Opening and Making Concessions

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

If your opponent is competitive, you may need to behave as such temporarily.

Open with an offer first if you think you know enough about the subject, or you trust the opponent to look after you. The anchor effect is in your favor. If you are not too familiar with the subject and you distrust your opponent, let them start but beware of the anchor effect being used against you.

If in a Relationship scenario, open with a fair or even accommodating position - not your ideal one.

If in a Transactions scenario, open optimistically if you have leverage: The idea is to open high and concede slowly. Optimistic means the highest for which there is a supplying standard or argument for it. Your argument must be presentable. You must be able to justify it.

This works due to the contrast principle. If you want $50, start with $75 (if you can justify it). Concede down to $50. The opponent is pleased with a $25 drop. If you start with $55, a drop of $5 is not much of a concession. Also, the reciprocity principle applies. They’ll feel compelled to do a favor for you if you do one for them.

The optimistic opening does not always work well in some transactions:

• If you do not have leverage and the other side knows it.
• In a market where there is no expectation of bargaining (or with people who do not haggle).

Balanced Concerns: Highly optimistic openings do not work well. As an example: Start at 5-10% within an acceptable amount, and negotiate on non-price issues. You do not want to belittle or insult the other person.

If you want a reasonable open, give yourself some room for concessions. Study: People are more satisfied if they start with a high price and negotiate down compared to a firm non-negotiable price, even if the final price is more favorable than the negotiated one. Concessions give off signals of cooperation and thus friendliness.

For relationship: Accommodate. Find out what the other party wants, and give it to them with interest.

Transactions: Firm concession strategy. In price-only negotiations, haggling is the rule. Open optimistically, hold for a bit, then progressively concede. Note: Hagglers will concede to a point and then refuse. This is not their minimum - it is their expected amount. Just start leaving and about half the times they will call you back and concede further. Then you decide if this amount is OK or you want to bargain further, but keep in mind they may not concede any more.

In higher stakes transactions, do not make big concessions early. The opponent will think you are conceding items not important to you. Or they will see you as flexible and then suddenly stubborn.

Transactions: Multiple issues may be involved at times. A classic haggler will take each issue sequentially and perform distributive haggling on it. There is a higher likelihood of deadlock.

Distinguish between distributive bargaining (pie is fixed) and integrative bargaining (make pie bigger).

The rule for integrative bargaining: Make big moves on little issues, and little moves on big issues. However, keep concession devaluation in mind. Ensure any concession, no matter how small, is signaled as meaningful to you.

Try to discuss all issues without offerings. One side proposes a package (on the whole problem - not one issue at a time). In the 2nd round, concede on small issues (with display of sacrifices). Do not agree to close on any issue until all are resolved.

“If you concede on A and B, we will concede on Y and Z.” This signals importance to the other side.

In multi-issue transactions, firm tactics will still be used.

Balanced Concerns: Have high expectations. Start with least issues, use if…then… statements for concessions. All trades should be reciprocal.

Balanced Concerns: Aggressive hardball does not work well.

Good Guy/Bad Guy routine: If you like one negotiator but hate the other, assume this trick is being played against you. Another scenario: The opponent says the demand is reasonable to her, but not her boss (invisible).

When confronted with good guy/bad guy, name it publicly and demand to know who is in authority. Then throw the bad guy out (if he is merely an advisor or lawyer).