Don’t Fall for Bad-Faith Bargaining

When you feel desperate to close a deal, it can be tempting to offer as much as you can just to lock it down. This risk can be heightened if your negotiating counterpart is engaged in bad-faith bargaining. New York City’s dealings with Amazon from 2017–2018 offer a negotiation case study in this realm. 

A Controversial Contest

In 2017, Amazon generated ill will for luring hundreds of North American cities and regions into an expensive competition for its alleged second headquarters, dubbed HQ2. When the company ultimately announced it would split HQ2 between the two most obvious locations, New York City and the Washington, DC, area, the contest looked to many like a predetermined farce—a case of bad-faith bargaining aimed at driving up bids and securing favorable tax incentives.

In late 2018, Amazon negotiated with the state and city of New York to build a campus for 25,000 new Amazon workers in Queens. New York’s governor at the time, Andrew Cuomo, promised Amazon $1.525 billion in incentives, as well as support for infrastructure upgrades, job-training programs, and other perks. The company was set to benefit from New York City tax credits worth nearly $1 billion over 12 years.

Many believed New York officials had gotten caught up in a bidding war and given away too much. Indeed, the majority of corporate incentives are offered to companies that would have moved to an area even without them, according to W.E. Upjohn Institute for Employment Research economist Timothy Bartik.

Politicians led by New York representative Alexandria Ocasio-Cortez and state senator Michael Gianaris, unions, and progressive groups protested the Amazon agreement as wasteful corporate welfare. Amid the firestorm of criticism, Amazon walked away from the New York arm of its HQ2 plan in February 2019.

Amazon Expands Anyway

Then, near the end of 2019, came Amazon’s announcement that it was leasing office space in Midtown Manhattan for more than 1,500 employees. For some New York politicians, it was proof of bad-faith negotiation efforts—and an irresistible opportunity to say, “I told you so.”

“Won’t you look at that,” tweeted Ocasio-Cortez. “Amazon is coming to NYC anyway—*without* requiring the public to finance shady deals, helipad handouts for Jeff Bezos, & corporate giveaways.”

“Amazon is coming to New York, just as they always planned,” said Gianaris in a statement. “Fortunately, we dodged a $3 billion bullet by not agreeing to their subsidy shakedown earlier this year.”

In the years since, Amazon has expanded its New York City footprint “relentlessly,” reports the New York Post, especially after ending pandemic-related work-from-home arrangements in September 2024 and ordering workers back to the office full time. The company bought Lord & Taylor’s former flagship Fifth Avenue store, where it has 2,000 employees, for $1 billion in 2020 and went on to expand into three other Manhattan buildings. In April 2025, the retailing behemoth leased 330,000 square feet in a high-rise near Bryant Park for $29.5 million per year.

No Need for Incentives

Amazon’s expansion in New York is part of a larger tech-industry trend. “Between 2014 and 2024, the tech sector added an average of 8,000 jobs a year across the five boroughs,” according to the Center for an Urban Future. With high-skilled employees increasingly preferring New York City over Silicon Valley, established tech companies, including Amazon, Facebook, Google, and Apple, as well as start-ups, have scrambled to pin down leases and hire workers.

Writing in the New York Times, Matthew Haag says that the growth in New York is “occurring largely without major economic incentives from the city and state governments.”

How to Avoid Bad-Faith Bargaining

In auctions, the winning bidder of an item of uncertain value often overpays, a phenomenon known as the . When an auction heats up, the fact that you are the winner suggests that others reached more realistic assessments of the item’s true value.

Relatedly, auction bidders often become so emotionally invested in a contest that they irrationally escalate their bids in the heat of the moment, a phenomenon known as auction fever. Those who catch auction fever risk overpaying due to a desire to win at any cost. Your outcomes can worsen if the other party is bargaining in bad faith.

To avoid these traps in auctions and multiparty negotiations, try not to get caught up in price contests. Instead, ask your target to negotiate one-on-one with you on deal terms where you may be more competitive. And remember: They may be just as anxious as you are to close a deal. 

What negotiation strategies would you recommend to avoid getting caught up in a bad-faith negotiation?