BazermanMoore

CLAIMING VALUE IN NEGOTIATION
Consider the following example:
A new MBA is being recruited for a highly specialized position. The organization and the
employee have agreed on all issues except salary. The organization has offered $90,000,
and the employee has counteroffered $100,000. Both sides believe they have made fair
offers, but they both would very much like to reach an agreement. The student, while not
verbalizing this information, would be willing to take any offer over $93,000 rather than
lose the offer. The organization, while not verbalizing this information, would be willing to
pay up to $97,000 rather than lose the candidate.
A simplified view of the bargaining zone concept describes the recruitment problem:
Bargaining Zone
Claiming Value in Negotiation 155
$90,000 $93,000 $97,000 $100,000
Ei Rr Er Ri
Ei = Employer’s initial offer
Rr = Recruit’s reservation point (minimum limit)
Er = Employer’s reservation point (maximum limit)
Ri = Recruit’s initial offer
The bargaining zone framework assumes that each party has some reservation
point below (or above) which the negotiator would prefer impasse to settlement. Reservation
points are set at the value of the negotiator’s BATNA. Notice that the two reservation
points overlap. Thus, there is a set of resolutions that both parties would prefer
over impasse—in this case, all points between $93,000 and $97,000. This area is known
as a positive bargaining zone. When a positive bargaining zone exists, it is optimal for
the negotiators to reach a settlement. When the reservation points of the two parties do
not overlap, a negative bargaining zone exists. In such cases, no resolution should occur
because there is no settlement that would be acceptable to both parties.
Many people find the notion of a bargaining zone to be counterintuitive. Having
participated in a variety of negotiations throughout their lives, they have reached the
conclusion that the reservation points of parties never overlap; they simply meet at the
point of agreement. This reasoning is incorrect. In fact, at the point of agreement, when
both parties choose a settlement rather than an impasse, their actual reservation points
are overlapping. This settlement point represents only one of what are often many
points within the bargaining zone. Most people enter into negotiations with some notion
of their target outcomes. However, most negotiators fail to think hard enough
about their reservation prices and the reservation prices of other negotiators, which are
determined by evaluating both parties’ BATNAs.
Returning to our recruiting example, we can see that the bargaining zone consists
of the range between $93,000 and $97,000. If the employer could convince the recruit
that an offer of $93,100 was final, we know the recruit would accept the offer, and the