BazermanMoore

Creating Value in Negotiation 159
common real-world difference in time preferences. When a businessperson complains
that her negotiating partner is fixated on meeting a certain budget cycle, we encourage
her to view this as an opportunity—in all likelihood, the other side will be willing to
make important concessions if she helps them solve their budget problems! Future
consequences can often be rearranged in a way that gives earlier return to the more
impatient party in exchange for concessions favored by the more patient party.
A multitude of differences between parties can enhance negotiation outcomes.
Northcraft and Neale (1993) have pointed out that skill differences between parties
collaborating on a project—such as a CEO and a COO, two researchers writing a book
together, or partners in a strategic alliance—often contribute to the partnership’s success.
Effectively, complementary skills create the opportunity to make trades in work
allocation, to the benefit of both parties. In their discussion of ‘‘dealcrafting,’’ Lax and
Sebenius (2002) cite a joint venture between auctioneer Butterfields and Internet
auctioneer eBay as a successful partnership based on value creation. Butterfields’
access to upscale commodities combined with eBay’s new distribution mechanism to
create value for both companies. Lax and Sebenius (2002) note a variety of other trades
that can be enhanced by taking advantage of a wide range of differences, including
differences in tax status, accounting treatments, and liquidity. By now, the overarching
message of this section should be clear: To the well-informed negotiator, differences
are not stumbling blocks, but opportunities.
Creating Value through Bets
While trading issues is the most common way to create value in a negotiation, you can also
create value through the development of bets, or contingent contracts. We have found
that the answer to many stalled negotiations is to eliminate the need for parties to argue
needlessly with the other side over their predictions about uncertain future outcomes.
Instead, bets can be a very effective technique for dealing with differing predictions.
You will recall from the discussion of the endowment effect in Chapter 4 that people
commonly overvalue what they own. It is important for sellers to recognize their
susceptibility to this effect and to adjust their expectations. If such adjustments fail to
resolve the dispute, parties may be able to use their differences of opinion to craft a
contingent contract that allows each side to bet on its opinion.
Malhotra and Bazerman (2007) give the example of a client who doubts her
lawyer’s ability to win in court. She might choose to sign a contingent contract with the
lawyer, a common legal practice that guarantees the lawyer a large payment if the client
wins her case and nothing at all if she loses. Similarly, book publishers often pay authors
a sum of money upfront, followed by a fixed percentage of sales revenue, known
as ‘‘royalties,’’ if the publisher earns back the ‘‘advance.’’ If the publisher is skeptical
about the author’s ability, it should be willing to pay the author a higher percentage of
sales revenue in exchange for very little money upfront. If the author is confident of her
book’s success, she will agree.
Now consider the case of a television production company negotiating the sale of
syndication rights to one of its shows, a major sitcom that has just completed its primetime
run, with a major independent television station in one of the three leading