Negotiation and Bargaining

Negotiation is the process of conferring with others to reach an agreement. Bargaining occurs when there is a dispute over the terms involved. A straightforward allocation of adequate resources would involve negotiation, but if there is a shortage of time, money, or materials, then the parties will bargain over the exact distribution to promote their own best interests. Collective bargaining [Page 1494]is a structured process where a group such as a union will negotiate with an employer as a single unit about terms of their employment contract.

The basic conditions for negotiation are that the parties are voluntary participants and there is a positive bargaining zone. Thus, there is no negotiation in mugging at gunpoint or when groceries are offered at a fixed price in the store and there are sufficient paying customers that the storekeeper has no incentive to lower the price. A bargaining zone is a range of exchange where one side is willing to offer and the other is willing to accept. If neither side is willing to extend the zone then there is no room for meaningful negotiation.

There are several other necessary elements for negotiations to be successful. Initially, the parties involved must have the power to settle. Second, all the parties involved need to be willing to take part in the negotiation. If critical parties are absent or if one party is not prepared to bargain in good faith, then there is little hope for a workable agreement. Moreover, the parties need to be psychologically prepared to negotiate; if there is high emotion, inadequate information, or failure to formulate a negotiation strategy, then the parties' negotiations are unlikely to be productive.

The parties must in some way be mutually dependent and have the ability to influence each other. Such influence can be seen as having something the other party desires or having the means to increase benefits for the other side (or conversely the ability to inflict distress). A negotiator needs some form of leverage to provide an incentive to the other side to alter their behavior. Where the power is completely disproportionate, meaningful negotiation with the other party is also unlikely to occur. Parties must also have some sense that delay will result in some adverse action. If only one side is under great time pressure, then the party with time to spare is likely to use that leverage to extract greater substantive gains from the party that is looking for a quick solution. The Paris peace talks to terminate the Vietnam War illustrate this: The Vietcong were able to procrastinate to the point where the Americans made substantive concessions to hasten the negotiation. On a more mundane level, the householder with leaking pipes needs a repair urgently and thus will be in no position to bargain with an available plumber.

If there is a better deal available elsewhere or the psychological stress is not worth the potential benefits, then people will break negotiations. Contemporary negotiation theorists often refer to the point at which someone will walk away by saying that any deal must improve on a party's “best alternative to a negotiated agreement.”

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