ZOPA – Zone of Possible Agreement

… a core concept in Leadership Skills and Atlas 109

zopaConcept description

A Zone of Possible Agreement (ZOPA – also called the bargaining range) exists if there is a potential agreement that would benefit both sides more than their alternative options do.

Writing in Beyond Intractability, Brad Spangler (reference below) notes that although the ZOPA/bargaining range is critical to the successful outcome of negotiation it may take some time to determine whether a ZOPA exists and that it may only become known once the parties explore their various interests and options. If the disputants can identify the ZOPA, there is a good chance that they will be able to come to an agreement.

ZOPAs and BATNAs

Spangler describes how, in order for disputing parties to identify the ZOPA, they must first know their alternatives, and thus their “bottom line” or “walk away position.” For example, Mary might have two potential buyers for her car. Georgio is willing to pay $6,950. Mary is now negotiating with Fred. If Fred will pay more than Georgio (Mary’s best alternative to a negotiated agreement, or BATNA), she will sell to him. If Fred won’t pay that much, she’ll sell to Georgio. Likewise, if Fred has found another car he likes for $5,500, then he won’t pay more than that for Mary’s car…maybe even a bit less. So Fred’s BATNA is $5,500. BATNAs determine each side’s bottom lines. If you have an alternative car available for $5,000, $5,000 is your bottom line. If you can sell your car for $7,000, that is your bottom line. If you don’t do better than that in the negotiation, you’ll walk away.

So, a zone of possible agreement exists if there is an overlap between these walk away positions. If there is not, negotiation is very unlikely to succeed. In fact, it will only succeed if one party either realizes that her BATNA is not as good as she thought, or she decides for some other reason to accept the agreement, even though an different option might  yield better results. (This often happens when parties do not explore or understand their BATNAs well enough, therefore settling for less than they could have gotten elsewhere.)

Identifying the ZOPA

Spangler says that if both sides know their BATNAs and walk away positions, the parties should be able to communicate, assess proposed agreements, and eventually identify the ZOPA. However, parties often do not know their own BATNAs, and are even less likely to know the other side’s BATNA. Often parties may pretend they have a better alternative than they really do, as good alternatives usually translate into more power in the negotiations. The result of such deception, however, might be the apparent absence of a ZOPA – and hence a failed negotiation, when a ZOPA actually did exist. Shared uncertainties may also affect the parties’ abilities to assess potential agreements because the parties may be unrealistically optimistic or pessimistic about the possibility of agreement or the value of alternative options.

Sources

Brad Spangler (2003), updated by Heidi Burgess (2013), Zone of Possible Agreement (ZOPA), Beyond Intractability, at http://www.beyondintractability.org/essay/zopa, accessed 25 March 2016. The article references Roger Fisher and William Ury. Getting to Yes: Negotiating Agreement Without Giving In, 3rd ed. (New York: Penguin Books, 2011). <http://www.beyondintractability.org/library/external-resource?biblio=23737> and Michael Watkins and Susan Rosegrant, Breakthrough International Negotiation: How Great Negotiators Transformed the World’s Toughest Post-Cold War Conflicts (San Francisco: Jossey-Bass Publishers, 2001), 26-28. <http://www.beyondintractability.org/bksum/watkins-breakthrough>.

Atlas topic and subject

Negotiating (core topic) in Leadership Skills.

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

Image: Wikipedia, Zone of possible agreement, at https://en.wikipedia.org/wiki/Zone_of_possible_agreement, accessed 25 March 2016.