BASIC CONCEPTS FOR DEFINING BARGAINING RANGE LIMITS IN DISTRIBUTIVE NEGOTIATION

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BASIC CONCEPTS FOR DEFINING BARGAINING RANGE
LIMITS IN DISTRIBUTIVE NEGOTIATION

• Gilles Gauthier
• Institute of Applied Economics

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BASIC CONCEPTS FOR DEFINING BARGAINING RANGE
LIMITS IN DISTRIBUTIVE NEGOTIATION

• 1. Best alternative (fallback position, best
  alternative to an absence of agreement)
• - the most advantageous result obtained through
  an alternative solution.
• - determined by the environment.

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BASIC CONCEPTS FOR DEFINING BARGAINING RANGE
LIMITS IN DISTRIBUTIVE NEGOTIATION

• 2. Revervation price
• - what can be otained elsewhere if negotiations
  are terminated, plus transaction costs (buyer)
  or less transaction costs (seller), arising
  from ending the negotiations.
• - determined by the environment.
• 3. Resistance point (breaking point)
• - determines whether there will be deadlock.
• - actual behaviour is based on the resistance
  point.

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BASIC CONCEPTS FOR DEFINING BARGAINING RANGE
LIMITS IN DISTRIBUTIVE NEGOTIATION

• - subjective factors come into play.
• ? cognitive bias
• ? agree to less rather than opt for
  alternative solution
• ? accept deadlock (alternative solution)
  rather than get more through an agreement.
• - depends on expected results (less costs), the
  time frame, negotiation difficulties, or the
  cost of the negotiations failing.