The first offer dilemma in negotiations – should you make the first offer? Few questions related to negotiation techniques and negotiation strategies have yielded more academic attention and debate among practitioners in negotiation research.
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Learn how to negotiate like a diplomat, think on your feet like an improv performer, and master job offer negotiation like a professional athlete when you download a copy of our FREE special report, Negotiation Skills: Negotiation Strategies and Negotiation Techniques to Help You Become a Better Negotiator, from the Program on Negotiation at Harvard Law School.
zone of possible agreement
What is the Zone of Possible Agreement?
How can you avoid common business negotiation pitfalls? Through careful preparation that includes an analysis of the zone of possible agreement, or ZOPA.
In a business negotiation, two polar-opposite errors are common: reaching agreement when it wouldn’t be wise to do so, and walking away from a mutually beneficial outcome.
Avoiding these twin perils—either accepting a subpar deal or walking away from a great one—begins with thorough preparation for negotiation, including reaching an accurate understanding of the zone of possible agreement, or ZOPA.
In fact, rigorously analyzing your best alternative to a negotiated agreement or BATNA, evaluating the zone of possible agreement, and investigating all the issues at stake are three complementary steps you can take to help achieve the best results.
As an example, if a job candidate would accept an offer between $70,000-$80,000 per year, and an organization is willing to pay between $65,000-$75,000, then a ZOPA of $70,000-$75,000 exists.
When you know the zone of possible agreement, and where you and your counterpart are in alignment (and those areas on which you diverge), a skilled negotiator can craft an agreement that most closely approximates her own and her counterpart’s needs while building a bargaining relationship with her counterpart. Rather than antagonistic, the negotiation process becomes a value-creating, integrative situation in which each side gets a “fair share” of the pool of resources.
To learn more about discovering and using your BATNA and ZOPA, and learning how to make better business deals, you can download a complimentary copy of our special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, right now!
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The following items are tagged zone of possible agreement:
Dealmaking: Secrets of Successful Dealmaking in Business Negotiations
Discover how to boost your power at the bargaining table in this free special report, Dealmaking: Secrets of Successful Dealmaking in Business Negotiations, from Harvard Law School.
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How to Find the ZOPA in Business Negotiations
In business negotiation, two polar-opposite errors are common: reaching agreement when it wouldn’t be wise to do so, and walking away from a mutually beneficial outcome. How can you avoid these pitfalls? Through careful preparation that includes an analysis of the zone of possible agreement, or ZOPA in business negotiations.
… Read How to Find the ZOPA in Business Negotiations
5 Dealmaking Tips for Closing the Deal
What should you do when you’ve done everything right, but you still aren’t closing the deal? Here are some dealmaking tips.
… Read 5 Dealmaking Tips for Closing the Deal
What is Anchoring in Negotiation?
What exactly is anchoring in negotiation, and how does it play out at the bargaining table? Consider this anchoring bias example from Harvard Business School and Harvard Law School faculty member Guhan Subramanian. While running a negotiation simulation in one of his classes, Subramanian noticed that one student spent a considerable amount of time explaining … Read What is Anchoring in Negotiation?
Dealmaking and the Anchoring Effect in Negotiations
The following question regarding the anchoring effect was asked of Program on Negotiation faculty member and Harvard Business School and Harvard Law School professor Guhan Subramanian.
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Negotiation Advice: When to Make the First Offer in Negotiation
When or when not to make the first offer in negotiations is a question many expert negotiators ask themselves when approaching business negotiations, real estate transactions, or even interpersonal negotiations with friends and family. In this article drawn from negotiation research, we offer negotiating skills and negotiation tips for when, and when not, to make … Read More
Check Out the All-In-One Curriculum Packages – Available for Some of Our Most Popular Simulations
Introducing a new way to go in-depth when teaching the most important negotiation concepts and to measure learning outcomes.
If you are new to teaching negotiation or are looking to go in-depth on teaching key concepts, the All-In-One Curriculum Package will provide you with everything you need. The Teaching Negotiation Resource Center has created All-In-One Curriculum … Read More
Setting Standards in Negotiations
As the starting point from which all commercial transactions occur, from purchasing equipment to setting salaries, negotiatiosn in business is an essential skill no matter what field a negotiator finds herself. Using an objective standard can strengthen your proposal and eliminate emotional bias.
… Read Setting Standards in Negotiations
A Negotiation Preparation Checklist
Without a doubt, the biggest mistake that negotiators make—and one that many make routinely—is failing to thoroughly prepare. When you haven’t done the necessary analysis and research, you are highly likely to leave value on the table and even to be taken advantage of by your counterpart. A negotiation preparation checklist can help you avoid … Read A Negotiation Preparation Checklist
Teaching the Fundamentals: The Best Introductory Negotiation Role Play Simulations
Introductory negotiation courses are taught in law and business schools around the world, but are also increasingly taught to undergraduates and in all types of corporate settings. No matter the context, though, the basic elements of negotiation are roughly similar. Teaching interest-based negotiation, the Zone of Possible Agreement (ZOPA), the Best Alternative to a Negotiated … Read More
7 Tips for Closing the Deal in Negotiations
“ABC: Always Be Closing.” That’s the sales strategy that actor Alec Baldwin’s character Blake shared in the 1992 film Glengarry Glen Ross as he tried to motivate a group of real estate salesmen. In his verbally abusive, profanity-laced speech, Blake presented a ruthless model of closing a business deal that ignores customers’ needs and cuts … Read 7 Tips for Closing the Deal in Negotiations
Michael Scott, Negotiation Genius? Lessons from TV Negotiations
Business negotiators can get useful advice from a variety of sources, from books to blogs to training and classes—and even, as it turns out, from TV shows. As you may have noticed, negotiations frequently play out on TV: from hostage negotiators on police procedurals to fast-talking lawyers in corporate boardrooms to the real-life entrepreneurs and … Read More
Price Anchoring 101
Opening offers have a strong effect in price negotiations. The first offer typically serves as an anchor that strongly influences the discussion that follows. In research documenting price anchoring, psychologists Daniel Kahneman and Amos Tversky found that even random numbers can have a dramatic impact on people’s subsequent judgments and decisions.
… Read Price Anchoring 101
Value Claiming in Negotiation
In most negotiations, we face two goals: claiming value and creating value. Value can be defined as anything you would like to get out a negotiation, whether it be more dollars, a consulting contract, a new rug, an end to conflict, and so on.
… Read Value Claiming in Negotiation
Understanding Exclusive Negotiation Periods in Business Negotiations
The clearest method for achieving exclusivity in negotiation is an exclusive negotiation period during which both sides agree not to talk to third parties, even if approached unexpectedly by others. In some arenas, these terms are called no-talk periods.
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How to Deal with Threats: 4 Negotiation Tips for Managing Conflict at the Bargaining Table
Sooner or later, every negotiator faces threats at the bargaining table. How should you respond when the other side threatens to walk away, file a lawsuit, or damage your reputation? These negotiation tips will help.
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Managing Expectations in Negotiations
Successful negotiators work hard to ensure that when they and their counterpart leave a negotiation, both sides feel satisfied with the agreement. Why should you care whether the other side is pleased with negotiations or not?
… Read Managing Expectations in Negotiations
Teach by Example with These Negotiation Case Studies
Negotiation case studies use the power of example to teach negotiation strategies. Looking to past negotiations where students can analyze what approaches the parties took and how effective they were in reaching an agreement, can help students gain new insights into negotiation dynamics.
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Top Ten Posts About Conflict Resolution
Conflict resolution is the process of resolving a dispute or a conflict by meeting at least some of each side’s needs and addressing their interests. Conflict resolution sometimes requires both a power-based and an interest-based approach, such as the simultaneous pursuit of litigation (the use of legal power) and negotiation (attempts to reconcile each party’s … Read Top Ten Posts About Conflict Resolution
What is Distributive Negotiation and Five Proven Strategies
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
Win-Win Negotiation: Managing Your Counterpart’s Satisfaction
As the following points of win-win negotiation will demonstrate, ensuring that your counterpart is satisfied with a particular deal requires you to manage several aspects of the negotiation process, including his outcome expectations, his perceptions of your outcome, the comparisons he makes with others, and his overall negotiation experience itself.
… Read More
What Is Distributive Negotiation?
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 What Is Distributive Negotiation?
Entrepreneurs: Prepare for Challenging Conversations in Key Negotiation
Start-ups and individual entrepreneurs often encounter challenging conversations when negotiating with potential partners and investors. When you are trying to sell others on your big idea or venture, you face the daunting challenge of convincing them that it’s worth their time, money, and effort. And even as you’re drawing on all your powers of persuasion … Read More
Should Salary Expectations Be a Laughing Matter?
In salary negotiations, job candidates are often at a disadvantage relative to the hiring organization. Due to the well-documented anchoring effect, the first figure introduced into the discussion tends to strongly influence the salary expectations. Unfortunately for candidates, the first figure mentioned in a negotiation often is not in their favor.
… Read Should Salary Expectations Be a Laughing Matter?
Repairing Relationships Using Negotiation Skills
Negotiation is not only something we do at work; often the toughest negotiations we encounter are in our personal lives. Some of the most successful negotiation examples of the power of negotiation skills in dispute resolution is when they repair relationships between friends.
… Read Repairing Relationships Using Negotiation Skills
Understanding the Negotiation Skills You Need to Negotiate with Friends and Family
Who achieves the best negotiated agreements: strangers, friends, or romantic partners? In a 1993 negotiation role-play simulation, Margaret Neale of Stanford University and Kathleen McGinn found that pairs of friends achieved higher joint gains than married couples and pairs of strangers.
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Are You Ready to Negotiate?
“Winging it” is a fine approach to life’s minor decisions, but when you negotiate, it can be disastrous. Follow these three preparation steps and improve your agreements.
… Read Are You Ready to Negotiate?
Using Integrative Negotiation Techniques to Close the Deal
Like a contingency, a condition to a deal is a related though far less common deal-structuring technique. A condition is an ‘if’ statement like a contingency, but, whereas a contingency depends on unknown future events, a condition is entirely within the control of the parties involved.
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Business Negotiation Skills: How to Enhance Your Negotiated Agreement
A common topic in our business negotiations articles are negotiation topics in business about enhancing your deal after signing the negotiated agreement. After all, not all contracts are created equal.
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When First Offers Fail In a Negotiation
In negotiation, the party who makes the first offer often gets the lion’s share of the value. That can be due to the anchoring effect, or the tendency for first offers to “anchor” the bargaining that follows in its direction, even if the offer recipient thinks the offer is out of line.
Yet plenty of times, … Read When First Offers Fail In a Negotiation
Digitally Enhanced Simulation Packages – With Live Data Analytics
In-depth Teaching Materials with Real Time Data Analytics Designed to Enhance Teaching Negotiation
From the Teaching Negotiation Resource Center (TNRC) at PON, and iDecisionGames: digitally enhanced simulation packages designed to take your teaching to the next level.
The Enhanced Simulation Package from the TNRC and iDecisionGames brings a new, interactive learning experience to teaching negotiation. This easy … Read More
The Top Three Defensive Negotiation Strategies You Need to Know
In the course of a career, a negotiator will confront many skilled persuaders. Here, we review three defensive negotiation strategies a negotiator can employ.
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For Price Negotiators, Preparation is the Key to Success
Some cultures have a long tradition of haggling—bargaining back and forth about the price of an item—in markets and bazaars. By contrast, in the United States and many other countries, haggling between buyers and sellers is an under-practiced skill. You might routinely pass up opportunities to haggle in situations where financial negotiations are not the … Read More
Break a Competitive Cycle with Win-Win Negotiation Strategies
Negotiators seeking to break through the mythical fixed-pie mindset can try the following three proven strategies, suggested by Max Bazerman for finding mutually beneficial tradeoffs.
… Read More
An Example of the Anchoring Effect
People tend to irrationally fixate on the first number put forth in a negotiation—the anchor—no matter how arbitrary it may be. Even when we know the anchor has limited relevance, we fail to sufficiently adjust our judgments away from it. This is the anchoring effect.
… Read An Example of the Anchoring Effect
How to Create Value at the Negotiation Table: Strategies for Creating Win-Win Negotiations
While you might choose many processes for conducting your negotiations, we recommend the following three steps of a mutual-gains approach to negotiations:
… Read More
Metaphorical Negotiation and Defining Negotiation Skills
Negotiators talk about building agreement, bluffing the opposition, and volleying offers back and forth. According to mediator Thomas Smith, careful attention to such metaphors can reveal deeper meaning beneath the explicit words that people use, notably regarding how they view the negotiation process and their relationship to one another.
… Read More
Price Negotiation Advice for Consumers
It’s official: Price negotiations aren’t just for big-ticket items anymore. The prices of furniture, electronics, wine, jewelry, and other “medium-ticket” goods are now frequently up for discussion. The ancient art of haggling has made a comeback, so brush up on your skills with our six price negotiation tactics.
… Read Price Negotiation Advice for Consumers
How to Bargain Salary: Laughing Matters?
As they contemplate how to bargain salary, job candidates are often at a disadvantage relative to the hiring organization. Due to the well-documented anchoring effect, the first figure introduced into a negotiation tends to strongly influence the final outcome. Unfortunately for candidates, the wage or wage range that employers give in a job listing or … Read How to Bargain Salary: Laughing Matters?
Successes & Messes: Sending a strong message on trade
For years, Donald Trump has complained that the United States is getting a raw deal in international trade negotiations. As president, he has tried to improve U.S. trade partnerships in different ways, with mixed results: Trump withdrew the United States from the Trans-Pacific Partnership entirely, renegotiated changes to NAFTA with Canada and Mexico, imposed punitive tariffs … Read More
10 Notable Negotiations
In 2016, political dealmaking and corporate mergers took center stage. We look back on some of the most notable of these negotiations, which offer significant lessons to professional negotiators.
… Read 10 Notable Negotiations
Building Trust in Negotiations
Adapted from “Strike the Right Balance Between Trust and Cynicism,” by Harvard Business School professor Max H. Bazerman, first published in the Negotiation Briefings newsletter.
Negotiators often must choose between trusting their counterparts and being cynical of their motives. The consequences of such decisions can be serious in dealmaking: trust too much, and you’ll lose big; … Read Building Trust in Negotiations
Add Variety to Your Curriculum with These Top Simulations
Update Your Teaching Materials with Our Top Negotiation Role Play Simulations
The field of negotiation is constantly evolving, and as such, requires new ways of teaching negotiation. It can sometimes happen that students come into a class having already encountered the negotiation simulation being used in the course, or that a different kind of exercise is … Read More
Teach Coalition Management in Multiparty Negotiations
Multiparty negotiations can be difficult to manage if you are unprepared for the formation of coalitions. Two-party and multiparty negotiations share some important similarities: the goal of discovering the zone of possible agreement, for example. However, there are some key differences that set them apart. As soon as the number of parties increases past two, … Read More
Compensation Negotiation Tips for Salary Bargaining
Job candidates are often eager for compensation negotiation tips, and with good reason: they tend to be at a bargaining disadvantage relative to the hiring organization. Due to the well-documented anchoring effect, the first figure introduced into the discussion can strongly influence the final outcome—and the wage or wage range cited by employers is likely … Read More
How to Find the Zone of Possible Agreement (ZOPA) Between Friends
Finding the zone of possible agreement in negotiations can be difficult, especially when dealing with friends and family. We all know people who have “alligator arms.” When the restaurant check comes, they can’t manage to reach their wallets, or they quibble that they had the small tomato juice, and you had the large.
… Read More
What is the Anchoring Bias?
It may be the most burning question in business negotiation: Should you make the first offer?
Traditionally, negotiators were advised to wait for the other side to make a first offer. According to this reasoning, the other side’s offer gives you valuable information about his goals and alternatives.
More recently, however, research on the anchoring bias has … Read What is the Anchoring Bias?
How a Bad BATNA Keeps Medicare Drug Prices High
It’s Negotiation 101: to get what you want, you need to be able to make a credible threat to walk away from a subpar deal. And for your threat to be credible, you can’t walk in with a bad BATNA, you have to have a strong BATNA, or best alternative to a negotiated agreement. In … Read How a Bad BATNA Keeps Medicare Drug Prices High
Leadership Style Assessment: Road Map for Podemos in Spain
The skills required for honing an effective participative leadership style have a great deal in common with those used by good negotiators. Following the May 24, 2015 municipal elections in Spain, all of those skills are being put to the test. The elections delivered a stunning rebuke to the incumbent conservative Popular Party of Mariano … Read More
Video: Setting the Stage for Productive Negotiations
Understanding how to arrange the meeting space is a key aspect of preparing for productive negotiations. In this video, Guhan Subramanian, professor at Harvard Law School and Harvard Business School, discusses a real world example of how seating arrangements can influence a negotiator’s success. The discussion was held in his negotiation training workshop “Setting the … Read More
Creating Value Through Haggling – Setting the Stage for Negotiation Success
Suppose your research reveals that the TV you want is fairly new on the market. Further research about your local store leads you to believe it may be willing to go as low as Amazon.com’s price of $900. Now you have a general sense of the ZOPA, or zone of possible agreement: between $900 (your … Read More
In Platform Negotiations with Clinton, Sanders Was Victorious
With the 2016 Democratic National Convention now over, Vermont senator Bernie Sanders used the Hillary Clinton campaign’s fear of a divisive spectacle in Philadelphia to extract concessions on the party’s official platform and committee assignments. The senator’s tough dealmaking suggests an important negotiation lesson: Always know your BATNA and ZOPA in any negotiation.
… Read More
Deal Negotiation and Dealmaking: What to Do On Your Own
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
Conflict Management: Becoming a Team Player
Show me the money!” That refrain from the 1996 movie Jerry Maguire, shouted by a football player to his agent, continues to echo through U.S. professional sports negotiations today. A public arena, enormous piles of cash, and even bigger egos combine to make sports negotiations a unique context. Yet anyone who has negotiated through agents, … Read Conflict Management: Becoming a Team Player
Working with Your Agent – and Someone Else’s – In Negotiation
Negotiations become especially complex when agents are involved on two or more sides.
In the course, of their research, Robert Mnookin and Lawrence Susskind discovered that many negotiators often mistakenly assume that an agent representing the other side
… Read More
Did You Really Get a Great Deal?
Adapted from “A Worse Deal Than You Think?” First published in the Negotiation newsletter, August 2006.
Most negotiators leave the bargaining table believing they were better at pushing the other side to its limit than was actually the case, according to experimental studies by Richard P. Larrick of Duke University and George Wu of the University … Read Did You Really Get a Great Deal?
Should You Dwell on Past Negotiation Outcomes?
Adapted from “Learn to Negotiate with an Open Mind,” first published in the Negotiation newsletter.
After wrapping up a difficult negotiation, it’s tempting to forget about it and move on. The regret triggered by counterfactual thinking, or reflections on “what might have been,” can be so painful that many people will do whatever they can to … Read Should You Dwell on Past Negotiation Outcomes?
“Are We Exclusive?”
Ron McAfee, a carpenter and roofing expert, spent considerable time working with a condominium association on the design of a new roof deck. After gaining agreement on the proposed layout, design, and materials, McAfee submitted a written bid of $12,500. One of the board members subsequently showed McAfee’s plans to another roofer, who offered to … Read “Are We Exclusive?”
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