bargaining

Bargaining or haggling is a type of negotiation in which the buyer and seller of a good or service dispute the price which will be paid and the exact nature of the transaction that will take place, and eventually come to an agreement. Bargaining is an alternative pricing strategy to fixed prices. Optimally, if it costs the retailer nothing to engage and allow bargaining, he can divine the buyer’s willingness to spend. It allows for capturing more consumer surplus as it allows price discrimination, a process whereby a seller can charge a higher price to one buyer who is more eager (by being richer or more desperate). Haggling has largely disappeared in parts of the world where the cost to haggle exceeds the gain to retailers for most common retail items. However, for expensive goods sold to uninformed buyers such as automobiles, bargaining can remain commonplace.

The following items are tagged bargaining.

Status Anxiety

Posted by & filed under Business Negotiations.

Sometimes in negotiation we are forced to deal not only with the issues on the table but also with concerns about status.

One famous instance took place in the late 1980s, when Robert Campeau, head of the Campeau Corporation and then one of Fortune magazine’s “50 Most Fascinating Business People,” tried to acquire Federated Department tores, the parent company of the prestigious department store Bloomingdale’s.

A bidding war over Bloomingdale’s escalated between Campeau and R.H. Macy. Campeau won with an irrationally high offer – but had to declare bankruptcy shortly thereafter.

Negotiation Tips: A Value-Creation Checklist

Posted by & filed under Negotiation Skills.

By following these tips in your next negotiation, you’ll improve your chances of meeting everyone’s interests.

Before you sit down at the bargaining table, imagine a wide-range of options and packages, including some that may seem far-fetched.
When talks begin, remember that getting down to business too quickly can stand in the way of building trust.
Emphasize to your counterpart the importance of separating the “inventing” from “deciding,” as Fisher, Ury, and Patton suggest in Getting to Yes.
Don’t worry about adding complexity. Bringing new issues, options, and parties to the negotiation is likely to create value.
Avoid artificial deadlines, though it can be helpful to decide when it’s time to concentrate on the packages you’ve identified.

Training for Non-Face-to-Face Negotiations

Posted by & filed under Pedagogy.

Negotiating by email poses a set of challenges that one doesn’t often encounter in face-to-face negotiations.

Without the benefit of seeing your counterpart’s body language, what one person might intend to be a straightforward request the other might perceive to be rude.

A legitimate delay responding to an email offer by one party might be construed by the other as a dirty negotiating tactic. If the subject matter being negotiated has an emotional element, the lack of seeing the other party’s facial expression could lead to big misunderstandings.

Dispute Resolution and the Chicago Teachers Union Strike

Posted by & filed under Dispute Resolution.

When a conflict looms, it can be tempting for each side to try to make unilateral decisions on key issues because of the belief that negotiations with the other side will be a dead end. This strategy may pay off in the short term, but it’s important to factor in the long-term costs.

Negotiating the Fiscal Crisis

Posted by & filed under Negotiation Skills.

How can we avert a full-throttle drive over the fiscal cliff? Despite some promising signs of movement on both sides of the aisle, the current negotiation approach – positional bargaining – is bound to bring us dangerously close to the edge.

Are You an Overconfident Negotiator?

Posted by & filed under Business Negotiations.

In 1901, J.P. Morgan wanted to buy the Carnegie Steel Company from its founder, Andrew Carnegie.

Carnegie was 65 years old and considering retirement. As Harold C. Livesay recounts in his book Andrew Carnegie and the Rise of Big Business (Little, Brown, 1975), when Carnegie finally decided he was ready to sell, he jotted down his estimate of his company’s worth in pencil: $480 million. Carnegie had the sheet of paper delivered to Morgan, who took one look and said, “I accept this price.”