Frankie Ferrara
Q1.
Jewel: estimated benefit of Z1 over Z2 is $5/unit.
Acme: quoted Z2 CPUs at $35/unit
Beta: quoted Z1 CPUs at $38/unit
Condor: only produces Z2 CPUs
a. The BATNA in the negotiation with Condor is to buy the Z1 CPUs from Beta. It is the best alternative considering the $5/unit benefit of Z1 over Z2 CPUs compared to the$3 difference between Acme and Beta’s offers.
b. Jewel’s reservation price in negotiating with Condor is $38 - $5 = $33.
There’s a 50% chance to negotiate with Acme a $28/unit with Acme.
c. Jewel’s BATNA is to negotiate a $28/unit with Acme.
d. The new reservation price base on the EMV is $30.5. 50% $28 EMV = $30.5 50% $33
Condor: Sell to Jewel, 20% chance to sell to one of Jewel’s competitors at $30/unit or 80% chance to liquidate at $15/unit.
e. Condor’s BATNA is to sell to one of Jewel’s competitors at $30/unit.
f. Condor’s reserved price based on EMV is $18. 20% $30 EMV = $18 80% $15
g. SRP = $18 |-------------------------ZOPA-------------------------| BRP = $30.
h. Considering that condor is risk averse, its reservation price would be 80% x $ 15 = $12.
Q2.
Mary put her house on the market for $215k and the first offer she received is 2 weeks later at $170k. Mary’s BATNA is this negotiation is to keep the house waiting for another buyer to make an offer or to try to find a lessee to rent the house. Mary’s reservation price depends on several factors including:
The current fair market value of the house
How pressed is she to sell the house (is she selling it out of an urgent need for money?)
The prospects of the real estate
Jewel: estimated benefit of Z1 over Z2 is $5/unit.
Acme: quoted Z2 CPUs at $35/unit
Beta: quoted Z1 CPUs at $38/unit
Condor: only produces Z2 CPUs
a. The BATNA in the negotiation with Condor is to buy the Z1 CPUs from Beta. It is the best alternative considering the $5/unit benefit of Z1 over Z2 CPUs compared to the$3 difference between Acme and Beta’s offers.
b. Jewel’s reservation price in negotiating with Condor is $38 - $5 = $33.
There’s a 50% chance to negotiate with Acme a $28/unit with Acme.
c. Jewel’s BATNA is to negotiate a $28/unit with Acme.
d. The new reservation price base on the EMV is $30.5. 50% $28 EMV = $30.5 50% $33
Condor: Sell to Jewel, 20% chance to sell to one of Jewel’s competitors at $30/unit or 80% chance to liquidate at $15/unit.
e. Condor’s BATNA is to sell to one of Jewel’s competitors at $30/unit.
f. Condor’s reserved price based on EMV is $18. 20% $30 EMV = $18 80% $15
g. SRP = $18 |-------------------------ZOPA-------------------------| BRP = $30.
h. Considering that condor is risk averse, its reservation price would be 80% x $ 15 = $12.
Q2.
Mary put her house on the market for $215k and the first offer she received is 2 weeks later at $170k. Mary’s BATNA is this negotiation is to keep the house waiting for another buyer to make an offer or to try to find a lessee to rent the house. Mary’s reservation price depends on several factors including:
The current fair market value of the house
How pressed is she to sell the house (is she selling it out of an urgent need for money?)
The prospects of the real estate