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Four things you need to know about distributive bargaining

Distributive bargaining is a realistic approach to some situations. [iStockphoto]

Distributive bargaining is a process where one party gains whereas the other party loses something.

It is a negotiation strategy used to distribute fixed resources such as money, resources and assets between two or more parties.

Here are four common negotiation strategies used in distributive bargaining:

  1. Avoid making unilateral concessions

Once each party has made an initial offer, avoid the trap of making another concession before your counterpart has reciprocated with theirs.

  1. Be comfortable with silence

Negotiators often are inclined to make undue concessions or retract their offer when their counterpart seems to be taking too long to respond.

Remember that your partner’s silence may be strategic, designed to make you uncomfortable or cave in.

  1. Label your concessions

As humans, we have an innate tendency to reciprocate the gifts and concessions we receive from others.

Due to this powerful norm of reciprocity, we tend to make a concession of our own when offered one by a counterpart in a distributive negotiation.

At the same time, to escape such feelings of obligation, negotiators can be motivated to undervalue or overlook one another’s concessions.

It’s good to clarify how costly the concession will be to you and make it clear that you’re reluctant to give this value away.

  1. Make contingent concessions

To further reduce the ambiguity of your concessions, you might explicitly tie your concessions to specific actions by the other party.

Make it clear that you will only make your concession if the other party meets your expectations.

Here’s an example: “I’m willing to pay more if you can promise me early delivery.”

Contingent concessions can not only secure commitments from your counterpart but also broaden the number of issues up for discussion, perhaps transforming a distributive negotiation into an integrative one—creating value in the process.