Horizon Thinking Involves ________

question 16

Multiple Choice

Horizon thinking involves ________.

• A) determining the optimal value of the negotiator's surplus
• B) making projections about future outcomes
• C) determining your counterparty's BATNA
• D) making projections about the counterparty's reservation point

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Definitions:

Negative Externality

A cost that affects a party who did not choose to incur that cost, often associated with production or consumption activities.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, representing the benefits that could have been received if a different decision were made.

External Cost

An external cost, or negative externality, refers to a cost that a transaction or activity imposes on parties who are not involved in the transaction, such as pollution affecting non-participants.

Positive Externality

A benefit that affects someone who did not choose to incur that benefit, often leading to an under-provision of a good or service.