EV

Negotiation Fundamentals – Distributive Bargaining Strategy & Tactics

Distributive Bargaining Situation

  • Key Terms
    • Target point: negotiator’s optimal, hoped-for outcome.
    • Resistance point (reservation price): negotiator’s bottom line – the worst acceptable agreement.
    • Asking price: seller’s initial offer.
  • Preparation
    • Both parties should decide starting, target, and resistance points before any negotiation begins.
  • Bargaining Range / Settlement Range / Zone of Potential Agreement (ZOPA)
    • \text{ZOPA}=\text{Buyer\ Resistance}-\text{Seller\ Resistance}.
    • Positive ZOPA → buyer’s resistance is above seller’s → agreement possible.
    • Negative ZOPA → buyer’s resistance below seller’s → likely stalemate.

Role of Alternatives (BATNA / WATNA)

  • BATNA = Best Alternative To a Negotiated Agreement.
  • WATNA = Worst Alternative To a Negotiated Agreement.
  • Power implications
    • Strong BATNA ⇒ more confidence, willingness to walk, greater share of the pie.
    • Good bargainers keep improving their BATNAs while talks proceed.
    • Strong alternatives shape counterpart perceptions & concession patterns.

Settlement Point

  • Goal in distributive bargaining: reach any point within the positive ZOPA.
  • Parties expect to settle below their own target yet above their resistance point.
  • Satisfaction drivers
    • Economic result vs. target & resistance.
    • Relational context (likelihood of future interactions).

Bargaining Mix

  • Definition: bundle of all issues on the table.
    • Every item has its own start – target – resistance trio.
    • Some issues mutual; some unilateral importance.
  • Larger mixes ↑ possibility of trade-offs & log-rolling.
    • Bundling several issues generally yields superior joint outcomes vs. single-issue haggling.

Information Management

Discovering the Other Party’s Resistance Point

  • Gather as much intelligence as possible, but control what you reveal.
  • Dual goals: obtain useful data & protect/shape your own data.
  • Complexity: each side simultaneously seeks & conceals information.

Influencing the Other Party’s Resistance Point

  • Shape their perception of what is realistic.
    1. Lower their estimate of your cost of delay/impasse (they think you can wait).
    2. Raise their estimate of their own cost of delay/impasse.
    3. Decrease their perceived value of contested issues.
    4. Increase their belief that you highly value certain issues (they may concede there).
  • Use caution; overly aggressive manipulation can backfire.

Four Tactical Tasks in Distributive Bargaining

  1. Assess the other side’s target, resistance, and termination costs.
  2. Manage the other side’s impressions of your corresponding numbers.
  3. Modify their perceptions of their own numbers.
  4. Manipulate actual costs of delaying or breaking off talks.

1 – Assessing the Other Party

  • Indirect Assessment
    • Observation (body language, reaction to proposals).
    • Public documents, annual reports, industry data.
    • Online forums & discussion boards.
    • Expert consultations.
  • Direct Assessment
    • Rarely offered voluntarily & accurately.
    • Possible when counterpart is at its limit or needs rapid closure.
    • Asking direct, specific questions may occasionally elicit candid answers.

2 – Managing Their Impressions of You

  • Screening (concealment)
    • Say little; avoid premature disclosures.
    • Calculated incompetence: delegate answers to someone “unaware.”
    • Single spokesperson funnels all information.
    • Flood the table: many issues, only a few truly matter to you.
  • Direct Action (selective presentation)
    • Frame data, justify positions.
    • Use emotion strategically (enthusiasm, disappointment).
    • Lengthy, data-rich presentations signal high importance.

3 – Modifying Their Self-Perceptions

  • Make their desirable outcomes look costly/hard.
  • Re-interpret consequences of their proposals.
  • Conceal favourable information they might exploit (e.g., looming deadlines on your side).

4 – Manipulating Actual Costs of Delay

  • Deadlines
    • Party without deadline pressure wields leverage.
  • Disruptive Action
    • Strikes, public complaints to raise counterpart’s pain of stalemate.
  • Involving Third Parties (mediators, higher management, regulators).
  • Scheduling
    • Compress timeline → create urgency; stretch timeline → exhaust.

Positions Taken During Negotiation

  • Critical elements
    • Opening offer (first number on the table).
    • Opening stance (tone: competitive vs. cooperative).
    • Concession strategy throughout.
  • Sensitivity to
    • Value characteristics (magnitude, relevance).
    • Content characteristics (how framed, rationale provided).

Opening Offers

  • “First-Offer Advantage” (anchoring)
    • First number strongly shapes bargaining zone perception.
    • "Phantom anchors" (numbers floated but not formal offers) also influence, yet risk backlash.
  • Making the first offer
    • More likely when one holds a strong BATNA.
  • Exaggerated openings
    • Pros: wider range, more room to concede, stronger anchor.
    • Cons: appear unreasonable, motivate early walk-away, damage credibility.

Opening Stance

  • Reflects attitude: cordial, tough, flexible, win-win, etc.
  • Consistency rule: stance & first offer should align; mixed signals create confusion.
  • Timing matters: stance conveyed via words, body language, and contextual cues (room setup, attire).

Concessions

Initial Concessions

  • First offer + counteroffer establish initial bargaining range.
  • Options after first round
    • Hold firm.
    • Make concessions (signals flexibility/cooperation).
  • First concession = symbolic indicator of how the rest may unfold.
  • Reasons to stay flexible
    • Gather intelligence about counterpart’s objectives.
    • Build cooperative climate.
    • Keep momentum.

Role of Concessions

  • Essence of negotiation; absence ⇒ stalemate.
  • People resent hard “take-it-or-leave-it.”
  • Psychological satisfaction ↑ when settlement reached via progressive give-and-take.
  • Reciprocity norms
    • Link your concession size/timing to theirs to promote balance.
  • Package concessions
    • Offer multiple items together; produces integrative breakthroughs and helps mask real priorities.

Pattern of Concession Making

  • Decreasing concession sizes often telegraph approaching limit.
  • Counterpart observing shrinking concessions will moderate counteroffers.
  • Negotiators focused rigidly on their own target resist such cues.

Figure 2.4 (Text Data)

  • Concession number (0-5) vs. size ($$) for two negotiators:
    • Both start at $(1,4)$.
    • George: $(2,3)\rightarrow(3,2)\rightarrow(4,1)$ (linear decline).
    • Mario: $(1,4)\rightarrow(2,4)\rightarrow(3,4)$ (flat line, then presumably drops later).

Final Offers

  • Communicate "this is it" either verbally or through no further concessions.
  • Tactics
    • Large final concession ("throwing in" the rest of the range).
    • Personalize concession: “I’m doing this just for you.”

Commitment

  • Definition: pledge to a positional outcome/future course.
  • Often interpreted as threat; can be promise.
  • Requires follow-through credibility.

Preventing Premature Commitment by Counterpart

  • Deny time needed to lock in.
  • Ignore/downplay their threats.
  • Sometimes encourage early commitment (if favourable to you) by reinforcing it.

Exiting a Committed Position

  • Plan escape routes before committing.
    • Let it die quietly (inaction).
    • Publicly restate/re-frame so change is acceptable.
    • Minimize losses; salvage face.

Closing the Deal (Art & Science)

  • Provide Alternatives: offer two or more equivalent packages.
  • Assume the Close: speak as if agreement is done, move to implementation details.
  • Split the Difference: quick, popular, may ignore underlying value differentials.
  • Exploding Offers: tight deadline, high value, forces decision.
  • Sweeteners: “If you sign now, I’ll add …”.

Assessing Agreement Quality

  • Objective outcomes: compare final price/terms to target & resistance.
  • Subjective value (psychological)
    • Satisfaction, relationship quality, procedural justice, self-image.

Hardball Tactics & Countermeasures

  • General response options
    • Label & confront tactic.
    • Ignore (can neutralize power yet appear weak).
    • Counter with own hardball.
    • Build rapport first to reduce usage of such tactics.
  • Typical Tactics
    • Good Cop/Bad Cop: transparent; split discussions or call it out.
    • Lowball/Highball: demand a reasonable offer or walk away.
    • Bogey (pretend an issue matters little/much): stay prepared, verify interests.
    • Nibble (small add-ons at end): insist on full package disclosure earlier.
    • Chicken (extreme threat): neutralize by ignoring, reframing.
    • Intimidation: stand firm, seek third-party support, negotiate as a team.
    • Aggressive Behavior: pause/adjourn; switch to objective criteria.
    • Snow Job (overload with data): slow pace, request clarifications, bring experts.

Distributive Skills Useful in Integrative Negotiations

  • Clear targets & resistance points.
  • Strong opening offer (anchoring still works in integrative contexts).
  • Strategic concession making (signals & information exchange).
  • Commitment management to build credibility without destroying flexibility.

Key Vocabulary Quick Reference

  • Target Point (Aspiration): desired outcome.
  • Resistance Point (Walk-away): minimum acceptable.
  • ZOPA / Bargaining Range: overlap between parties’ resistance points.
  • BATNA / WATNA: best / worst alternative if no deal.
  • Bargaining Mix: set of negotiable issues.
  • Commitment: binding positional pledge.
  • Hardball Tactic examples: good cop-bad cop, lowball/highball, bogey, nibble, chicken, intimidation, aggressive behavior, snow job.

Practical / Ethical / Philosophical Implications

  • Ethical line between strategic concealment and deception.
  • Over-reliance on distributive moves may erode relationships needed for integrative gains.
  • Manipulating perceptions (deadlines, costs) must balance effectiveness with reputational risk.
  • Transparency & fair process boost subjective value even in zero-sum settings.