Competitive Bargaining vs. Cooperative Problem Solving

… a core concept in Leadership Skills and Atlas 109

CooperativeProblemSolvingConcept description

The Model UN Guidebook (reference below) distinguishes are two different approaches to negotiation  – competitive bargaining and cooperative problem solving.

Competitive bargaining

The Guidebook describes this approach to negotiation in the following way:

“The crudest form of negotiation in an international conference resembles crude commercial negotiations, for example, when you are trying to buy or sell a second-hand car and the only point at issue is the price. In that case the buyer wants to pay as little as possible, while the seller wants to receive as much as possible. A gain by one party means an equal loss by the other. This type of negotiation is sometimes referred to as ‘competitive bargaining’. It has been extensively studied over the centuries by traders everywhere and, more recently, in business schools.

“You probably already understand this form of negotiation. The essential feature is that each party receives something which they accept as the outcome of the negotiation. At the simplest they would receive equal shares; but the issues before international conferences are generally far too complex for that and the needs and capabilities of the nations concerned are too varied for any simple equilibrium. Instead, at the international level, the balance to be found is between trade-offs, in which not only the quantity but also the nature of what different parties receive is different.

“Each party is concerned primarily to maximize its own gains and minimize the cost to themselves.

“Then some important tactical principles come to the fore:

  • Always ask for more than you expect to get. Think of some of the things asked for as ‘negotiating coin’ that you can trade away in order to achieve your aim. You can also assume that the other party does not expect to get everything they ask for and that some of their requests are only negotiating coin.
  • You might even start off by demanding things you do not really hope to achieve, but which you know other parties strongly oppose. By such blackmail you may hope that the other parties will make concessions to you just to refrain from pressing such demands.
  • Always hide your ‘bottom line’. Because the other party’s aim is to concede to you as little as possible, you may get more if they are not aware of how little is acceptable to you.
  • Take early and give late. Negotiators often undervalue whatever is decided in the early part of the negotiation and place excessive weight on whatever is agreed towards the end of the negotiation.
  • As the negotiation progresses, carefully manage the ‘concession rate’. If you ‘concede’ things to the other party too slowly, they many lose hope of achieving a satisfactory agreement; but if you ‘concede’ too fast, they could end up with more than you needed to give them.
  • The points at issue are seen as having the same worth for both sides – although they rarely do.

“Precepts of this kind can readily generate a competitive or even combative spirit and encourage negotiators to consider a loss by their counterparts as a gain for themselves. It should be evident that such sentiments at the international level are harmful to relations and thus to the prospects of cooperation and mutual tolerance.”

Cooperative problem-solving

The Guidebook describes this approach to negotiation as follows:

“An entirely different style of negotiation is more common in international conferences than ‘competitive bargaining’, both because it is generally more productive and is widely seen as more appropriate in dealings between representatives of sovereign states. This style of negotiation starts from the premise that you both have an interest in reaching agreement and therefore an interest in making proposals that the other is likely to agree to. In other words, each has an interest in the other(s) also being satisfied.

“Achieving your objective requires that you also work to achieve the objectives of the other party (or parties) – to the extent that such effort is compatible with your objectives. The same applies to your counterpart(s): it is in their interest to satisfy you to the maximum extent possible. This makes negotiation a cooperative effort to find an outcome that is attractive to all parties.

“To succeed in this type of negotiation, principles apply which are quite contrary to those that apply in ‘competitive bargaining’, namely:

  • It is important not to request concessions from the other side that you know are impossible for them. If you do so, they will find it difficult to believe that you are genuinely working for an agreement.
  • It is in your interest that the other party should understand your position. Indeed, perhaps they should even know your ‘bottom line’. If they understand how close they are to that ‘bottom line’ on one point, they will also understand the necessity to include other elements that you value so as to give you an incentive to agree.
  • Sometimes it is in your interest to ‘give’ a lot to the other side early in the negotiation process so as to give them a strong incentive to conclude the negotiation and therefore ‘give’ you what you need to be able to reach agreement.
  • The ‘concession rate’ may not be important.
  • There is a premium on understanding that the same points have different values for different negotiators and also on finding additional points on which to satisfy them.
Win-win negotiation skills

The MindTools Editorial Team (reference below) applies a similar perspective in its advice on negotiations in most workplace situations. It notes that:

“Where you do not expect to deal with people ever again and you do not need their goodwill, then it may be appropriate to “play hardball”, seeking to win a negotiation while the other person loses out. Many people go through this when they buy or sell a house – this is why house-buying can be such a confrontational and unpleasant experience.

“Similarly, where there is a great deal at stake in a negotiation, then it may be appropriate to prepare in detail and legitimate “gamesmanship” to gain advantage. Anyone who has been involved with large sales negotiations will be familiar with this.

“Neither of these approaches is usually much good for resolving disputes with people with whom you have an ongoing relationship: If one person plays hardball, then this disadvantages the other person – this may, quite fairly, lead to reprisal later. Similarly, using tricks and manipulation during a negotiation can undermine trust and damage teamwork. While a manipulative person may not get caught out if negotiation is infrequent, this is not the case when people work together routinely. Here, honesty and openness are almost always the best policies.”

MindTools counsels that excessive preparation for negotiation to resolve a workplace disagreement can be counter-productive because it can be seen as manipulative because, just as it strengthens your position, it can weaken the other person’s. However, it advises that if one needs to resolve a major disagreement then it is important to prepare thoroughly by thinking through:

  • Goals: what do you want to get out of the negotiation? What do you think the other person wants?
  • Trades: What do you and the other person have that you can trade? What do you each have that the other wants? What are you each comfortable giving away?
  • Alternatives: if you don’t reach agreement with the other person, what alternatives do you have? Are these good or bad? How much does it matter if you do not reach agreement? Does failure to reach an agreement cut you out of future opportunities? And what alternatives might the other person have?
  • Relationships: what is the history of the relationship? Could or should this history impact the negotiation? Will there be any hidden issues that may influence the negotiation? How will you handle these?
  • Expected outcomes: what outcome will people be expecting from this negotiation? What has the outcome been in the past, and what precedents have been set?
  • The consequences: what are the consequences for you of winning or losing this negotiation? What are the consequences for the other person?
  • Power: who has what power in the relationship? Who controls resources? Who stands to lose the most if agreement isn’t reached? What power does the other person have to deliver what you hope for?
  • Possible solutions: based on all of the considerations, what possible compromises might there be?
Dealing with emotions

MindTools says that style is critical and that:

“For a negotiation to be ‘win-win’, both parties should feel positive about the negotiation once it’s over. This helps people keep good working relationships afterwards. This governs the style of the negotiation – histrionics and displays of emotion are clearly inappropriate because they undermine the rational basis of the negotiation and because they bring a manipulative aspect to them.

“Despite this, emotion can be an important subject of discussion because people’s emotional needs must fairly be met. If emotion is not discussed where it needs to be, then the agreement reached can be unsatisfactory and temporary. Be as detached as possible when discussing your own emotions – perhaps discuss them as if they belong to someone else.”

Sources

UN4 MUN, Competitive Bargaining vs. Cooperative problem solving, at http://outreach.un.org/mun/guidebook/skills/negotiation/strategies/, accessed 25 March 2016.

MindTools Editorial Team, Win-Win Negotiation – Finding a Fair Compromise, at https://www.mindtools.com/CommSkll/NegotiationSkills.htm?, accessed 25 March 2016.

Atlas topic and subject

Negotiating (core topic) in Leadership Skills.

Page created by: Ian Clark, last modified on 25 March 2016.

Image: UN4 MUN, A view of the Conference on Disarmament, Competitive Bargaining vs. Cooperative problem solving, at http://outreach.un.org/mun/guidebook/skills/negotiation/strategies/, accessed 25 March 2016.