Understanding Bargaining Zones

The range between negotiators' reservation points where a mutually agreeable settlement can be reached.

Another name for the bargaining zone, highlighting the potential for agreement.

The absolute minimum a party is willing to accept in a negotiation; the 'walk-away' price.

A bargaining zone where negotiators' reservation points overlap, meaning mutual agreement is possible.

A bargaining zone where negotiators' reservation points do not overlap, agreement is less likely.

An agreement reached between negotiators, ideally within the bargaining zone.

Best Alternative To a Negotiated Agreement. The best course of action if a negotiation fails.

Identifying and evaluating potential alternatives if a negotiation doesn't succeed.

Having several options if a negotiation falls apart.

Separating different possibilities within multiple alternatives (e.g., separate job offers).

Negotiators with multiple alternatives may have a skewed understanding of the possible agreement range.

BATNA can and does change over time. It is not fixed.

High goals or expectations in a negotiation.

Sellers may dislike buyers with overly ambitious goals, reducing future cooperation.

When extreme proposals in negotiation make the other party less willing to discuss or negotiate further, possibly leading to a breakdown of the discussion.

A proposal considerably higher or lower than a reasonable expectation, often detrimental to the negotiation.

Low power negotiators are more likely to abandon negotiations due to extreme offers.

While displeased by extreme offers, high-power negotiators are less likely to walk away from the table than low-power negotiators.

Presenting a slightly less favorable starting offer than one's realistic target to encourage negotiations.

The absolute least favorable outcome a negotiator will accept, the 'walk-away' point.

Gradually increasing the offered terms until the negotiating counterparty's reservation point is reached.

A negotiation tactic where one party strategically makes the first offer to influence the counterparty's perceptions and expectations.

The tendency for the first offer in a negotiation to influence subsequent offers and the final outcome.

The risk of overpaying or under-asking in a negotiation when you have less information than the opponent.

A negotiator lacking relevant information or knowledge about the negotiation's subject.

A negotiator possessing relevant facts or knowledge crucial to the negotiation's outcome.

Informed party should propose first when the other is naïve, or both should try to reach agreement through a joint evaluation process.

The effect of the first offer acting as a psychological anchor, potentially pushing the other party's perceived 'acceptable' price.

The ability to express one's needs and preferences clearly and confidently in a negotiation.

The personal feeling of satisfaction with the deal or outcome.

A response to an initial offer made by the other party in a negotiation, offering an alternative proposal.

The tendency for negotiators to be influenced by the first offer presented, potentially affecting their own proposals.

The most advantageous course of action if a negotiation is unsuccessful. A key factor in negotiation strategy.

The ideal outcome a negotiator hopes to achieve in a negotiation. It's a desired result.

A reduction in the demands or a compromise made by a negotiator during discussion.

A counteroffer that shifts the focus away from the initial offer and towards a new negotiation point of discussion.

The lowest acceptable price or value a negotiator will accept in a deal or agreement.

Distributes outcomes equally, regardless of input.

Distribution proportional to individual contributions.

Distribution based on need, differing from equity.

Individual satisfaction influenced by others' outcomes (tent-shaped).

Equal shares ($1,500 each) is most satisfying to most people.

Preferring to get more than others in a deal

Preferring others to gain more in a transaction

Favorable relationships in negotiations lead to fairer outcomes (equality).