By D. Lyn Hunter, Public Affairs
Posted March 17, 1999

Though the football rivalry between Cal and Stanford is legendary, a lesser-known but equally competitive battle between the two schools took place in cyber space in early March.

Sixty-six students from the Haas School of Business, Boalt Hall School of Law and Hastings Law School engaged in feverish one-on-one online negotiations with 66 Stanford business students over a five-day period to see who could sell high, buy low and seal a deal.

The mock negotiations are part of a course that Tim Dayonot, an adjunct professor at the Haas School, teaches to familiarize students with the growing phenomenon of electronic negotiations in the global business world.

"With the boom in electronic commerce, more companies are turning to email negotiations," said Dayonot. "It's more convenient, less expensive and allows participants time to reflect before they respond, a luxury you don't get when negotiating in person."

To add some realism, drama and a hint of Big Game rivalry to the project, Dayonot invited Stanford business students to participate. The Cardinals enthusiastically agreed.

The exercise began when the Stanford students, designated as sellers, advertised the sale of a fictitious set of tax law books on the Internet and Berkeley students, as buyers, responded to the ad. Once the Stanford students replied to that initial inquiry, the negotiations began in earnest.

Some deals were sealed within a few hours, after only two or three exchanges, while others involved a flurry of heated offers and counter-offers that stretched over several days. A few responses were only two sentences long, while others went on for pages. The highest price paid for the set of books was $6,500; the lowest bid came in at $3,000.

Surprisingly, more than one-fourth of the class failed to make a deal. Dayonot attri-butes this to students' inability to create rapport with the opposing team.

"The most important factor in any deal-making situation is building rapport with the other side and this is difficult to achieve in electronic dialogue," said Dayonot. "Non-verbal cues, which people rely on so heavily during face-to-face negotiations, are missing from the somewhat sterile atmosphere of electronic communication, making it hard to create a personal connection."

Several students attempted to create rapport by engaging in a little cyber chit-chat before embarking on the actual negotiations. Others did background searches on their opponents to uncover clues about their personalites. Some carefully timed their responses as part of their strategy.

"A quick response may indicate the buyer is anxious, thereby encouraging the seller to increase the price," said Dayonot.

Dayonot hopes the exercise will teach his students how to approach this novel but rapidly growing way of doing business.

"A lot of students pushed too hard and ended up with no deal," said Flavio Feferman, a 33-year-old Haas Business School graduate student who paid $4,350 for the books. "My opponent initially came on very strong but we relaxed, found a groove and settled on a deal that was mutually beneficial."

March 17 - 30, 1999 (Volume 27, Number 27)
Copyright 1999, The Regents of the University of California.
Produced and maintained by the Office of Public Affairs at UC Berkeley.
Comments? E-mail berkeleyan@pa.urel.berkeley.edu.