My Photo

Disclaimer

Subscribe to receive free e-mail updates

« Potential cost savings of mediation in family disputes | Main | Recommended podcast on Human Rights »

Comments

Stephen Frenkel

This is a very interesting blog post. It is true that the first offer often acts as an "anchor" in a negotiation, and studies have shown that negotiated agreements do tend to fall closer to the first number thrown out than the counter offer. However, I believe this is a result of people negotiating unsystematically, letting psychological factors rather than logic and reason drive their negotiated outcomes.

As you mentioned, many negotiators start high and let their counterpart "extract" concessions - which may increase their satisfaction. It is my contention, however, that through proper research and identifying what we call "objective standards" (which are factors outside the influence of either party that can help both parties realize and define a fair outcome), a negotiator can resist being taken advantage of by a counterpart who inflates their price and makes "concessions" or uses other tactics to their advantage.

When negotiating, it's important to determine for yourself what exactly defines success. Is success extracting concessions? For example, If I mark up the price of my home by $100,000 from it's fair market value and then "concede" $50,000 from the listing price, does this large concession equal a good negotiated outcome? I think you can see what I’m getting at.

By identifying relevant objective standards, a prepared negotiator can identify an inflated price and not be persuaded by an inflated "anchor." Rather, they would know the fair market value and determine a fair price by the merits of the deal, rather than the psychological impact of bargaining down the seller.

The concept of Objective Standards is only one element in the seven element framework of "interest-based" or "collaborative" negotiation, as defined by Roger Fisher and his colleagues at the Harvard Negotiation Project. For more information about these concepts or to learn about workshops that teach the skills of collaborative negotiation, which are aimed to help negotiators maximize value for all parties while improving long-term working relationships, feel free to contact me at Mediation Works Incorporated at sfrenkel@mwi.org or at 617-973-9739 x24.

Justin Patten

Very interesting, Ted.

2 points:

1 Such a strategy may be dependent on getting known. Your wife probably saw more benefits as her reputation grew.

2 If you are effectively negotiating with yourself, does this prevent you from getting all the benefits of 3rd party solutions?

Ted McClure

My wife, a criminal defense attorney and civil litigator (now retired), had a negotiating style that placed a different spin on the process. After determining what her client would accept, she would make her "best" offer - her "line in the sand" position - first, announcing it as such. Against a typical counteroffer, she would respond with a "worse" offer from the perspective of the opposing party. In effect, she would create a "dutch auction" with only one bidder. The first time she did this with a particular opposing counsel, she would not be believed and the matter would go to trial with all the attendant uncertainty, delay, and expense. The second time she negotiated with the same opposing counsel, her position was known and understood. Usually the matter was settled then and there, as her "best offer" was invariably realistic. As her reputation grew, the games played by opposing counsel in the negotiation process tended to fade away and her clients tended to be not unhappy with the results.

The comments to this entry are closed.