have a reasonable conversation and negotiation from different perspectives. What if their first offer is extremely attractive, right? Should you just accept it? I'm gonna suggest "no", don't just accept it, keep negotiating. That helps you get more. But it also makes them feel better. Imagine you make the first offer, did all this work, thought it was really ambitious and they're just like, "Oh, okay, yep, deal done, great." You would probably feel pretty bad right? In that moment, you know that your first offer wasn't ambitious enough. It didn't push them past the reservation price, it was probably right too moderate. But if they push back, you probably feel better like you claimed more of the pod. And indeed research shows that. So in a study the one of the best predictors of post negotiation satisfaction was the number of concessions. If someone accepts your offer immediately you feel less satisfied and greater regrets than if they delay. They just think about it for a minute. They're like, "Oh I don't know if I can do that." If they sit on it, then it seems like, okay, you've really pushed them. That makes you feel more satisfied, less regrets. Or if you do a few back and forth, then you also feel more satisfied, less regret. The degree to which you kind of have this back and forth and feel tension signals how much you've pushed them to their limit, which influences your satisfaction in the negotiation. So if you get an extremely attractive first offer, at least delay, don't accept right away, right? Think about it, help them feel good about it and see if there's right additional concessions you would like. Do the benefits of making a first offer, outweigh the costs? In most situations, yes, I will tell you, you already have a leg up just by being here on all the negotiation students you might face at Booth in the years to come or at other schools. We tend to come in with the belief that we should not make the first offer, and yet research really shows that we should. How do we know we have lack of experimental data, consensus among professionals in various fields, and if we think through these thought experiments, we can realize in most cases, unless there's large asymmetric information, you cannot do the research, there are no way to get a good gauge on their reservation price. Then that's the one valid exception. But in most cases you can do good research and you should make the first offer. So bringing that all together as step by step, you would head into a negotiation thinking about do I wanna negotiate? What do I want and why? My position issues, interests. what is my BATNA, the best alternative to a negotiated agreement?

Emma: What is the expected value of that BATNA, my reservation price? What do I think the other party's reservation price is? Because that influences the zone of possible agreement. Once I know the zone of possible agreement, I'm going to plant my first offer just outside of that with a reasonable justification and then we're gonna go from there. So that kind of sets the ground for how to get into a negotiation. Then you spend a lot of time in class actually figuring what do we do now at the table? How do we make concessions? How do we share information, and how do we approach different types of negotiations? So everything I've shared today is actually specific to distributive negotiations. Distributive negotiations are issues on which parties, preferences are imposing directions and you care about it equally. So price, selling a company and all we care about a price is a distributive negotiation. Every dollar you give me, you lose, I gain, and it's of equal value to each of us. So the dynamics we talked about today are about distributive negotiations. If you take a course, you learn there's a lot of different types of negotiations. There's also integrative negotiations, where we care about different things differently, or there might be a common issue or interest negotiations in which we actually care about the same thing. There's also different types of negotiations. We are just thinking through a dyadic negotiation today, but there's also lots of team and multi-party negotiations, virtual versus in-person negotiations. There's negotiations you might do as an agent versus yourself. And so there's lots of things to expand on and dive into through nine weeks of a negotiations course. So I hope this gave you a little bit of taste of what you might learn and the approach to studying and researching and practicing and learning negotiations. And I hope to see you all at Booth. So I'm happy to take a little bit of questions. I think we have a little bit of time, but thanks for sticking with me.

Kara: Yeah, thank you so much. That was great and interactive. I really appreciate all the dialogue in the chat as well. So through in the Q&A, I'll read out some of the questions verbally that Professor Levine can answer. And I'm trying to clump them like the ones that were similar questions cause we have about 15 minutes left. So what nonverbal cues have you experienced that have alerted both parties that negotiations are going poorly? Is anything like on the non-verbal aspect?

Emma: Yeah, we spend a lot of time in my class talking about anger and emotion in negotiations and obviously a lot of cues to emotion or non-verbal, right? Like verbal brows, sweating, red face. I mean some of that is embarrassment or anxiety too. But yeah, I mean you can read from a person's face if they're offended, or angry, or outraged and that's usually a pretty good diagnostic that you've said something that has struck cord and what we talk about in class is not to necessarily misinterpret that as it's going poorly, right? You might have learned something really valuable, right? So if you say, "Well I'm not willing to do it for less than 8 million," and their face is like upset, yes, that could be a turning point where it goes poorly or you can pause for a moment to realize okay, this means, like I've struck a nerve, they care a lot about that issue. That's probably a position they can't take, right? Let me write that down and think about how to utilize that. And so we didn't talk about integrative negotiations today, but if you realize okay, they really, really care about that issue and they're not gonna budge, how can I give them that and ask them for something I care about in return. So there's a lot to the non-verbal cues and you could use that to both of your advantages and there's also times where you might wanna use it to kind of cool off.

Kara: Makes sense, thank you. What are some tips that can be used when one party does not agree with the other party's justification?

Emma: So I think that's why you always want to prepare your own justification. Before you come to the table you wanna do your own research and kind of have your own script and your own justification, so that if your partner gets to it first and says, you know, I want this for these reasons and you disagree, you can just say, well this is how I'm thinking, this is what I came to and what I think is justified. And you can discuss that, it doesn't... Depending on your view of their justification, it doesn't have to be heated, right? You can both have a discussion about why you came to the conclusion you did and try to come to common ground from there. If you fundamentally think they're being unfair, or deceptive, or unethical, you can walk away, right? There are costs, and we talk about this a lot in my class, there are costs about doing a deal with an unethical partner. And so if you think you're in that world, then there are different tips to kind of give them maybe one chance to reform and then decide whether it's actually not worth the risk of doing a deal with them.

Kara: Great, there is question under the umbrella of M&A. So this is one that kind of hits on the variety that came through. How does anchoring work for a seller in a typical M&A process where the seller can only react to the bids that they've received?

Emma: Yeah, I need to think about this for a moment. It's funny cause I've been thinking this for seven years and I haven't gotten like a specific question of this sort, but I'd say, you know, you still have some power, right? So I guess there there's two answers. So one, there are some domains in which there is one party that makes the first offer, so if you're reacting to a bid, then you know your job is to basically get the best bid and the way you're gonna negotiate is by buying offers from each other. And that's a different strategy than just focusing on kind of how to carve away value from this particular party. Nonetheless, you still would've wanted to do the calculation and the effort to figure out, what is the number that you want and figure out which of the possible bids is going to get that to you. Even in a bidding process though, there's typically going to be some back and forth even following the bids where you have control and you're negotiating over whether it's price or some other part of the deal. Like you know, ownership or you know, naming, there's a million different issues. And so even there, there's you're gonna wanna think about what are your interests, what would you trade for? And there might be different first offers on different issues that you would introduce.

Kara: Thank you, in a case where you make the first offer but realize you could have done better, how do you steer that negotiation back in your favor? This was asked in a couple different formats.

Emma: Yeah, it's hard. So I mean the first offer is, you know, they are the optimal strategy but they're not without risk, right? And so once you've named that first offer, it does anchor the negotiation, right? That's the whole point, and so it's really hard to backtrack. If you say, you know, I want 20 million and then you realize you could have asked for 40, you're gonna need to figure out a justification for going up and if you can't, I'd say it's not really right to just go up for the sake of going up to kind of re-anchor once you realize you've made a mistake. And so through my class, my goal is to help students get as much preparation, as much research as possible so that they are not making first offers that undersell themselves because that is a risk. And once you've done that, I think it's a hard game and a fine line to walk to try to change your justification and I want to steer people away from that in general to try to keep them ethical.

Kara: Are there any like discussion topics or in any way you approach or talk about negotiating effectively across cultures or countries?

Emma: Yeah, so we do a whole class on negotiating across differences, where we talk about race, gender, and culture. The kind of context specific, so I mean, you know, it would be a little bit hard to unpack it here, but right there are cultural differences and so we talk about a few of these differences in my class. So there's differences between east and west in terms of norms of trust in strangers. So in the west it tends to be innocent and until proven guilty, we start with high trust and then when trust is broken, you lose trust quickly. And so kind of trust in the long run ends up kind of being the same as in other cultures but it starts high and then you can break it. Whereas in the east it's kind of incremental. You trust strangers at a low level and then you build trust over time. And so those differences in initial trust influence negotiations because the influence how much you're willing to share and how transparent you're willing to be with strangers when it's a first negotiation. So that's just one example. There's other cultural differences too, but we do spend a lot of time in class kind of getting into that to help you make the most of cross-cultural negotiations and think about when you might wanna bring in a mediator if kind of the gaps are too big.

Kara: Yeah, that's helpful. There was another question about what other topics come up in negotiation classes. So in addition to the cultural and cross country negotiations, other topics you could share in your classes or other, like I know there's an advanced negotiations class, some other topics that come up.

Emma: Yeah, so there's kind of like content topics but then also strategy topics. So in a typical negotiations class, you'll do a week on a classic distributive negotiation, which is kind of what today mimicked, but in a very quick condensed way. Then you would do integrative negotiations, which is now we're going to do multi-issue negotiations where there's lots of issues on the table and we have to figure out how to come to agreements where we can actually grow the pie and trade on issues that benefit both of us. Then moving to multi-party negotiations where you're doing a five person team negotiation, there's multiple issues and multiple people and then you might do kind of team on team negotiations, or you kind of basically different formats where the issues have different formats and the people have different formats. But then, you know, in my class we'll spend a week on race, culture and gender. We'll spend a week on game theory, so kind of more rational approaches to negotiations, what we can learn from behavioral game theory, spend a week on ethics and negotiations, emotion and negotiations, biases and negotiations. So bringing in a lot of kind of classic decision making research and then seeing how it influences different parts of the negotiation process.

Kara: That's great and I promise Professor Levine did not ask me or pay me to say this, but whenever I've talked, I've worked here for 15 years and ask so many alumni and students like favorite classes or classes they still pull from today, even 20 years out, negotiations is always one of those classes. So it's great to hear that. And there was a question about gender differences, anything you could like briefly share. I'm sure there's a lot of research on that about the gender differences between style and competence levels.

Emma: Yeah, so there's a really large body of research on gender in negotiations and I think what's interesting is that's really evolved over the last couple years. So the classic rhetoric is, women don't ask. Women don't engage in negotiations enough, which is kind of why they maybe have salary inequities and they should negotiate more and to some extent that's true and I teach some of those studies in my class, but a lot of more recent research has come out that suggests it's really context dependent. And so when we think about traditionally masculine typed context, maybe like finance or certain other contexts, we see this reluctance, but when we move into domains that are more feminine stereotypes and you don't see a reluctance to negotiate and so it's not really these fundamental gender differences as much as kind of stereotypes and the identities we assume are relevant to different contexts. And there's certain formats of negotiating that influence gender in different ways. So women tend to actually be quite aggressive and ambitious and initiate negotiations when they're asking or negotiating on behalf of others, not when they're negotiating on behalf of themselves. And so we talk about a lot of these dynamics in my class. Gender is a pervasive issue in the negotiation space, but I think we're making on a lot of headway on how to improve gender gap.

Kara: Great, thank you. We'll do like two more questions. So anyone know any recommended books? I know you already mentioned "Getting to Yes", anything else that comes to mind?

Emma: "Getting to Yes" is great, "Negotiation Genius" by Max Bazerman and Deepak Malhotra is also excellent and pretty recent.

Kara: Great, well then as we wrap up here, knowing that the audiences, many of them are going to be applying to any of Booth programs hopefully in the next year or so, anything you could share that you think really stands out about Chicago Booth? We know there's many great schools out there, but just in your observations of our students or being a professor here, anything you could share about, you know anything about our culture, community, that sort of thing?

Emma: Yeah, I think both as a faculty and as a student, Booth as the best place to learn, there's such a focus on research and learning that I think the experience here is really enriched and different than you get other places. I have choices to teach at other institutions, I have lots of friends at other institutions, but I think here, like you learn the research, you learn what's cutting edge, you learn what's new. That's what we pride ourselves on as faculty and I think it makes for a really rich and also a fun learning environment.

Kara: Great, thank you. I really appreciate that and just a couple final thoughts. As I mentioned at the beginning, we do these master classes to give a snippet of what it's like in the classroom. I think this was such an excellent example, so please join me in thanking Professor Levine. We can't thank you enough for your insights and your time and energy today. And then keep in mind we will resume our kind of traditional in-person campus visits in the autumn. So keep that in mind, stay in touch with admissions no matter which program you're interested in, you can always reach out to me directly. I'm more than happy to connect, to point you in the right direction. But as much as you can keep engaging with us, whether it's virtually or being able to visit campus again and sit in on classes, that sort of thing. So we're here for you to support you throughout the process. And again, thank you Professor Levine, and we hope to stay in touch, thanks everybody.

Emma: Thanks everyone, thanks for coming.

Kara: Thank you, bye everybody.