Much of the materials with the tag bfa comes from the Bargaining for Advantage book.
Leverage gives you power to reach an agreement on your terms.
One way to increase leverage is by finding alternatives. No matter how bleak the situation, there are always alternatives!
Leverage is dynamic. It keeps changing. At each stage of the negotiation, assess who has what leverage.
Threats in a negotiation is playing with fire. Opponent must believe you’ll act on the threat, and must believe it will hurt.
Positive leverage: Every time the other party says “I want…” or “I need…”, your leverage goes up, especially if you can provide for them.
Negative leverage: Threats are negative leverage. Usually implied in a subtle way. Be wary: Even subtle threats are like playing with fire.
Threats work because losses loom larger in the mind than the potential gains of equivalent nature.
If others use threats against you, respond in kind. Especially against competitive people. Equivalent threats are needed to neutralize them.
Normative leverage: Use standards and norms. Khaali’s example of asking to stay at home until trial.
Litmus test: At any point, ask who has the most to lose if the negotiations stop. That tells you who has leverage.
Alter the situation to get leverage. To do this:
- Gain more information on what the other side needs.
- Obtain power to make the other side worse.
- Frame your needs using their principles and norms.
- Improve your BATNA in case the other party doesn’t cooperate.
You can get all 3 kinds of leverage by using relationships and shared interests to form a coalition (especially before negotiations). Merely having bigger numbers is an advantage. Social proof plays a strong role.
As a good example of a coalition, consider small ranchers who couldn’t compete with the meat industry.
Coalitions are also effective in providing alternatives.
Misconception: Those who have the power also have the leverage. Leverage depends on the details of the situation, not merely on power. A parent has more power, but need not have more leverage over a petulant child. Use the same strategies you would use against a stubborn child with stubborn politicians, customs officials, etc.
Misconception: Leverage is static. It changes rapidly. So timing of making needs known is critical. For job hunting, negotiate stuff after an offer is made.
Misconception: Leverage depends on facts. It doesn’t. It is purely perception. If the other side thinks you are in a strong position, you have leverage. Corollaries to this are:
- The other side may not be as strong as you think.
- You may be strong but the other side doesn’t know it, so demonstrations may be in order.
Leverage in the market differs from that in the family/firm. In the market, walking away is not bad. Within the family, it is a threat. Normative works better in the family. Urgency in the market is bad for you, but in a family it is good. It signals passionate commitment and persistence. It helps if such displays are rare (people ignore overly dramatic folks). Intensity, coupled with expertise, gets people’s attention.