Think about the last time you were in a cordial bargaining session that unexpectedly reached an impasse. Perhaps you and your counterpart were simply too far apart on price. Or maybe you couldn’t agree on who should take responsibility for a particular problem. Often, these stalemates arise because each side holds a different view of fairness in negotiation. What seems fair to one party may feel unreasonable—or even outrageous—to the other. When these competing fairness perceptions collide, progress can grind to a halt, even in an otherwise cooperative discussion.

That’s precisely what happened in 2014, when negotiators from Citigroup and the U.S. Department of Justice (DOJ) were attempting to determine what penalties the bank should accept for allegedly defrauding investors in 2006 and 2007 by selling mortgages with underwriting defects.

Citigroup made its opening offer: $363 million. Try again, the DOJ replied. Citigroup increased the offer to $700 million. The DOJ countered with a demand of $12 billion.

The gap was so wide that the odds of reaching agreement appeared slim. Matters were further complicated by the fact that the two sides relied on very different standards to assess the harm Citigroup had caused, according to New York Times. Citigroup grounded its offers in its relatively small share of the mortgage-securities market. The DOJ, by contrast, argued that penalties should reflect Citigroup’s level of culpability, as evidenced by internal emails and other damaging documentation.

As this case illustrates, the fairness standards we invoke to justify our positions can unintentionally prolong impasse. Shifting toward an interest-based approach, by contrast, can open the door to more creative and productive negotiations.

Moving Beyond Impasse

There are three fundamental ways to move beyond impasse, write William L. Ury, Jeanne M. Brett, and Stephen B. Goldberg in Getting Disputes Resolved: Designing Systems to Cut the Costs of Conflict.

First, parties can reconcile their interests—the needs, concerns, fears, and motivations underlying their stated positions. Through negotiation or mediation, disputants can probe beneath surface demands, explore creative options, and make tradeoffs across interests.

Second, negotiators can resolve disputes through power, typically by imposing costs or threatening to do so. Labor unions, for example, may attempt to strengthen their position by threatening a strike.

Third, disputants can seek resolution by determining who is right. This often involves appeals to fairness in negotiation—as Citigroup and the DOJ did—or by turning to courts or other adjudicators to decide the matter.

Our judgments about what constitutes fairness in negotiation are rarely neutral. They are shaped by our perspectives, incentives, and goals. As a result, each party can usually construct a compelling—but self-serving—argument for why its preferred standard is the fairest one.

Citigroup negotiators argued that market share was the appropriate benchmark for assessing penalties, while government negotiators viewed culpability as the fairest standard. Unsurprisingly, Citigroup’s standard supported a relatively low settlement, while the DOJ’s justified a far higher one.

When both sides insist that their chosen standard best represents fairness in negotiation, they often become entrenched—unable or unwilling to see the issue from the other party’s point of view.

Asserting rights and exercising power can be legitimate negotiation strategies. But when circumstances allow, Ury, Brett, and Goldberg urge negotiators to focus on reconciling interests. Research suggests that interest-based negotiators tend to be more satisfied with their outcomes, incur lower costs, and face fewer future disputes than those who rely primarily on rights or power. Yet in practice, most of us default to asserting rights and power more often than necessary.

From Concerns about Fairness in Negotiation to Interests

To see how negotiators can move beyond arguments over rights and fairness, consider how the Citigroup talks ultimately unfolded. After the bank increased its offer from $700 million to $1 billion, it learned through media reports that the DOJ was preparing to take the case to court. That looming lawsuit—a power move that could have definitively resolved the fairness question—prompted Citigroup to reconsider its reliance on the market-share argument.

At that point, the parties began brainstorming options more seriously. The DOJ wanted Citigroup to provide substantial mortgage assistance to struggling homeowners. Citigroup responded that, because its mortgage business had shrunk significantly since the financial crisis, it lacked the capacity to offer large-scale homeowner relief.

Noting that many people displaced during the crisis were now renters, the DOJ proposed an alternative: Citigroup would contribute $180 million toward building affordable rental housing in high-cost areas, according to The New York Times.

Citigroup, for its part, expressed a strong desire to avoid future confrontations with government regulators. In exchange for accepting higher penalties, the DOJ agreed not to pursue additional cases related to Citigroup’s pre-2008 sale of collateralized debt obligations.

A deal ultimately emerged through what the Times described as “a simple feat of accounting.” Citigroup agreed to shift a portion of the settlement from state attorneys general to the DOJ, a move that prevented the bank from claiming a tax deduction on that amount—an outcome the DOJ valued highly.

Through this combination of power, rights, and interest-based bargaining, the parties reached a mutually beneficial agreement. Citigroup agreed to pay $4 billion in cash penalties, $2.5 billion to support rental housing, mortgage modifications, and other consumer relief, and $500 million to state attorneys general and the Federal Deposit Insurance Corporation.

The impasse was broken in part by an assertion of power—the DOJ’s litigation threat—but the final agreement took shape only after both sides moved beyond abstract fairness norms and focused on underlying interests. The lesson is not that fairness, rights, or power should be ignored, but that each has its place. Effective negotiators know when to shift among them.

Do you have advice on dealing with concerns about fairness in negotiation?

Sometimes a negotiation is all about managing perceptions. As this question below shows, focusing a counterpart on his own BATNA can persuade him to reduce the intensity of his hard-bargaining tactics.

Q: A customer is pressuring me to make a deal fast. I don’t want to be forced into a one-sided agreement and prefer to reach a compromise on mutually beneficial terms. How should I respond to such hard-bargaining tactics?

A: As long as your customer thinks he’s your only option, he will believe that he has all the leverage in your negotiation and will continue bargaining aggressively. In this respect, the business world is similar to that of international relations, where, as the Greek historian Thucydides put it, “The strong do what they can, and the weak suffer what they must.”

Consider an example from diplomatic history. In the 1970s and ’80s, the United States engaged in an unprecedented coercive campaign to persuade Taiwan to abandon its pursuit of nuclear weapons. U.S. officials employed thinly veiled threats to militarily abandon the island and bring its economy to a halt by cutting off its energy supplies. Taiwan backed down. Its complete diplomatic isolation—the United States was its only security guarantor and diplomatic ally—made the extreme pressure tactics possible and effective.

As this story shows, a weak BATNA, or best alternative to a negotiated agreement, can severely impede your ability to negotiate effectively and may invite exploitative moves from your counterpart. To strengthen your position, you should engage in “perception management” of your BATNA. By managing perceptions and clarifying your willingness to explore alternative deals if the pressure continues, you suggest the possibility of turning the tables on your opponent—that is, threatening him with the loss of your attractive business deal. By doing so, you seek to increase the costs of his hard-bargaining stance and force him to scale back or abandon such tactics.

This strategy comprises three steps:

1. Understand your counterpart. Is your customer simply trying to exploit you, believing that you have no other options? Or is he keenly interested in closing the deal as soon as possible? Maybe both? Question him to try to better understand the motivations behind his aggressive negotiation approach.

2. Demonstrate your credibility. Your credibility—whether the other side believes you will do what you claim—forms the foundation of your negotiation strategy. In this situation, your credibility depends on (a) your willingness to exercise your BATNA and (b) the impact of this decision on your counterpart.

To demonstrate your willingness to walk away, you must clarify that you are capable of bearing any costs of doing so. You might do this by revealing that you’ve been exploring alternative deals, a fact that will demonstrate your willingness to abandon the ongoing negotiation in favor of an alternative if you’re pushed too far. Public exploration of alternative deals signals that you are not as isolated as the other side may believe.

3. Managing perceptions of his own BATNA. Next, highlight the potential impact on your customer of your possible decision to walk away by specifying the benefits he will lose if he continues pressuring you. By forcing him to consider what he will do if he forfeits this deal with you, you will be shaping your customer’s perception of his own BATNA.

Here’s another example from the diplomatic world. When, in the 1980s, the United States sought to pressure Pakistan to abandon its pursuit of nuclear weapons, Islamabad highlighted its critical support of the mujahideen’s efforts to evict the Soviet army from Afghanistan. It was a pointed reminder that Pakistan was playing a key role in the Cold War struggle against the Soviet Union. Since the United States had no alternative partner to Pakistan in Afghanistan, it had no choice but to put its nuclear nonproliferation objectives on the back burner.

As this story shows, focusing a counterpart on his own BATNA can persuade him to reduce the intensity of his hard-bargaining tactics.

How do you work on managing perceptions in negotiation? 

Q: A customer is pressuring me to make a deal fast. I don’t want to be forced into a one-sided agreement and prefer to reach a compromise on mutually beneficial terms. How should I respond to such hard-bargaining tactics?

A: As long as your customer thinks he’s your only option, he will believe that he has all the leverage in your negotiation and will continue bargaining aggressively. In this respect, the business world is similar to that of international relations, where, as the Greek historian Thucydides put it, “The strong do what they can, and the weak suffer what they must.”

Consider an example from diplomatic history. In the 1970s and ’80s, the United States engaged in an unprecedented coercive campaign to persuade Taiwan to abandon its pursuit of nuclear weapons. U.S. officials employed thinly veiled threats to militarily abandon the island and bring its economy to a halt by cutting off its energy supplies. Taiwan backed down. Its complete diplomatic isolation—the United States was its only security guarantor and diplomatic ally—made the extreme pressure tactics possible and effective.

As this story shows, a weak BATNA, or best alternative to a negotiated agreement, can severely impede your ability to negotiate effectively and may invite exploitative moves from your counterpart. To strengthen your position, you should engage in “perception management” of your BATNA. By clarifying your willingness to explore alternative deals if the pressure continues, you suggest the possibility of turning the tables on your opponent—that is, threatening him with the loss of your attractive business deal. By doing so, you seek to increase the costs of his hard-bargaining stance and force him to scale back or abandon such tactics.

This strategy comprises three steps:

1. Understand your counterpart. Is your customer simply trying to exploit you, believing that you have no other options? Or is he keenly interested in closing the deal as soon as possible? Maybe both? Question him to try to better understand the motivations behind his aggressive negotiation approach.

2. Demonstrate your credibility. Your credibility—whether the other side believes you will do what you claim—forms the foundation of your negotiation strategy. In this situation, your credibility depends on (a) your willingness to exercise your BATNA and (b) the impact of this decision on your counterpart.

To demonstrate your willingness to walk away, you must clarify that you are capable of bearing any costs of doing so. You might do this by revealing that you’ve been exploring alternative deals, a fact that will demonstrate your willingness to abandon the ongoing negotiation in favor of an alternative if you’re pushed too far. Public exploration of alternative deals signals that you are not as isolated as the other side may believe.

3. Shape the other side’s perception of his own BATNA. Next, highlight the potential impact on your customer of your possible decision to walk away by specifying the benefits he will lose if he continues pressuring you. By forcing him to consider what he will do if he forfeits this deal with you, you will be shaping your customer’s perception of his own BATNA.

Here’s another example from the diplomatic world. When, in the 1980s, the United States sought to pressure Pakistan to abandon its pursuit of nuclear weapons, Islamabad highlighted its critical support of the mujahideen’s efforts to evict the Soviet army from Afghanistan. It was a pointed reminder that Pakistan was playing a key role in the Cold War struggle against the Soviet Union. Since the United States had no alternative partner to Pakistan in Afghanistan, it had no choice but to put its nuclear nonproliferation objectives on the back burner.

As this story shows, focusing a counterpart on his own BATNA can persuade him to reduce the intensity of his hard-bargaining tactics.

Eugene B. Kogan
Research Fellow
Harvard Kennedy School
Winner, 2014 Howard Raiffa
Doctoral Student Paper Award
Program on Negotiation,
Harvard Law School

As negotiators, we understand the importance of estimating the likely parameters of an agreement in upcoming talks. Yet even the most experienced negotiators have moments of surprise at the bargaining table when they realize that their estimates were far off the mark.

A new negotiation study by professor Michael P. Haselhuhn of the University of California at Riverside suggests a novel way for negotiators to reach more accurate estimates of the bargaining range in a given negotiation. Specifically, Haselhuhn draws on research by psychologists Amos Tversky and Derek J. Koehler on support theory, which finds that people consider an event to be more likely to occur when it is described in terms of its components—that is, when it is “unpacked”—as compared with when they consider it as a single package. For example, people tend to believe that “heart disease, cancer, or some other natural cause” (an unpacked event) are more likely to lead to death than “natural causes,” even though both descriptions include the same causes and thus carry the same possibility of death. Because unpacking reminds us of outcomes we might have overlooked, it leads us to view a cluster of events as more likely than when they are packed together.

In four experiments, Haselhuhn found that participants who unpacked their potential positive outcomes prior to engaging in a negotiation simulation believed those outcomes to be more likely to occur, set higher aspirations and more aggressive bottom lines, and claimed more value. For example, in one experiment, MBA students were instructed to negotiate for a taxi fare from school to their homes. Some of the students were asked to unpack their judgments of the likely outcome, specifically how likely the driver would be to accept an offer above $10 and offers within a series of five descending ranges ($9.01–$10, $8.01–$9, $7.01–$8, and so on). By contrast, those in the “packed” condition simply were asked to estimate the likelihood that the driver would agree to a fare above $10 or below $10. As compared with those who did not unpack their estimates, those who unpacked reached more accurate estimates of how low drivers would go and negotiated better fares. Interestingly, however, students in both conditions underestimated drivers’ willingness to negotiate.

It seems that envisioning various positive outcomes, rather than just one, boosts negotiators’ optimism before bargaining, and that optimism leads them to set more ambitious goals and pursue them assertively. However, Haselhuhn found that unpacking a range of potential negative outcomes has the opposite effect: It inspires greater pessimism, lower demands, and less value claimed relative to negotiators who did not unpack.

In sum, considering various possible positive outcomes—but not negative ones—before negotiating a single issue, such as price, could give you the confidence you need to aim high and achieve better results. Pointing out the various negative consequences a counterpart could face if she walks away from a deal with you could also be a useful strategy.

“Support Theory in Negotiation: How Unpacking Aspirations and Alternatives Can Improve Negotiation Performance,” by Michael P. Haselhuhn. Journal of Behavioral Decision Making, 2014.

As negotiators, we understand the importance of estimating the likely parameters of an agreement in upcoming talks. Yet even the most experienced negotiators have moments of surprise at the bargaining table when they realize that their estimates were far off the mark.

A new negotiation study by professor Michael P. Haselhuhn of the University of California at Riverside suggests a novel way for negotiators to reach more accurate estimates of the bargaining range in a given negotiation. Specifically, Haselhuhn draws on research by psychologists Amos Tversky and Derek J. Koehler on support theory, which finds that people consider an event to be more likely to occur when it is described in terms of its components—that is, when it is “unpacked”—as compared with when they consider it as a single package. For example, people tend to believe that “heart disease, cancer, or some other natural cause” (an unpacked event) are more likely to lead to death than “natural causes,” even though both descriptions include the same causes and thus carry the same possibility of death. Because unpacking reminds us of outcomes we might have overlooked, it leads us to view a cluster of events as more likely than when they are packed together.

In four experiments, Haselhuhn found that participants who unpacked their potential positive outcomes prior to engaging in a negotiation simulation believed those outcomes to be more likely to occur, set higher aspirations and more aggressive bottom lines, and claimed more value. For example, in one experiment, MBA students were instructed to negotiate for a taxi fare from school to their homes. Some of the students were asked to unpack their judgments of the likely outcome, specifically how likely the driver would be to accept an offer above $10 and offers within a series of five descending ranges ($9.01–$10, $8.01–$9, $7.01–$8, and so on). By contrast, those in the “packed” condition simply were asked to estimate the likelihood that the driver would agree to a fare above $10 or below $10. As compared with those who did not unpack their estimates, those who unpacked reached more accurate estimates of how low drivers would go and negotiated better fares. Interestingly, however, students in both conditions underestimated drivers’ willingness to negotiate.

It seems that envisioning various positive outcomes, rather than just one, boosts negotiators’ optimism before bargaining, and that optimism leads them to set more ambitious goals and pursue them assertively. However, Haselhuhn found that unpacking a range of potential negative outcomes has the opposite effect: It inspires greater pessimism, lower demands, and less value claimed relative to negotiators who did not unpack.

In sum, considering various possible positive outcomes—but not negative ones—before negotiating a single issue, such as price, could give you the confidence you need to aim high and achieve better results. Pointing out the various negative consequences a counterpart could face if she walks away from a deal with you could also be a useful strategy.

“Support Theory in Negotiation: How Unpacking Aspirations and Alternatives Can Improve Negotiation Performance,” by Michael P. Haselhuhn. Journal of Behavioral Decision Making, 2014.

On April 29, the National Basketball Association (NBA) banned Los Angeles Clippers owner Donald Sterling from the league for life and fined him $2.5 million in reaction to racist remarks he made during a phone call, which were made public. The NBA’s announcement, as reported by Scott Cacciola in the New York Times, set off a dizzying series of negotiations and legal battles that illustrate the challenges of dealing with an erratic partner.

To sue or to sell?
As Sterling considered suing the NBA to reverse the ban and fine, Rochelle Sterling, his estranged wife, and her lawyers tried to persuade him to sell the Clippers voluntarily. Mrs. Sterling convinced her husband—for the time being—that a lawsuit might strip them of the team.

The NBA Board of Governors could have voted to terminate the Sterlings’ ownership interests in the Clippers at a meeting scheduled for June 3. But, hoping to avoid a legal battle, the league provided Rochelle Sterling with a list of potential bidders for the team and encouraged her to make a deal before the meeting.

On May 13, after watching her husband give a disjointed television interview, Mrs. Sterling persuaded him to undergo neurological testing. Doctors concluded he had cognitive impairment that could lead to serious errors in judgment.

Sideline maneuvers
A law firm began organizing a private auction for a cash sale of the Clippers before the June 3 deadline. Quickly, star-studded groups of bidders stepped forward. One group included entertainment mogul David Geffen, Oprah Winfrey, and Oracle CEO Larry Ellison. Another included NBA player Grant Hill.

On May 25, Rochelle Sterling was awakened by a phone call from a friendly man telling her that he wanted to buy the Clippers. When he offered to fly from Seattle to meet with her that same day, she agreed, though she was confused about who this “Bomber” person was, Cacciola reports. Soon she figured out that she had been speaking to former Microsoft CEO Steve Ballmer.

That afternoon at Mrs. Sterling’s house, Ballmer described his passion for basketball. A statistician for Harvard’s team while a student there, Ballmer had sought to join the exclusive club of NBA team owners for years. When Mrs. Sterling expressed concern that he would relocate the Clippers, he assured her that a move would be a financial mistake.

From Ballmer, a full-court press
Three days later, on the bidding deadline, Rochelle Sterling received three final offers. Geffen’s group bid $1.6 billion. Hill’s group bid $1.2 billion. And Ballmer made a staggering $1.925 billion bid, which Mrs. Sterling’s legal team convinced him to nudge up to $2 billion. The offer dwarfed the next highest price paid for an NBA franchise, the $550 million sale of the Milwaukee Bucks in May 2014.

Why did Ballmer bid so high? The Clippers’ once dismal prospects are improving, and the team’s proceeds from TV rights will rise significantly in a few years. Moreover, Ballmer’s advisers convinced him that a bold bid was needed to set him apart from the pack.

Indeed, for Rochelle Sterling, the choice was clear. But just as she accepted Ballmer’s offer, her husband told her he’d changed his mind: Upset that the NBA wouldn’t revoke his lifetime ban and fine as part of the deal, he said he wouldn’t sell at any price.

The same day the impending sale to Ballmer was announced, Donald Sterling filed a $1 billion lawsuit against the NBA.

The playbook’s Plan B
To move the deal with Ballmer forward, Mrs. Sterling launched what her lawyer referred to as “Plan B”: removing Mr. Sterling as cotrustee of the Clippers because of his mental deficiencies.

On July 28, a California judge ruled that Rochelle Sterling had properly followed the stipulations in the trust the Sterlings held for the team and thus had the authority to sell the Clippers to Ballmer. The judge referenced Donald Sterling’s cognitive impairment and agreed with Rochelle Sterling’s lawyers’ argument that the team’s value would plummet if the sale to Ballmer were canceled.

The NBA officially approved the sale on August 12. Donald Sterling has vowed to contest the ruling and to continue to pursue his suit against the NBA, but his odds of blocking a sale appear slim. Like it or not, he is about to become much, much richer.

On April 29, the National Basketball Association (NBA) banned Los Angeles Clippers owner Donald Sterling from the league for life and fined him $2.5 million in reaction to racist remarks he made during a phone call, which were made public. The NBA’s announcement, as reported by Scott Cacciola in the New York Times, set off a dizzying series of negotiations and legal battles that illustrate the challenges of dealing with an erratic partner.

To sue or to sell?
As Sterling considered suing the NBA to reverse the ban and fine, Rochelle Sterling, his estranged wife, and her lawyers tried to persuade him to sell the Clippers voluntarily. Mrs. Sterling convinced her husband—for the time being—that a lawsuit might strip them of the team.

The NBA Board of Governors could have voted to terminate the Sterlings’ ownership interests in the Clippers at a meeting scheduled for June 3. But, hoping to avoid a legal battle, the league provided Rochelle Sterling with a list of potential bidders for the team and encouraged her to make a deal before the meeting.

On May 13, after watching her husband give a disjointed television interview, Mrs. Sterling persuaded him to undergo neurological testing. Doctors concluded he had cognitive impairment that could lead to serious errors in judgment.

Sideline maneuvers
A law firm began organizing a private auction for a cash sale of the Clippers before the June 3 deadline. Quickly, star-studded groups of bidders stepped forward. One group included entertainment mogul David Geffen, Oprah Winfrey, and Oracle CEO Larry Ellison. Another included NBA player Grant Hill.

On May 25, Rochelle Sterling was awakened by a phone call from a friendly man telling her that he wanted to buy the Clippers. When he offered to fly from Seattle to meet with her that same day, she agreed, though she was confused about who this “Bomber” person was, Cacciola reports. Soon she figured out that she had been speaking to former Microsoft CEO Steve Ballmer.

That afternoon at Mrs. Sterling’s house, Ballmer described his passion for basketball. A statistician for Harvard’s team while a student there, Ballmer had sought to join the exclusive club of NBA team owners for years. When Mrs. Sterling expressed concern that he would relocate the Clippers, he assured her that a move would be a financial mistake.

From Ballmer, a full-court press
Three days later, on the bidding deadline, Rochelle Sterling received three final offers. Geffen’s group bid $1.6 billion. Hill’s group bid $1.2 billion. And Ballmer made a staggering $1.925 billion bid, which Mrs. Sterling’s legal team convinced him to nudge up to $2 billion. The offer dwarfed the next highest price paid for an NBA franchise, the $550 million sale of the Milwaukee Bucks in May 2014.

Why did Ballmer bid so high? The Clippers’ once dismal prospects are improving, and the team’s proceeds from TV rights will rise significantly in a few years. Moreover, Ballmer’s advisers convinced him that a bold bid was needed to set him apart from the pack.

Indeed, for Rochelle Sterling, the choice was clear. But just as she accepted Ballmer’s offer, her husband told her he’d changed his mind: Upset that the NBA wouldn’t revoke his lifetime ban and fine as part of the deal, he said he wouldn’t sell at any price.

The same day the impending sale to Ballmer was announced, Donald Sterling filed a $1 billion lawsuit against the NBA.

The playbook’s Plan B
To move the deal with Ballmer forward, Mrs. Sterling launched what her lawyer referred to as “Plan B”: removing Mr. Sterling as cotrustee of the Clippers because of his mental deficiencies.

On July 28, a California judge ruled that Rochelle Sterling had properly followed the stipulations in the trust the Sterlings held for the team and thus had the authority to sell the Clippers to Ballmer. The judge referenced Donald Sterling’s cognitive impairment and agreed with Rochelle Sterling’s lawyers’ argument that the team’s value would plummet if the sale to Ballmer were canceled.

The NBA officially approved the sale on August 12. Donald Sterling has vowed to contest the ruling and to continue to pursue his suit against the NBA, but his odds of blocking a sale appear slim. Like it or not, he is about to become much, much richer.

As Joe Biden tells it, he never wanted to be vice president.

When Barack Obama asked him to consider being vetted as his running mate, Biden declined. Traditionally, the vice presidency was a largely ceremonial position removed from the center of power. Though recent VPs, most notably Dick Cheney, had changed that, Biden, as a longtime U.S. senator and presidential aspirant, was uneasy about playing second fiddle. Biden’s wife, Jill, talked him into reconsidering, though she, too, was concerned about how her husband would react to being in a supporting role, as reported by Evan Osnos in a recent New Yorker profile of Joe Biden.

As it turns out, for the past six years, Biden says, he has relished being No. 2, in part because of his canny ability to stay, in his words, “in the deal”—as a close adviser to President Obama, a lead player in significant domestic and international negotiations, and an advocate for his own personal agenda. Assessments of Biden’s success as a negotiator vary widely, but few would deny that he has constructed an influential role for himself in the White House.

In negotiation, sometimes we operate solo, advocating exclusively on our own behalf. More often, however, we negotiate on behalf of others—our organization, our boss, our family.

We may not think of ourselves as agents per se, but it’s a function we engage in nonetheless.

In such situations, we face several challenges. Will we have the authority to explore options and opportunities? Can we keep our principal’s goals at the forefront without neglecting our own interests? How can we stay in the deal? Here we suggest what business negotiators can learn from Biden’s approach to these challenges.

What role will you play?
Agents can have many different assignments in negotiation. They can play the heavy, communicating bad news and standing firm to allow the principal to preserve a harmonious relationship. They can be peacemakers, extending an olive branch when talks between principals have broken down. They can bring specialized knowledge to the table, such as an understanding of relevant technology or industry practices.

Agents’ involvement and authority in a negotiation also vary. You might be little more than a messenger, or, at the other end of the spectrum, you could have significant decision-making authority, note professors Robert Mnookin of Harvard Law School and Lawrence Susskind of the Massachusetts Institute of Technology in a book they edited, Negotiating on Behalf of Others: Advice to Lawyers, Business Executives, Sports Agents, Diplomats, Politicians, and Everybody Else (Sage, 1999).

Rather than passively accepting the role your principal envisions for you, you can take action to shape it. Biden, for example, took several steps early on to ensure that he would be a lead decision maker and negotiator in the Obama White House.

Expand your scope
Biden had expected to be a vice president along the lines of Lyndon B. Johnson. But after reading that Johnson felt that President John F. Kennedy had shut him out of key decisions, Biden reconsidered. Johnson “just wasn’t in the deal,” Biden told Osnos.

So Biden instead sought to emulate another vice president, Walter Mondale, who positioned himself as President Jimmy Carter’s general adviser. Just as Mondale had moved his office from the Executive Office Building to the West Wing of the White House, Biden negotiated for a private weekly lunch with Obama, a tradition they adhere to faithfully. Biden also follows former vice president Dick Cheney’s practice of attending the president’s meetings with his top national security advisers.

Simply by being a regular presence in the room, Biden created the expectation that he would weigh in on key issues and be active in high-level negotiations. The strategy paid off: Obama assigned Biden to oversee key projects with a high degree of difficulty, like the reconstruction of Iraq and the allocation of economic stimulus funds. As a long-standing member of Congress, Biden also has been an important arm-twister on Capitol Hill, as when he helped secure the Republican votes needed to pass Obama’s stimulus plan.

In addition to positioning him as an indispensable team member, Biden’s “face time” with Obama helped him chip away at his reputation for gaffes and bluster. “You and I are becoming good friends!” Obama reportedly said to Biden during one of their lunches, adding, according to the New Yorker, “I find that very surprising.”

Negotiate your mandate
Capturing the attention and respect of your principal is one means of increasing your negotiating stature. Another is to secure a strong negotiating mandate—that is, the authority to act on your principal’s behalf, according to Tufts University professor Jeswald W. Salacuse.

You can and should discuss in advance with your principal the types of deals you may explore and perhaps tentatively agree to. A strong negotiating mandate will increase the odds that your counterpart across the table will take you seriously. It can also give you confidence that those you represent will sign off on your draft agreement, writes Salacuse in his book Leading Leaders: How to Manage Smart, Talented, Rich, and Powerful People (AMACOM, 2005).

Biden appears to have had broad leeway to brainstorm options and chart his own path. After Obama charged him with overseeing Iraq in 2009, for example, Biden took steps to elevate Iraqi prime minister Nuri al-Maliki, writes Osnos in the New Yorker. When Maliki ultimately proved to be less of a friend to the United States than Biden expected, the vice president was criticized for backing him.

This example underscores the fact that agents who secure a strong negotiating mandate face a significant risk: Their decisions can backfire on both them and their principals. To minimize this risk, discuss the critical choices you face with your principal throughout the course of the negotiation. Present both your personal recommendations and opposing views thoroughly.

Don’t overreach
As an agent, your interests rarely, if ever, will be perfectly aligned with those of your principal. That is, your personal incentives—the desire to win a bonus, secure a promotion, or even get home in time for dinner—will sometimes compromise your ability to get your principal the deal that’s best for him. A real estate agent, for example, may encourage her clients to bid high on a house so that she can close the deal quickly and secure her commission. You can reduce such conflicts of interest by carefully designing your incentive structure with your principal.

Restraining the impulse to usurp your principal’s decision-making authority can be an even more difficult challenge. Vice President Dick Cheney reportedly wielded significant power in the early years of the George W. Bush administration, but when the perception arose that Cheney was pulling the strings, Bush took steps to marginalize him near the end of his presidency.
Biden has, at times, overstepped as well, as when he undercut Obama by expressing his support of gay marriage in advance of the president’s planned statement on the issue. But Biden has largely skirted the hazard of overreaching by conveying, through statements and actions, both his loyalty and his deference to Obama.

“My job’s about the president,” he told Osnos. When politicians have criticized Obama in his presence, Biden has lashed out at them. The stories of Biden’s defense of Obama reach the president, writes Osnos. That may be part of why Obama has called Biden “extraordinarily loyal.”

Biden’s attitude echoes that of James Baker during his tenure as George H.W. Bush’s secretary of state. Bush and Baker had been friends for several decades before they entered the White House. Consequently, Bush gave Baker a broad negotiating mandate and trusted him implicitly. “When I went out somewhere and talked to a foreign leader, they knew I was speaking for him,” Baker said while receiving the 2012 Great Negotiator Award from the Program on Negotiation at Harvard Law School and the Future of Diplomacy Project at the Harvard Kennedy School. “I was seamless with my president.”

As Joe Biden tells it, he never wanted to be vice president.

When Barack Obama asked him to consider being vetted as his running mate, Biden declined. Traditionally, the vice presidency was a largely ceremonial position removed from the center of power. Though recent VPs, most notably Dick Cheney, had changed that, Biden, as a longtime U.S. senator and presidential aspirant, was uneasy about playing second fiddle. Biden’s wife, Jill, talked him into reconsidering, though she, too, was concerned about how her husband would react to being in a supporting role, as reported by Evan Osnos in a recent New Yorker profile of Joe Biden.

As it turns out, for the past six years, Biden says, he has relished being No. 2, in part because of his canny ability to stay, in his words, “in the deal”—as a close adviser to President Obama, a lead player in significant domestic and international negotiations, and an advocate for his own personal agenda. Assessments of Biden’s success as a negotiator vary widely, but few would deny that he has constructed an influential role for himself in the White House.

In negotiation, sometimes we operate solo, advocating exclusively on our own behalf. More often, however, we negotiate on behalf of others—our organization, our boss, our family.

We may not think of ourselves as agents per se, but it’s a function we engage in nonetheless.

In such situations, we face several challenges. Will we have the authority to explore options and opportunities? Can we keep our principal’s goals at the forefront without neglecting our own interests? How can we stay in the deal? Here we suggest what business negotiators can learn from Biden’s approach to these challenges.

What role will you play?
Agents can have many different assignments in negotiation. They can play the heavy, communicating bad news and standing firm to allow the principal to preserve a harmonious relationship. They can be peacemakers, extending an olive branch when talks between principals have broken down. They can bring specialized knowledge to the table, such as an understanding of relevant technology or industry practices.

Agents’ involvement and authority in a negotiation also vary. You might be little more than a messenger, or, at the other end of the spectrum, you could have significant decision-making authority, note professors Robert Mnookin of Harvard Law School and Lawrence Susskind of the Massachusetts Institute of Technology in a book they edited, Negotiating on Behalf of Others: Advice to Lawyers, Business Executives, Sports Agents, Diplomats, Politicians, and Everybody Else (Sage, 1999).

Rather than passively accepting the role your principal envisions for you, you can take action to shape it. Biden, for example, took several steps early on to ensure that he would be a lead decision maker and negotiator in the Obama White House.

Expand your scope
Biden had expected to be a vice president along the lines of Lyndon B. Johnson. But after reading that Johnson felt that President John F. Kennedy had shut him out of key decisions, Biden reconsidered. Johnson “just wasn’t in the deal,” Biden told Osnos.

So Biden instead sought to emulate another vice president, Walter Mondale, who positioned himself as President Jimmy Carter’s general adviser. Just as Mondale had moved his office from the Executive Office Building to the West Wing of the White House, Biden negotiated for a private weekly lunch with Obama, a tradition they adhere to faithfully. Biden also follows former vice president Dick Cheney’s practice of attending the president’s meetings with his top national security advisers.

Simply by being a regular presence in the room, Biden created the expectation that he would weigh in on key issues and be active in high-level negotiations. The strategy paid off: Obama assigned Biden to oversee key projects with a high degree of difficulty, like the reconstruction of Iraq and the allocation of economic stimulus funds. As a long-standing member of Congress, Biden also has been an important arm-twister on Capitol Hill, as when he helped secure the Republican votes needed to pass Obama’s stimulus plan.

In addition to positioning him as an indispensable team member, Biden’s “face time” with Obama helped him chip away at his reputation for gaffes and bluster. “You and I are becoming good friends!” Obama reportedly said to Biden during one of their lunches, adding, according to the New Yorker, “I find that very surprising.”

Negotiate your mandate
Capturing the attention and respect of your principal is one means of increasing your negotiating stature. Another is to secure a strong negotiating mandate—that is, the authority to act on your principal’s behalf, according to Tufts University professor Jeswald W. Salacuse.

You can and should discuss in advance with your principal the types of deals you may explore and perhaps tentatively agree to. A strong negotiating mandate will increase the odds that your counterpart across the table will take you seriously. It can also give you confidence that those you represent will sign off on your draft agreement, writes Salacuse in his book Leading Leaders: How to Manage Smart, Talented, Rich, and Powerful People (AMACOM, 2005).

Biden appears to have had broad leeway to brainstorm options and chart his own path. After Obama charged him with overseeing Iraq in 2009, for example, Biden took steps to elevate Iraqi prime minister Nuri al-Maliki, writes Osnos in the New Yorker. When Maliki ultimately proved to be less of a friend to the United States than Biden expected, the vice president was criticized for backing him.

This example underscores the fact that agents who secure a strong negotiating mandate face a significant risk: Their decisions can backfire on both them and their principals. To minimize this risk, discuss the critical choices you face with your principal throughout the course of the negotiation. Present both your personal recommendations and opposing views thoroughly.

Don’t overreach
As an agent, your interests rarely, if ever, will be perfectly aligned with those of your principal. That is, your personal incentives—the desire to win a bonus, secure a promotion, or even get home in time for dinner—will sometimes compromise your ability to get your principal the deal that’s best for him. A real estate agent, for example, may encourage her clients to bid high on a house so that she can close the deal quickly and secure her commission. You can reduce such conflicts of interest by carefully designing your incentive structure with your principal.

Restraining the impulse to usurp your principal’s decision-making authority can be an even more difficult challenge. Vice President Dick Cheney reportedly wielded significant power in the early years of the George W. Bush administration, but when the perception arose that Cheney was pulling the strings, Bush took steps to marginalize him near the end of his presidency.
Biden has, at times, overstepped as well, as when he undercut Obama by expressing his support of gay marriage in advance of the president’s planned statement on the issue. But Biden has largely skirted the hazard of overreaching by conveying, through statements and actions, both his loyalty and his deference to Obama.

“My job’s about the president,” he told Osnos. When politicians have criticized Obama in his presence, Biden has lashed out at them. The stories of Biden’s defense of Obama reach the president, writes Osnos. That may be part of why Obama has called Biden “extraordinarily loyal.”

Biden’s attitude echoes that of James Baker during his tenure as George H.W. Bush’s secretary of state. Bush and Baker had been friends for several decades before they entered the White House. Consequently, Bush gave Baker a broad negotiating mandate and trusted him implicitly. “When I went out somewhere and talked to a foreign leader, they knew I was speaking for him,” Baker said while receiving the 2012 Great Negotiator Award from the Program on Negotiation at Harvard Law School and the Future of Diplomacy Project at the Harvard Kennedy School. “I was seamless with my president.”

In 2013, negotiators from Citigroup and the U.S. Department of Justice (DOJ) began meeting to discuss what penalties the bank should face for allegedly defrauding investors in 2006 and 2007. The DOJ accused Citigroup of ignoring signs that a significant portion of the mortgages it had packaged and sold had underwriting defects. Widely criticized for being too soft on the banks that contributed to the 2008 financial crisis, the DOJ was eager to make an example of Citigroup.

In April 2014, Citigroup made its first settlement offer: $363 million. The DOJ deemed that figure to be so low it didn’t warrant a counteroffer. Try again, it told the bank. Citigroup bumped the offer up to $700 million. The DOJ responded with a demand for $12 billion.

The two sides were so far apart that the odds of a deal seemed low. Making matters worse, each side was using very different measures to calculate the extent of the harm Citigroup’s mortgage securities had inflicted on investors, reports Michael Corkery in the New York Times. Citigroup based its offers on the bank’s relatively small share of the market for mortgage securities. Given that the DOJ had reached a $13 billion settlement with JPMorgan Chase over its much broader sale of mortgage securities, Citigroup argued, it should pay a much smaller amount.

The DOJ rejected this standard, saying that Citigroup should be penalized based on its level of culpability, as reflected in damning e-mails and other evidence. “There’s no way you’ll get anywhere with us if you are only going to make the market-share argument,” one DOJ official reportedly told a Citigroup lawyer. The two sides were at an impasse.

Think about the last time you tried to negotiate an end to a dispute or resolve a sticking point in an otherwise cordial bargaining session. Maybe you were far apart on price, or perhaps you and your counterpart disagreed about which of you bore responsibility for solving a serious problem. Chances are, each party had different views and justifications about what would constitute a fair settlement, just as Citigroup and the DOJ did in their negotiations.

As we will see, the fairness standards we cite to support our positions can greatly influence our odds of reaching a mutually satisfactory agreement. In this article, we explain how appealing to our rights can hold us back in negotiation, and how we can do better.

Three approaches to dispute resolution
There are three fundamental ways of resolving disputes, write William L. Ury, Jeanne M. Brett, and Stephen B. Goldberg in their book Getting Disputes Resolved: Designing Systems to Cut the Costs of Conflict (PON Books, 1993). First, parties can reconcile their interests—the needs, desires, concerns, and fears that underlie their stated positions. Through negotiation or mediation, disputants can engage in the difficult but often rewarding work of probing for underlying concerns, searching for creative solutions, and making tradeoffs across opposing interests.

Second, negotiators can resolve disputes on the basis of power, typically by imposing costs on the other party or threatening to do so. Labor unions, for example, sometimes try to harness their power to get what they want by threatening to strike or actually going on strike.

Third, disputants can try to resolve their differences by determining who is right. They do so by referencing standards they perceive to be legitimate or fair, as the DOJ and Citigroup did, or by taking their dispute to court and allowing a judge or jury to weigh who’s right.

Asserting your rights and exercising your power can be valid negotiating strategies. Threatening a lawsuit, for example, on the grounds that the other party has violated your rights, may at times be necessary to convince your counterpart to engage in settlement negotiations. When possible, however, Ury, Brett, and Goldberg encourage us to focus on reconciling interests. Interest-based negotiators are more satisfied with their outcomes than those who focus on asserting their rights or power, and they also tend to incur lower costs, less strain on the relationship, and fewer subsequent disputes. Yet in negotiation, most of us rely on asserting our rights and power more often than is necessary.

When fairness becomes an issue
Our perceptions of what constitutes a fair settlement in a given negotiation are heavily biased by our perspective and our goals for the negotiation. Each party to a dispute may be able to make a strong case for its view, and each view is likely to be slanted in favor of its self-interest.

Citigroup negotiators may have honestly believed that the market-share argument was the proper standard to apply in their negotiations with the DOJ, just as the government negotiators likely viewed culpability to be the fairest standard. Not surprisingly, Citigroup’s fairness standard supported a low settlement, and the DOJ’s supported a much higher one.

Unfortunately, when negotiators cite conflicting fairness standards, it can become nearly impossible for them to come to agreement. With each side arguing that its standard is the fairest, the parties become locked into their positions and incapable of seeing the other side’s point of view.

Consider the recent dispute between New York City’s Metropolitan Opera and its unions. Facing rising costs and a declining endowment and disappointing ticket sales in recent years, the Met urgently needed to adjust its mounting budget shortfalls. Labor and management agreed on that point, but they disagreed about who was to blame and what would constitute a fair solution.

Management said labor costs were too high and that the unions must accept their fair share of cuts. Meanwhile, the unions accused management of overspending on productions and said the proposed labor cuts were unfair. We will discuss how the parties finally came to agreement in a future issue.

From rights to interests
For an example of how you can get out of the trap of arguing over rights, let’s see how the Citigroup negotiation unfolded. After the bank upped its offer slightly from $700 million to $1 billion, it learned through news reports that the DOJ was planning to take it to court. The threat—a power play that, once in motion, could have settled the fairness question once and for all—inspired Citigroup to move beyond its market-share argument.

Finally, the parties began brainstorming options. The DOJ, for instance, wanted Citigroup to provide substantial mortgage assistance to struggling homeowners. But because Citigroup’s mortgage business had diminished since the financial crisis, the bank was not in a position to grant significant homeowner relief. Noting that many people who lost their homes during the financial crisis are now renting, the DOJ persuaded Citigroup to provide $180 million to build affordable rental housing in areas where the cost of living is high, writes Corkery in the Times.

Similarly, Citigroup put one of its key interests on the table: its desire to avoid future encounters with government negotiators. In return for higher penalties, the DOJ agreed not to pursue cases related to Citigroup’s pre-2008 sale of collateralized debt obligations.

A deal became even more possible thanks to “a simple feat of accounting,” according to the Times: Citigroup agreed to shift a portion of the settlement from state attorneys general to the DOJ. The move will prevent the bank from claiming a tax deduction on the settlement, a concession highly valued by the DOJ.

Thanks to this creative negotiating, the two sides were able to reach a deal. Citigroup agreed to pay a $4 billion cash penalty; $2.5 billion for the financing of rental housing, mortgage modifications, and other consumer relief; and $500 million to state attorneys general and the Federal Deposit Insurance Corporation.

Looping back to interests
In these negotiations, the parties were motivated to focus on interests by a bold-faced assertion of power and rights—the DOJ’s threat of a lawsuit. The breakthrough attests to the intricate relationship among interests, power, and rights in negotiation. In other words, though it pays to focus on interests whenever possible, power and rights have their place.

How else can you move beyond clashing fairness appeals in your negotiations? In Getting Disputes Resolved, Ury, Brett, and Goldberg encourage organizations to design dispute-resolution systems that include “loop-back” procedures that enable disputants to replace contests over rights and power with interest-based negotiation.

Some loop-back procedures work by educating negotiators about the rights they are asserting and the likely outcome of a rights contest such as a lawsuit, according to the authors.

In advisory arbitration, for example, an arbitrator provides a nonbinding decision that should give parties insight into how a binding arbitration or lawsuit could unfold.

Similarly, you may be able to avoid rights contests or call them off after they’ve started by engaging in a joint fact-finding process, writes Massachusetts Institute of Technology professor Lawrence Susskind in his book Good for You, Great for Me: Finding the Trading Zone and Winning at Win-Win Negotiation (PublicAffairs, 2014). In joint fact-finding, both parties to a negotiation mutually choose and hire expert advisers to gather the data they need to chart the best course. The negotiators then assess the data together and decide how to proceed. Joint fact-finding helps negotiators avoid the temptation to cherry-pick data that suits their interests.

In addition, negotiators can try to overcome their differences by engaging in mediation. Mediators trained in interest-based negotiation can help parties replace their focus on fairness with a deeper consideration of the issues at stake. Through mediation, they can begin to explore opportunities to create value and come together.