Closing and Giving Commitment

Much of the materials with the tag bfa comes from the Bargaining for Advantage book.

Scarcity Effect: People will value (or overvalue) a commodity that they think will be scarce soon. Some negotiators will imply that what they have is in high demand and supplies are low. If the other party is bluffing, they may be involving the scarcity effect.

Time may be a scarcity (artificial deadline)

Deadlines are most effective if related to events out of both party’s control.

A “take it or leave it” ultimatum triggers scarcity. Many walkouts are pure theater. If someone threatens it, know that the issue is important to them.

If the opponent is cooperative and threatens a walkout, he likely is not bluffing. If you do not want to cancel the deal, apologize. If this is not enough, get a 3rd party to act on your behalf: One who does not offend the opponent.

Overcommitment: You have put so much energy into something that you do not want to back out at that stage. So if negotiations took a long time, you are more likely willing to close. Hence, sudden last minute clauses and requests (nibbles) appear. When dealing with a nibbler, refuse or get meaningful concessions from the other party.

Relationship: Accommodate and close quickly.

Balanced Concerns: Most common: Split the difference. Compromises often just take an average of 2 openings. But this strategy is even used after lengthy negotiations.

In a pure Transaction, be wary of splitting the difference.

In Balanced Concerns that are complex, do not split the difference early on. If splitting the difference is not OK (gap too wide), get a professional assessor. If you cannot agree on a professional assessor, get one for each party and split their difference.

Again: Split the difference only if the relationship is important.

Breakdown of negotiations: Sometimes this is a good thing. It gives time to re-evaluate and think.

If a negotiation broke down, leave a door open to return: “I cannot negotiate at this time.”

If hostilities escalate and a breakdown is looming, make very minor concessions and look for reciprocals. Repeat the cycle. This is a useful technique in any deadlock. Use M&Ms to playfully keep score for small concessions to get the talks going.

Do not just get agreement. Get commitment (e.g. contract, although there are other options)! Example of the volunteer organizer who frequently had delinquent volunteers on the days of the events. She gave small tasks to the volunteers. They then knew that if they didn’t show up, they would be failing the group (e.g. by not bringing needed supplies).

In almost every negotiation, commitment begins with a social ritual (e.g. a handshake). Do not downplay this, and find out what the ritual is.

As the stakes go up, so does the complexity of the social rituals. This often includes some form of public disclosure.

In the US, a verbal contract is not enough for many transactions (e.g. anything over $500).

A simultaneous exchange may be needed (e.g. simultaneous exchange of title to car with check).