The next I do want to think about is the zone of agreement. Some negotiation scholars talk about a zone of positive agreements and use the acronym ZOPA. But the zone of agreement, what is it? And where does it come from? And how should we think about it? Here's an idea about the foundations of negotiation to think about it a little more carefully and systematically than we might have otherwise. The idea to think about is that let's say there's a buyer and seller will start with a very simple case, distributive case where we're just thinking about price. We can think about what a buyer's willing to pay and what a seller's willing to accept. We can think about the zone between that as a of possible agreement. Now, the first thing to realize is it's not always is positive. That is, sometimes there could be almost no overlap or it could be, there's no deal to be had. The most buyers willing to pay is less than what the seller is willing to accept, and there's just no zone of agreement. But I want to think about where these numbers come from. What drives a buyer's willingness to pay? Where does their limit come from? The key idea is to think about is alternatives. I mentioned before the idea that we can develop our alternatives before negotiation. The strength of our alternatives is really going to drive the power that we have in a negotiation. If I'm good to negotiate to buy a car and I have good alternatives, that's going to give me more confidence and strengthen my position when I'm negotiating with the car that I really want. The same is true for jobs or for houses. When you're realtor tells you, well, the goal is to fall in love with one house and just figure out how to pay for it. I would push back and say, well, no. The goal is to fall over the few houses and then figure out which one you're going to get the best deal for. Not just find one house and have to buy that one house. Here we think about this bargaining zone, alternatives really matter. The terminology that negotiators use is the best alternative to negotiate the agreement. The best alternative to negotiate agreement. The acronym BATNA, refers to the idea of what happens should negotiations collapse? There's a screaming match. You run out of the room, you get your BATNA. Now, let's say you're negotiating to buy a car, your BATNA here could be I continue to take the bus to work or I keep my old car, or I walk to work. There's something it could be a good alternative, it could be terrible, but you get your BATNA. In general, we think about the BATNA as exogenous to that negotiation. That is, it's something separate. It's the offer you have somewhere else that you could take. That's going to give you the sense of where the bargaining zone is. Now, what's important to recognize is that sometimes your BATNA is not separate from the negotiation. That it could be that as you negotiate, your alternatives might change, and that could just be a function of time. As the negotiation drags on, the timing changes. I mentioned before UPS workers, their greatest leverage is right before the holiday time when it's very busy. If the negotiations drag on and they started negotiating in November, they're still negotiating in January. Their leverage has really diminished. The BATNA of your counterparts to hire non-union workers has become much better. If you think about what the BATNA is as it relates to the negotiation itself. Or sometimes a tech company is selling some technology through negotiation, if they disclose so much information, they can end up with not very much left to sell. Their badness changed through the negotiation process. I want to think carefully about what it is, what is our alternatives? Where is that zone of agreement? To recognize that, we want to make sure we're careful that we are clear about as we go into the negotiation. First, we've developed greater alternatives, so we're in the best position we can been. Second, we're mindful of how the negotiation process might influence the BATNA that we have as time goes on and as perhaps we reveal information through that process. The broader idea here is to think about how as we're building rapport, we can learn information about our counterpart's BATNA. We can learn it through asking direct questions and from doing our preparation, doing our homework to learn information. But here, all this information, the preparation, the non-task communication, and this idea of asking direct questions will help us understand our counterpart's BATNA, give us a sense of what the ballpark is, what the zone of agreement might look like, and that should inform the offers that we make. Let's think about making a first offer. Here's the idea. The first offer is going to anchor the negotiation. When you have a good sense of what the zone is like, going first can be a great advantage. That is, it'll anchor the negotiation, influence expectations of your counterpart, and drive where you end up. We should make the first offer when we have a good sense of what that zone agreement looks like. But if we don't, that's when we should be asking our questions, doing our homework, and waiting because we can make a mistake. If we go too early, we could end up leaving a lot of money on the table or offending our counterparts. You want to be very careful about making that first offer, but way different from the advice of never going first. If both you and your counterpart are doing that, again, that could be a long negotiation, but sometimes somebody has to go first. In some cases, going first can confer a real advantage. When we get offers, we want to make sure we take our time to react to these offers and make sure we're doing this. As I mentioned before, in a thoughtful, reasonable way, that is, we want to make sure we're not revealing too much information in our emotional reactions. We want to be watching our counterparts as they react. We want to make sure if it's an unreasonable offer that we reset and recalibrate the negotiation, we don't just get carried along and continue splitting the difference when the initial starting point wasn't a very reasonable point to start with. When we think about negotiation dance, this exchange of offers, it's likely to follow a pattern where we see alternating bids and asks, larger concessions at the beginning matching concessions, smaller concessions at the end split the difference. That's going to mean that those two initial prices are likely to be a very good prediction of where we end up even in a long negotiation dance. Dances tend to be much shorter for things where relationships matter a lot like salary negotiations in a very short dance. In contrast, negotiations for goods.
