Utility Curves at a Glance

2018-11-05T19:42:21+00:00 Tags: , |

Would it mean more to someone to get a payrise from $15,000 a year to $20,000, or from $100,000 a year to $105,000? You almost certainly preferred the first option above, for a very simple reason: the utlity or value of $5,000 is not constant across every situation, or for every person. Things have different utility based on (for example) how common they are, what they can be used for, and when they are being received. Different types of utility curves include: Diminishing Returns — Money may mean less and less to you personally, the more you have of it. Accelerating Returns — The more money you have, the more you have spare to invest, allowing you to further increase your wealth faster. Parabolic — Too little free time will burn you out, while too much free time bores you... You may want a happy medium in between. Threshold / [...]

Are You Double Counting Issues?

2018-11-05T18:58:25+00:00 Tags: , |

If one of your priorities in a negotiation also impacts a second priority, chances are that you are currently overvaluing the first priority without knowing it. Let's look at how this might arise through an example — imagine you are a politician, weighing up whether or not you should accept a renegotiated bill on healthcare. You have a long list of issues to concern yourself with, but among those are: Cost to Taxpayers, Effective Coverage for the Poor, and Voter Popularity. When evaluating how the deal scores along each of those criteria, it can be extremely easy to fall into the subtle trap of letting the Cost to Taxpayers and Effective Coverage for the Poor scores heavily influence the score you give to Voter Popularity. After all, voters won't love footing an expensive bill, and they surely won't want a bill that only helps the rich... right? This train of [...]

Don’t Be Suprised

2018-06-09T08:34:31+00:00 Tags: , |

"Spend at least twice as much time preparing... as you expect to spend at the table." The #1 emotional sign that a negotiation has gotten the best of you isn't anger or disappointment — it's surprise. Most people don't behave erratically or without reason. They make the most rational decisions they can with the information available to them, and sometimes even signal their intentions beforehand. If the success or failure of a negotiation is going to impact you for years to come (even if the deal is as small as choosing one used car over another), why wouldn't you invest at least two hours of your time researching and preparing for the negotiation? With thanks to: The Harvard Program on Negotiation

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