4.1 Principles of Distributive Bargaining

Distributive bargaining is all about dividing a fixed pie. Negotiators compete for limited resources, often withholding information to gain an advantage. It's a zero-sum game where one party's gain is the other's loss.

Key strategies include anchoring with aggressive initial offers, claiming value through persuasion, and using power dynamics to leverage better outcomes. Tactics like good cop/bad cop and brinksmanship aim to extract concessions from the other party.

Distributive Bargaining

Distributive vs integrative bargaining

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• Distributive bargaining involves zero-sum or fixed-sum negotiations where parties compete for a fixed resource or outcome and one party's gain is the other party's loss (dividing a fixed pie)
• Integrative bargaining involves non-zero-sum or variable-sum negotiations where parties collaborate to find mutually beneficial solutions and aim to expand the pie and create value for both parties (win-win outcomes)

Key assumptions of distributive bargaining

• Resources are fixed and limited, meaning there is a finite amount to be divided between parties (budget, assets)
• Parties have opposing interests and are focused on maximizing their individual gains rather than finding joint gains
• Information is often withheld or manipulated by parties to gain an advantage and maintain bargaining power (hiding bottom lines, true priorities)

Strategies in distributive negotiations

• Anchoring involves making an aggressive initial offer to set a favorable reference point and influence the other party's expectations (high initial price)
• Claiming value involves persuading the other party to concede more value through tactics like threats, bluffing, or emotional appeals (emphasizing your BATNA)
• Concealing information involves withholding or misrepresenting information to maintain an advantage and prevent the other party from accurately assessing the situation (hiding budget constraints)
• Commitment tactics involve making firm, inflexible demands to pressure the other party into conceding (take-it-or-leave-it offers)
• Deadline tactics involve imposing or manipulating time pressure to force concessions from the other party (artificially short timelines)

Power dynamics in distributive bargaining

• Power is the ability to influence the other party's decisions and outcomes based on sources like BATNA (Best Alternative To a Negotiated Agreement), resources, expertise, or legitimacy
• Leverage is the strategic application of power to gain an advantage, often by exploiting power asymmetries to extract concessions from the weaker party
• Parties with greater power and leverage tend to secure more favorable outcomes in distributive negotiations, while weaker parties may be forced to accept suboptimal agreements (large company vs small supplier)

Strategies and Tactics

Identify common strategies employed in distributive negotiations

• Good cop/bad cop involves one negotiator playing a friendly, cooperative role while the other plays a tough, uncompromising role to manipulate the other party's perceptions and extract concessions (sympathetic HR rep and stern manager in job offer negotiation)
• Salami tactics involve securing a series of small concessions that accumulate into a significant gain, gradually eroding the other party's position (additional contract clauses, fee increases)
• Brinksmanship involves pushing the negotiation to the edge of collapse to force the other party to concede, risking impasse to secure a better deal (threatening to walk away)
• Take-it-or-leave-it offers involve presenting a final, non-negotiable offer and pressuring the other party to accept or risk losing the deal entirely (exploding job offers, limited time sales)