Like HowStuffWorks on Facebook!

How Negotiation Works


Negotiation Weapons: This is War
Get your game face on and be prepared for a fight when you enter a negotiation.
Get your game face on and be prepared for a fight when you enter a negotiation.
Tim Robberts/Photonica/Getty Images

Before entering a battle, it's smart to do some reconnaissance, inventory and, if ethically possible, espionage. Keep in mind that knowledge is power -- both knowledge of your own situation and knowledge of the other side's. Learn as much as you can about your situation and alternative options. Keep these details hidden from the other party so they're not used against you. Learning as much as possible about the other party's situation could give you the upper hand.

One factor that experts recommend you learn about yourself before you enter negotiations is your best alternative to negotiated agreement (BATNA). This is the option you would take if the talks fell through. For instance, if you're negotiating over the price of a house, your choices of BATNA could be staying where you live or trying to get a different house.

Knowing your BATNA is essential to making smart decisions during negotiation because you can't make a wise choice when you don't know what your choices are. Like the game show contestant who must choose between what's behind mystery door no. 3 and the $10,000 cash prize she just won, you'd be entering a negotiation blindly by not figuring out your BATNA. And, the better your BATNA is, the stronger -- and more confident -- your negotiating can be. For this reason, authors Fisher and Ury advocate doing what you can to improve your BATNA.

Unless you have a very good BATNA, keep it hidden from the other party until you're ready to use it. However, letting the other party know you have a strong BATNA -- without going into specific details -- is a solid negotiation tactic. Also, learning that the other side has a poor BATNA will improve your negotiating position.

A related factor to figure out before entering a negotiation is your reservation price, also called the walk-away price. Your reservation price represents the worst terms you'd be willing to accept for a deal [source: Harvard Business Review]. For instance, this might be the highest price you'd be willing to pay for a house or the lowest salary you'd be willing to accept to work for an employer. And unless you want it to be your only option, keep it to yourself.

To know the battlefield, get familiar with the zone of possible agreement (ZOPA). This is the range at which two opposing parties can possibly agree. In other words, it's the difference between the seller's reservation price -- the lowest price he'll accept -- and the buyer's reservation price -- the highest price she'll pay. You might figure out that the two reservation prices don't overlap at all, meaning that no ZOPA exists and negotiation is impossible.

Some negotiations require a third party to intervene. This person could be a hired mercenary for your fight -- an advocate paid to negotiate on your behalf. On the other hand, an impartial mediator can step in to either help the parties understand each other, to make steps toward resolution, or to come up with a solution that all parties would be willing to accept [source: WIPO]. The parties aren't required to accept this solution, however. This is different from an arbiter or arbitrator, whose decision is final. An example of this is when a matter goes to court in front of a judge.

But, what are we fighting over, anyway? Is it possible to alter the playing field, or is every inch I gain one that you lose? Read on to find out how it might be one or the other.