Home            Blog
Showing posts with label resolutions. Show all posts
Showing posts with label resolutions. Show all posts

Wednesday, February 27, 2013

A recent study of selfishness in negotiation has interesting results


The Dictator Game: Justifying Selfishness in Negotiation

 / MEETING FACILITATION
In a recent study of selfishness in negotiation, Fei Song of York University and C. Brian Cadsby and Tristan Morris of the University of Guelph had participants play the “dictator game,” adapted from experimental economics literature. In this game, Party A is given a sum of money to allocate between himself and Party B. Because Party B has no power, Party A’s allocation goes into effect without debate. The dictator game captures the essence of negotiations in contexts with an extreme power differential.
Song and her colleagues compared the behavior of people who played the role of Party A on their own versus those who made the allocation decision as part of a two-person team. The authors also compared how males and females behaved in the role of Party A. Male participants were significantly more selfish when they represented a team than when they acted alone; female participants were less influenced by whether they represented only themselves or a two-person team.
The results for males were broadly consistent with past research by Professor Kristina A. Diekmann of the University of Utah, which showed that negotiators are more selfish when they can attribute selfish behavior to their group rather than to themselves. As David Messick of Northwestern University has observed, football coaches don’t justify the decision to take a new position by saying, “I want more money.” Rather, they tend to say, “I need to protect the financial interests of my family.” Obviously, the two statements mean more of less the same thing.
Song and her colleagues raise the possibility that female negotiators are less influenced by the social context of representing a group. These results shine new light on claiming behavior as it relates to gender and whether negotiators act alone or as part of a team. Specifically, when negotiators begin to reference their family, department, or team, they may be about to claim more than their fair share of the pie.

Tuesday, February 19, 2013

Business Negotiations and the Return of the LBO


Business Negotiations and the Return of the LBO

 / BUSINESS NEGOTIATIONS
Computer giant Dell’s potential $23 billion leveraged buyoutcould mark the beginning of a new era of sky-high-priced acquisitions, writes Matt Wirz in the Wall Street Journal.
Dell founder Michael Dell and private-equity from Silver Lake Partners are seeking a reported $15 billion in financing as they shop the company. The last jumbo-sized leveraged buyout – an acquisition with a purchase price financed through equity and debt – took place back in the pre-recession era, when Blackstone Group purchased Hilton Hotels for $26 billion in 2007.
Private-equity firms have stockpiled about $550 billion in cash, reports Wirz, yet have avoided large deals for fear that economic slumps in Europe and the United States could make the deals difficult to finance. However, the firms are starting to think about wheeling and dealing again, given a recent rise in the stock market and record low costs for the debt that backs buyouts. Banks are also recognizing the potential benefits of lending at relatively high interest rates to highly leveraged companies.
In 2012, bankers arranging a deal for Fortescue Metals Group to raise $5 billion to repay existing debt found themselves facing demand for $10 billion from investors. The deal reportedly caused many in the private-equity business to speculate about how large of a deal they could do, Leland Hart, a managing director for the investment management firm BlackRock told Wirz.
Will the Dell deal mark the return to the heady days of big returns to investors and hefty fees for financiers?Some analysts predict Dell’s debt financing will be snapped up, while others are more pessimistic, given that the company has been in a slump due to slow sales in recent years.
High-priced mergers and acquisitions often fail to live up to the initial expectations of those involved. Yet due to the tendency of business negotiators and other decision makers to be overoptimistic and overconfident, it may be only a matter of time before billion-dollar LBOs are commonplace once again.