Negotiator Cognition

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Negotiator Cognition
Max H Bazerman
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RMTTSU i c -i. ^^ , -^*»''^?'- ^ SovfcCK ^^^S& MAR^J-Jf. February 1911 Acquiring a Company Pase 59 la e^ follovlag oxGreiea you vlll represent Coopeny A (the Acquiror), which is ccrreaely considering scqulrlng CoEpany T (the target) by means of « tender offer. Tou pica to tender la cash for lOOZ of Co^peay T's shares but are tmsura how hl^h a price to offer. Tha rcain cocpllcadoa la this: . The value of Coopany T depends directly on tho ouccoaa of a najor oil ex- ploration project it is current...ly undertaking. Indeed, the very viability of Ccspcny T depends on tho exploration outcot:^. If tho project fails, the coc^p^ny usidor current cicasc^^^Qt uill be tforth nothing— $0/share. But if the project succeeds, the valuo of the cozpcny iindcr current manage- meat could be as hich as $100/shsre. All chsre values betvccti $0 end $100 are considered equally likely. By all cotlcaees, the coispany will be vorch considerably csoro in tho hrinds of Cccpcny A than under current canagemenc. La f£ct, vhatevor tho ulticmto value under current Banagcczcnt, the company vill be vorth fifty percent Eora under the dcnapecant of A then under Company T.

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