Most negotiations call for very different, even opposing, skills: collaboration and competition. To get a great deal, we typically must work with others to find new sources of value while also competing with them to claim as much of that value for ourselves. Before mastering the intricacies of value creation in negotiation, it helps to … Read More
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What is Distributive Bargaining?
Distributive bargaining involves haggling over a fixed amount of value—that is, slicing up the pie.
Wise negotiators recognize the value of both collaborating and competing at the bargaining table. They look for ways to increase the pie of value for all parties, often by identifying differences across issues and making tradeoffs. And they also rely on distributive bargaining strategies to try to claim as much of that larger pie for themselves.
People often think that distributive bargaining strategies require adversarial bargaining, such as making tough demands, threats, or bluffs. But in fact, the most effective distributive bargaining strategies require you to set aside plenty of time before your negotiation to engage in clear-eyed preparation.
In particular, negotiators should determine their best alternative to a negotiated agreement, or BATNA—what they’ll do if they don’t achieve their goals in the current negotiation. A job seeker might decide to pursue other job openings, for example. Negotiators also need to assess their reservation point or walk away point—the figure at which they’re indifferent between accepting the deal they negotiated and instead of turning to their BATNA.
Additionally, to help determine the most you’ll be able to get in a distributive bargaining situation, take some time to research the other party’s likely BATNA and reservation point.
Then, armed with a sense of each party’s reservation point and BATNA, you should be able to determine if a zone of possible agreement, or ZOPA, exists in your distributive bargaining. The ZOPA is the range of all possible deals that both parties would accept. Your reservation point will be at one end of the ZOPA, and the other party’s reservation point will be at the other.
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The following items are tagged distributive bargaining:
Wise negotiators recognize the value of both collaborating and competing at the bargaining table. They look for ways to increase the pie of value for all parties, often by identifying differences across issues and making tradeoffs. And they also rely on distributive bargaining strategies to try to claim as much of that larger pie for … Read More
Imagine that you’re buying a used car from its original owner. Of course, you want to get the best deal you can for your money, while your counterpart wants to maximize the value of his asset. After haggling with one another, each side finally arrives at a price point acceptable to both parties. But how … Read More
What is distributive negotiation? Distributive negotiation involves haggling over a fixed amount of value—that is, slicing up the pie. In a distributive negotiation, there is likely only one issue at stake, typically price. When you are negotiating with a merchant in a foreign bazaar, or over a used car closer to home, you are generally … Read More
How can you uncover additional value, make useful trades, and put together a package that exceeds your party’s expectations? Here are four integrative negotiation strategies for value creation that all negotiators should add to their toolkit. … Read More
“Never do business with friends,” the adage goes. But should you always stay away from an opportunity to negotiate with friends and family? A strict policy of keeping friends and family members out of our business lives would be impractical, and it could cause us to pass up potentially valuable negotiating opportunities. … Read More
If a competitive bargaining session shifts in a counterpart’s direction, your anger could send the wrong signals to your negotiation counterpart. In this instance, strong emotions portray desperation rather than strength. Here are some bargaining and negotiation tactics for dealing with difficult situations in relationships. … Read More
Do your students really understand the difference between value distribution and integrative negotiation, and have you given them a chance to practice their distributive bargaining skills? Do they understand that every negotiation includes elements of both value creation and value distribution? To help teach these key negotiation skills the Teaching Negotiation Resource Center (TNRC) has developed a … Read More
Teach Your Students to Negotiate One of the Most Critical Global Industries With an ongoing pandemic devastating communities around the world, the acute importance of the healthcare industry to community welfare has become even more apparent. Healthcare is one of the biggest economies in the world, with billions of dollars spent on treatments and associated research. … Read More
When life becomes routine we are more likely to overlook details or, conversely, we cannot see the forest for the trees. In both instances, what we may lack is a creative outlook on the situation at hand. In negotiations, creativity can lead to value-creation for both parties. … Read More
Due to the anchoring bias, the first offer made in a negotiation often has an outsized effect on the outcome. But recent research shows that anchoring with a range offer can have an even bigger impact than a single figure. … Read More
Even after the best negotiations, sometimes the other side will demand a renegotiation of the deal. Here are some guidelines on how to proceed in a negotiation. … Read More
How do you teach your students to identify and create value in real estate negotiations? Real estate negotiation can be difficult for both the buyer and the seller. Teaching real estate negotiation can involve value creation, distributive bargaining, as well as issue linkages. It is important for both buyers, sellers, and agents to identify ways to … Read More
How does the desire to negotiate stack up against other workplace decision-making procedures? Negotiation seems to be the preferred decision-making mechanism when employees are seeking individually tailored solutions. … Read More
Everyone negotiates every day. How we negotiate is changing dramatically due to the use of various technological tools. People need not fear this change. Rather, they should understand the different technology at their disposal, grasp the pros and cons, and determine how to select the best medium to suit their needs, negotiation style, and approach. … Read More
Have you ever won an auction only to realize later that you overbid for the prize? In competitive bidding situations, it’s easy to get carried away in the heat of the moment and overpay. The Boston Red Sox 2006 procurement of Japanese pitching phenomenon Daisuke “Dice-K” Matsuzaka offers a lesson in keeping cool in these … Read More
Negotiate International Sports Contracts In many business negotiations, especially those involving athletes, you will find an agent negotiating on behalf of the principal party. This unique principal-agent relationship can cause challenges at the negotiating table. The agent may have different preferences from their principal party. Agents may also have different incentives from the principal. Agents may … Read More
How does mediation work in a lawsuit? For those new to mediation, we advise you being by getting a list of mediators from a reputable provider agency. You can find these agencies by searching under dispute resolution or by inquiring with your organization’s legal department. … Read More
Many negotiation and mediation instructors draw from other disciplines for a range of purposes. Insights from social psychology, for instance, can help students understand, explain, or predict certain interpersonal and inter-group dynamics. Ideas from economics and game theory can shed light on various value-creation principles. … Read More
Six negotiation skills tips for negotiators seeking to creative value during their next round at the bargaining table. Business negotiators are often faced with the complex task of coordinating multiple parties – here are some tips for the individual business negotiator on how to achieve success in her next deal negotiation. … Read More
Whether you’re purchasing a new home or car, or negotiating a discount on an inventory purchase for your firm, the art of haggling enables negotiators to make a strong claim for their share of the pie. Here are six tips from the Negotiation Briefings newsletter to help you start becoming a better at haggling in … Read More
The Harvard Negotiation Project was recently mentioned in the Wall Street Journal by David Feith in his interview with Benny Tai, “China’s New Freedom Fighters.” Benny Tai, a 49 year old lawyer who has been branded an “enemy of the state,” founded Occupy Central with Love and Peace, a group that promotes civil disobedience in order … Read More
Founded in 1983, the Program on Negotiation at Harvard Law School is a pioneer in the fields of negotiation, mediation, and alternative dispute resolution. In commemoration of the program’s 30th anniversary this year, the Program on Negotiation is proud to present a video describing many of PON’s various educational and research activities. According to Chair Robert Mnookin, … Read More
In 1986, the investment bank Goldman Sachs was a $38 billion business owned by more than 100 active and retired partners. While the partnership structure had insulated the company from the vicissitudes of the stock market and given the company a strong culture of teamwork, it had some significant disadvantages, particularly an unstable capital base and … Read More
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 … Read More
The PON Clearinghouse offers hundreds of role simulations, from two-party, single-issue negotiations to complex multi-party exercises. Negotiating Budget Cuts at Newtowne Hospital is a six-person negotiation among hospital administration and employee representatives to reach consensus on budget cuts in three departments. SCENARIO: Dr. Van Hagen, a distinguished heart surgeon, will soon join the staff at Newtowne Hospital, … Read More
When interests collide, some managers dig in their heels: You get your way or I get mine. Others go for a compromise where the plan is to give up as little as possible. Neither strategy is likely to lead to the best outcome. But businesses, nonprofits, government agencies … and even rock ‘n’ rollers … … Read More