Dear Negotiator Explorer,

Welcome to Week 1 of our NegoAI series.

Today we'll explore a fundamental truth about negotiation: any time meeting your goals requires the cooperation of others, you must negotiate. And to negotiate effectively, you must understand what drives the other party's decisions.

Our research shows that combining negotiation expertise with LLM capabilities leads to better and more efficient outcomes.

This newsletter will first present the theory of interests, followed by practical applications using ChatGPT and Claude through an original negotiation scenario inspired by a Harvard Business School role-play.

The Power of Understanding Interests

Most negotiators focus solely on what people say they want - their positions. However, the key to unlocking successful negotiations lies in understanding why they want it - their interests.

Research shows that even skilled negotiators often fail to find shared and complementary interests in about 50% of negotiations.

Think of interests and positions as an iceberg. Positions are visible above the water - they're the demands and requirements that people openly state. But beneath the surface lie the true interests - the needs, concerns, and motivations that drive those positions.

Moving Beyond Surface-Level Demands

Three common psychological barriers often prevent negotiators from discovering underlying interests:

1. confirmation bias (seeing what we expect to see),

2. fixed-pie bias (assuming negotiations are always zero-sum), and

3. trying too hard to accommodate without asking probing questions.

A fourth critical barrier is the tendency to stop investigating when information is incomplete.

Instead of making assumptions and moving forward with incomplete data, skilled negotiators develop hypotheses about the other party's interests and systematically verify them during the negotiation process.

Skilled negotiators ask themselves:

What underlying needs and pressures drive the other party's position? How do personal and organizational motivations shape their approach? What unstated concerns might influence their decisions?

The key question in every deal is: "Why is the other person sitting there?"

The Art of Interest Discovery

Put yourself in their shoes. Before entering any negotiation, imagine sitting in the other party's chair. Consider their needs, pressures, constraints, and potential priorities.

Then rank these potential interests based on their likely importance to the other party.

Research thoroughly to understand the context the other party operates within. This includes industry dynamics, organizational pressures, and relevant stakeholder concerns.

Listen actively during discussions. The most effective negotiators ask twice as many questions as average ones, focusing particularly on open-ended questions that start with "how," "what," or "when."

They test their understanding by rephrasing responses and periodically summarizing what they've heard.

Treat your initial assumptions as hypotheses to be tested. During the negotiation, systematically verify your assumptions about their interests through careful questioning.

This week’s analysis with ChatGPT and Claude

This week's analysis features an original negotiation scenario inspired by a Harvard Business School role-play. We will demonstrate how to use LLMs strategically by providing them with the seller's perspective only, then analyzing how they:

1. identify and rank the seller's core interests

2. develop multiple negotiation scenarios based on possible buyer interests.

Prompt

Hi Brama, I need your expertise to analyze a negotiation scenario. Please review the attached seller's instructions and assist with the following tasks:

1. Key Facts Summary: Extract and concisely summarize the essential details from the seller's instructions.

2. Seller's Interests Analysis: Identify and rank the seller's primary interests (defined as needs, desires, motivations, constraints, concerns and fears) in this negotiation.

3. Buyer's Interests Analysis: Create 3 distinct scenarios for the potential buyer, each including ranked interests (defined as needs, desires, motivations, constraints, concerns and fears).

4. Targeted Questions: Create open-ended questions to help assess which buyer scenario is most likely.

ChatGPT’s Response

Key Facts Summary

• The Taylors own a house at 43 Cedar Lane and an adjacent 10,000-square-foot parcel.

• The parcel does not meet the minimum building lot size required by local zoning but has potential value if integrated into another property.

• The Taylors bought the parcel eight years ago for $20,000, intending to use it for a tennis court but only occasionally used it as a vegetable garden.

• The Taylors are relocating out of state after securing a favorable price for their house (not including the parcel) and are seeking to sell the parcel before leaving.

• They have a standing $17,000 offer from their house buyer for the parcel, which is less than their purchase price but would be acceptable if no better offer arises.

• Their primary focus is on selling the parcel to their neighbors, the Riveras, who previously declined to purchase it jointly.

Seller's Interests Analysis

1. Maximizing Sale Price (Primary Need): The Taylors aim to sell the parcel for more than $17,000, which they see as an absolute minimum. They prefer to recoup as much as possible of their original $20,000 investment plus the cost of upkeep and taxes over the years.

2. Quick Sale (Constraint): With their impending move out of state, the Taylors need to finalize the sale promptly to avoid managing the parcel from afar.

3. Straightforward Transaction (Motivation): They are only interested in a straight cash deal and want to avoid complex arrangements like seller financing or easements.

4. Minimize Uncertainty (Concern): The Taylors prefer a deal with their neighbors to mitigate potential issues, as they have limited options and time.

5. Avoid Undervaluation (Fear): They are aware of the unique nature of the property and aim to avoid selling it for less than its perceived potential value.

Buyer's Interests Analysis

Scenario 1: Riveras Want Buffer and Yard Space

• Primary Need: Increased yard space or a buffer from the new neighbors.

• Motivation: Improve privacy, enhance property aesthetics, and increase usable land.

• Constraint: Financial limitations or competing priorities for discretionary spending.

• Concern: Whether the parcel adds sufficient value to justify the expense.

• Fear: Overpaying for land that might not significantly enhance their property value.

Scenario 2: Riveras See Long-Term Investment Value

• Primary Need: A strategic investment for future property value appreciation.

• Motivation: Potential resale benefits or integration into future development plans.

• Constraint: Immediate financial liquidity or perceived low likelihood of high returns.

• Concern: Market uncertainty regarding the parcel's future value.

• Fear: Risk of zoning changes or other constraints diminishing investment potential.

Scenario 3: Riveras Have Practical Use in Mind

• Primary Need: Functional use (e.g., additional garden space, play area).

• Motivation: Enhancing daily utility of their property.

• Constraint: Limited interest in land that doesn't directly enhance current usability.

• Concern: Cost of landscaping or integrating the parcel into their property.

• Fear: Limited use for the land or inability to recover costs if resold.

Targeted Questions

1. Motivations and Interests:

   • What value might you see in owning this parcel of land?

   • How do you think this property could complement or enhance your current home or lifestyle?

2. Future Intentions:

   • What are your thoughts on how this land could be used in the short or long term?

   • How might owning this parcel align with any future plans you have for your property?

3. Constraints and Concerns:

   • What factors would you consider most important in deciding whether to acquire this parcel?

   • Are there any challenges or uncertainties you’d want to explore further before making a decision?

Claude’s Response

Key Facts Summary

Property Details

• Location: 43 Cedar Lane (vacant parcel between Taylor and Rivera properties)

• Size: 10,000 sq ft (~929 sq meters)

• Zoning: Below minimum building lot size (less than half of required half-acre)

• Purchase Price: $20,000 (8 years ago)

• Current Alternative Offer: $17,000 (from house buyer)

• Property Use: Occasional vegetable garden, never developed

Situation Context

• Sellers (Taylors) are moving out of state due to early retirement

• House already sold to private buyer (good price, no broker fees)

• House buyer will pay maximum $17,000 for the parcel

• Previous attempts to sell to other neighbors (north/south) unsuccessful

• Historical context: Riveras declined joint purchase 8 years ago

• Relationship with Riveras: Neutral, minimal contact

Deal Parameters

• Must exceed $17,000 (absolute minimum)

• Cash deal only

• No seller financing, special easements, or additional terms

• Local real estate market: Declined over decade, recent partial recovery

• Unique property - no clear market value benchmark

Seller's Interests Analysis

1. Primary Financial Interests

• Maximize sale price (above $17,000 minimum)

• Recover original investment ($20,000)

• Recoup maintenance and tax costs

• Complete transaction before relocation

2. Transaction Efficiency

• Quick resolution before moving

• Clean, uncomplicated deal structure

• Avoid ongoing property management from out of state

• Minimize transaction costs

3. Risk Management

• Secure guaranteed sale

• Avoid property becoming stranded asset

• Prevent future liability or complications

• Maintain good neighbor relations

Buyer Potential Scenarios

Scenario 1: Privacy-Focused Buyer

Ranked Interests:

1. Buffer zone from new neighbors

2. Maintain privacy and quiet enjoyment

3. Property value protection

4. Cost management

5. Avoid construction near property line

Scenario 2: Property Enhancement Buyer

Ranked Interests:

1. Expand usable yard space

2. Add recreational amenities

3. Increase property value

4. Investment potential

5. Construction/development flexibility

Scenario 3: Risk-Averse Buyer

Ranked Interests:

1. Control future development

2. Prevent undesirable neighboring uses

3. Maintain current neighborhood character

4. Minimize financial exposure

5. Avoid property maintenance burden

Strategic Discovery Questions

General Context Questions

1. "What changes have you noticed in the neighborhood since you've lived here?"

2. "How do you currently use your outdoor space?"

3. "What are your thoughts about the recent development in this area?"

Scenario-Specific Questions

Space Focus:

1. "What outdoor activities does your family enjoy?"

2. "How do you envision using your property in the next 5-10 years?"

3. "What aspects of your current yard space work well or could be improved?"

Investment Orientation:

1. "What opportunities do you see in this local real estate market?"

2. "How familiar are you with the area's zoning regulations and recent changes?"

3. "What development trends have you observed in similar properties nearby?"

Problem Avoidance:

1. "What concerns do you have about future development in the neighborhood?"

2. "How important is maintaining privacy and space between properties to you?"

3. "What experiences have you had with property line or neighbor issues?"

Value Exploration Questions

1. "What would make this additional land particularly valuable to you?"

2. "How would acquiring this parcel impact your long-term plans for your property?"

3. "What considerations would factor into your decision about investing in additional land?"

This Week’s Exercise

Take a current negotiation or conflict you're facing and spend 20 minutes analyzing it through the lens of interests:

1. Write down the stated positions of all parties

2. For each position, ask "Why?" at least three times to dig deeper

3. List potential underlying interests you've identified

4. Consider how understanding these interests might open up new solutions

Preview of Next week

Next week, we'll explore another fundamental concept: BATNA (Best Alternative to Negotiated Agreement), how understanding alternatives shapes negotiation power, and how LLMs can help identify and strengthen your alternatives.