Negotiation Handout - University of Hawaii

Professor John Barkai
William S. Richardson School of Law
University of Hawaii at Manoa
2515 Dole Street · Honolulu, Hawaii 96822
Phone (808) 956-6546 · Fax (808) 956-5569
Web Page:
"Discourage litigation. Persuade your neighbors to compromise whenever you can.
Point out to them how the nominal winner is often a real loser: in fees, expenses and
waste of time. As a peacemaker the lawyer has a superior opportunity of being a good
man. There will still be business enough." - Abraham Lincoln
Control of action; power to settle.
The practitioners licensed by the supreme court shall have control to judgment and execution,
of all suits and defenses confided to them; provided that no practioner shall have power to
compromise, arbitrate, or settle such matters confided to the practitioner, unless upon special authority
in writing from the practitioner's client.
Rule 408 Compromise, offers to compromise, and mediation proceedings.
Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or
offering or promising to accept, a valuable consideration in compromising or attempting to
compromise a claim which was disputed as to either validity or amount, or (3) mediation or
attempts to mediate a claim which was disputed, is not admissible to prove liability for or
invalidity of the claim or its amount. Evidence of conduct or statements made in compromise
negotiations or mediation proceedings is likewise not admissible. This rule does not require
the exclusion of any evidence otherwise discoverable merely because it is presented in the
course of compromise negotiations or mediation proceedings. This rule also does not require
exclusion when the evidence is offered for another purpose, such as proving bias or
prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct
a criminal investigation or prosecution.
Evidence of statements or gestures that express sympathy, commiseration, or
condolence concerning the consequences of an event in which the declarant was a
participant is not admissible to prove liability for any claim growing out of the event. This rule
does not require the exclusion of an apology or other statement that acknowledges or implies
fault even though contained in, or part of, any statement or gesture excludable under this
In representing a client, a lawyer shall exercise independent professional judgment
and render candid advice. In rendering advice, a lawyer may refer not only to law but to other
considerations such as moral, economic, social and political factors, that may be relevant to
the client's situation. In a matter involving or expected to involve litigation, a lawyer should
advise a client of alternative forms of dispute resolution which might reasonably be pursued
to attempt to resolve the legal disputer or to reach the legal objective sought.
Professor John Barkai
- Negotiations p. 1 -
CONFLICT IS LIKE WATER: Too much causes damage to people and property. Too little creates a dry, barren
landscape devoid of life and color.
- Cathy Costantino & Christina Sickles Merchant
All polishing is achieved by friction. - Mary Parker Follett
Conflict is inevitable. Accept it as a given.
Conflicts settle in time.
If it doesn't make sense, you probably don't have all the facts.
Find ways to express differences without provoking contention.
Truth is found usually in the middle.
We should learn from the mistakes of others. We don't have time to make them all ourselves.
- Groucho Marx
Anger is one letter short of danger.
- Anonymous
If you are patient in one moment of anger, you will escape a hundred days of sorrow.
- Chinese Proverb
It is often better not to see an insult than to avenge it.
- Seneca
Your most effective negotiation tool is a good question.
Have a good sense of your our priorities and be willing to accept that other people order their priorities
differently. That's why they make shirts in different colors.
Negotiating contracts is like playing poker - you gamble.
- Leo Reed, Teamsters' Negotiator on the Baywatch negotiation.
"Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them
how the nominal winner is often a real loser: in fees, expenses and waste of time. As a peacemaker the
lawyer has a superior opportunity of being a good person.
- Abe Lincoln
What's mine is mine, what's yours is negotiable.
Never negotiate with strangers.
Professor John Barkai
- Negotiations p. 2 -
We are not in charge of what happens in the world; we are in charge of how we respond to what
It's always like this kid. Two guys make a deal. They always know something, the other guy doesn't.
-From L.A. Times, by Stuart Woods
It is a luxury to be understood.
- Ralph Waldo Emerson
A closed mouth gathers no feet.
You can't reason someone out of something they weren't reasoned into.
- Jonathan Swift
I personally think we developed language because of our deep inner need to complain.
- Jane Wagner and Lily Tomlin
There's not a lot of traffic on the extra mile.
Anyone who doesn't think there are two sides to an argument is probably in one.
- Sam Horn, Tongue Fu.
I never saw an instance of one or two disputants convincing the other by argument.
- Thomas Jefferson
Tact is the art of making a point without making an enemy.
Patience is never more important than when you're on the verge of losing it.
It is better to swallow words than to have to eat them later.
- Franklin D. Roosevelt
To speak ill of others is a dishonest way of praising ourselves.
I have never been hurt by anything I didn't say.
The greatest remedy for anger is delay.
- Will Durant
- Calvin Coolidge
- Seneca
Our task is not to fix the blame for the past, but to fix the course for the future.
- John F. Kennedy
The only way to get the best of an argument is to avoid it.
Sticks and stone can break my bones, but words can break my heart.
You can't build a relationship with a hammer.
Of course I'm yelling. That's because I'm wrong.
Professor John Barkai
- Dale Carnegie
- Robert Fulghum
- Anonymous
- Leslie Charles
- Negotiations p. 3 -
Nothing is a waste of time if you use the experience wisely.
- Auguste Rodin
A man convinced against his will is of the same opinion still.
- Anonymous
We don't see things as they are, we see things as we are.
- Anais Nin
If the only tool you have is a hammer, you tend to see every problem as a nail.
- Abraham Maslow
Most anger is a cry for attention.
Conversation in the United States is a competitive exercise in which the first person to draw a breath is
considered the listener.
- Nathan Miller
If you are not listening, you are not learning.
If you want to lift yourself up, lift up someone else.
- Lyndon Baines Johnson
- Booker T. Washington
The hardest thing to learn in life is which bridge to cross and which to burn.
Professor John Barkai
- David Russell
- Negotiations p. 4 -
Many of the tactical moves in positional negotiation revolve around shaping the perceived bargaining
range. Opening demands are particularly significant because they are the first actions which begin to
influence the perceptions of the bargaining range.
Basic Rule:
The general advice about the first offer is to be extreme within reason. The higher you start, the higher
you are likely to end up.
Henry Kissinger said, "If the final agreement will be between the two starting points, there is no point
being moderate. Be far more extreme than what you are willing to accept. The more outrageous your
first offer, the more likely that what you 'really' want looks like a compromise."
Why High?:
Why should you start high? The experimental evidence suggests that once two offers are on the table,
the best prediction of the final contract is the mid-point between the bids, provided that the mid-point is
within the bargaining range.
Risks of opening demands:
Low Demand: If the opening demand is too low, you lose the possibility of a more favorable settlement.
High Demand: If the opening demand is too high, you may make your opponent mad. The other side will
walk away even though there is was plenty of room between the bottom lines to reach
an agreement.
Should you make the first offer?
YES: The first offer is the starting point for setting the bargaining range.
Maybe the other side will misjudge the negotiating situation and their first offer will be low.
How will you respond to the opening offer?
Professor John Barkai
- Negotiations p. 1 -
Basic Principles from the book
by William Ury
Whether you are negotiating with a hostage-taker, your boss, or your teenager, the basic principles remain
the same. In summary, the five steps of what the author calls "breakthrough negotiation" are:
Go to the Balcony. The first step is to control your own behavior. When your opponent says no or launches
an attack, you may be stunned into giving in or counterattacking. So, suspend your reaction by naming the game.
Then buy yourself time to think. Use the time to figure out your interests and your BATNA. Throughout the
negotiation, keep your eyes on the prize. Instead of getting mad or getting even, focus on getting what you want. In
short, go to the balcony.
Step to Their Side. Before you can negotiate, you must create a favorable climate. You need to defuse your
opponent's anger, fear, and suspicions. He expects you to attack or to resist. So do the opposite: Listen to him,
acknowledge his point, and agree with him wherever you can. Acknowledge his authority and competence, too.
Disarm him by stepping to his side.
Don't Reject . . . Reframe. The next step is to change the game. Instead of rejecting your opponent's
position--which usually only reinforces it--direct his attention to the problem of meeting each side's interests. Take
whatever he says and reframe it as an attempt to deal with the problem. Ask problem-solving questions, such as
"Why is it that you want that?" or "What would you do if you were in my shoes?" or "What if we were to . . . ?" Rather
than trying to teach him yourself, let the problem be his teacher. Reframe his tactics, too: Go around stone walls,
deflect attacks, and expose tricks. To change the game, change the frame.
4. Build Them a Golden Bridge. At last you're ready to negotiate. Your opponent, however, may stall, not yet
convinced of the benefits of agreement. You may be tempted to push and insist, but this will probably lead him to
harden and resist. Instead, do the opposite--draw him in the direction you would like him to go. Think of yourself as a
mediator. Involve him in the process, incorporating his ideas. Try to identify and satisfy his unmet interests,
particularly his basic human needs. Help him save face and make the outcome appear as a victory for him. Go slow
to go fast. In sum, make it easy for him to say yes by building him a golden bridge.
Bring Them to Their Senses, Not Their Knees. If your opponent still resists and thinks he can win without
negotiating, you must educate him to the contrary. You must make it hard form him to say no. You could use threats
and force, but these often backfire; if you push him into a corner, he will likely lash out, throwing even more resources
into the fight against you. Instead, educate him about the costs of not agreeing. Ask reality-testing questions, warn
rather than threaten, and demonstrate your BATNA. Use it only if necessary and minimize his resistance by
exercising restraint and reassuring him that your goal is mutual satisfaction, not victory. Make sure he knows the
golden bridge is always open. In short, use power to bring him to his senses, not his knees.
The breakthrough strategy requires you to resist normal human temptations and do the opposite of what you
usually feel like doing. It requires you to suspend your reaction when you feel like striking back, to listen when you
feel like talking back, to ask questions when you feel like telling your opponent the answers, to bridge your differences
when you feel like pushing for your way, and to educate when you feel like escalating.
At every turn the strategy calls on you to choose the path of indirection. You break through by going around
your opponent's resistance, approaching him from the side, acting contrary to his expectations. The theme
throughout the strategy is to treat your opponent with respect--not as an object to be pushed, but as a person to be
persuaded. Rather than trying to change his mind by direct pressure, you change the environment in which he
makes decisions. You let him draw his own conclusions and make his own choice. Your goal is not to win over him
but to win him over.
Professor John Barkai
- Negotiations p. 2 -
Basic Principles from “The Power of a Positive No”
by William Ury (Summarized by Geoffery Lee)
The Positive No exercises your power to protect interests while also tending to relationships. The Positive No
replaces the three common approaches to the power-versus-relationship dilemma: accommodation (loss of power), attack
(loss of relationship), and avoidance (loss of interest). The Positive No avoids the pitfalls of the three A's by engaging the
other in a constructive and respectful confrontation.
The Positive No is a “Yes! No. Yes?” Saying No means, first, saying “Yes!” to your interests; followed by a matterof-fact “No.” that sets a clear limit; ending with “Yes?” that invites the other to reach an agreement that respects the other's
Stage One – Prepare
1. Uncover your Yes! -- Base “no” on what you are for, not what you are against.
1. Stop: go to the balcony: The first step is to control your own behavior. There is no chance to influence the
other unless you are able to control your own natural reactions and emotions.
2. Use the time out to uncover your underlying interests, needs and values. Reach down to your core to
discover what really matters and what your true priorities are, distilling that into a single positive intention.
3. The most powerful intentions are positive. Transform negative emotion into positive intention, clarifying what
your really want to do in the situation.
2. Empower your No. -- To be prepared is half the victory.
1. Develop a Plan B: a practical strategy that will address core interests independently of the other's cooperation
and respect: similar to BATNA. Brainstorm a variety of plan B's. Prepare to: “do it yourself,” “exit,” “look to third
parties who share interests.”
2. If your alternatives are extremely unattractive brainstorm again, check your options, and check the facts.
Carefully prepare to gain the confidence to negotiate effectively.
3. Anticipate the other's power moves. -- What can they do to compel you, what can you do to stand your
ground? Take away their threat by changing the situation. Don't let anxiety and fear magnify potential
4. Reassess your No. -- Do you have interests in saying no? Do you have the power? Do you have the right?
3. Respect your way to Yes. -- Give positive attention to others. Act with respect no matter what. Listen attentively
and acknowledge the other, letting them know you value them.
Stage Two – Delivery – Affirmation (Yes!) Establish a Limit (No.) Proposal (Yes?)
1. Express your Yes! -- Affirm your intention and explain why: by using “The” statements to set out the facts, “I”
statements to explain interests, and “We” statements to invoke shared interests and standards.
2. Assert your No. -- Let your No be simple and straightforward, flowing from your Yes!, flowing from a
commitment to a future course of action, flowing from respect. No is a selection principle that allows you to be
who you are.
3. Propose a Yes? -- As you close one door, open another. Your proposal should clarify and strengthen your
position, while respecting the interests of the other positively.
Stage Three – Follow-through
1. Stay true to your Yes. – If there is disagreement Don't Yield Don't Attack. Go to the Balcony. Listen respectfully
and empathize without sympathizing. Paraphrase. Use: “Oh” to acknowledge their point neutrally. “So” to let the
other run through tactics and tricks. “No” repeat no.
2. Underscore your No. – Emphasize patiently and persistently that No means no. Repeat the No and employ an
anchor phrase. Educate the other with reality-testing questions. Plan B if they refuse to respect your needs,
withdraw cooperation and implement plan with respect.
3. Negotiate to Yes. – Build a Golden Bridge. Facilitate a wise agreement by not compromising essentials and
helping the other address unmet interests. The other should not see the negotiation as a loss but rather as a
satisfactory ongoing agreement. Help them save face. Help the other win approval from those the other
represents. Use the “acceptance speech test” to find the persuasive arguments, themes, and criticisms for the
other's constituency. Cultivate a healthy relationship. Continue to respect them. Pay more attention to the
relationship, rebuild confidence, and replenish your good will account. End on a positive note.
Professor John Barkai
- Negotiations p. 3 -
Strategies for Integrative Bargaining
Facts: A married couple are trying to decide where to spend their two-week vacation.
He wants to go to the mountains; she wants to go to the seashore.
Expanding the Pie.
Increasing the resources to be bargained for. If the resources can be increased
then perhaps both sides can get what they want.
Example: Get four weeks vacation and spend two at the mountains and
two at the seashore.
Nonspecific Compensation.
One side gets their objectives and the other side is paid off for accommodating
the other's interests.
Example: W tells H that if he goes to the seashore, she will buy him a new
set of golf clubs.
If two or more issues are in disputes, the negotiators may be able to do a series
of trade-offs. One side gets their top priority on the first issue and the other side
gets their top priority on the second issue.
Example: H wanted an inexpensive cabin; W wanted a luxury hotel. If W
prefers quality of accommodations to the place, a luxury hotel in the mountains
might meet both their needs.
Cost Cutting.
One side gets their objectives and the other's sides costs are reduced by going
along with the first side.
Example: H likes a quiet, peaceful vacation; W likes the beach because of
all the activity. An inexpensive place on a isolated beach may fit the needs of
The parties are able to invent new options that meet each side's needs and
Example: H really wants to hunt and fish; W want to swim, shop, and
enjoy the nightlife. Maybe they can find a resort that has all of these.
Professor John Barkai
- Negotiations p. 4 -
Determine who has more power.
Examples: Competitive negotiations & strikes.
Determine who is right.
Examples: Go to court or arbitration.
Reconcile underlying interests of both parties.
Examples: Interest-based negotiations or mediation.
New ideas about resolving conflicts:
Focusing on INTERESTS is better than focusing on RIGHTS,
Focusing on RIGHTS is better than focusing on POWER.
The goal is to encourage people to resolve their differences by reconciling their interests, and
if that is not possible, then to use low-cost methods to determine rights.
The recent "win-win" negotiation advice suggests replacing traditional "hard bargaining" over
rigid positions, in which the focus is on power, with problem-solving negotiation, in which the focus is
on creatively reconciling interests.
New alternative dispute resolution (ADR) methods are aimed at replacing rights-based
procedures (such as litigation) with interests-based procedures (such as win-win negotiation and
Professor John Barkai
- Negotiations p. 5 -
Most people prepare for a negotiation by trying to
decide what their "bottom line" is. Their bottom-line is the
worst agreement they would accept. They then decide
how much above their bottom line they will ask for when
they make their first offer. They may also determine a "fall
back" position for their first concession, but that is about
the extent of their planning.
A great improvement can be made in negotiating
planning by systematically considering factors that apply to
virtually every negotiation. Both you and the opposing
side should be analyzed. The "5 Planning Factors" should
be considered in every negotiation. A planning chart can
be used to help you in the planning.
Before and during the negotiations, you should ask
yourself the following questions:
What do I know?
What don't I know yet?
How am I going to find out the information I need?
Professor John Barkai
- Negotiations p. 6 -
What are the past histories and present feelings of the people involved in this
negotiation? What are their goals and objectives? Who is more powerful and
what is the source of that power? What influences can they bring to bear on this
negotiation? What do you know about their negotiating style?
Do the negotiators or their constituents have any history together? What was
that prior relationship like? How are they getting along now during the
negotiation? Do they have a good relationship? Is it strained? Have they just
met for the first time? Will the parties have a continuing relationship or will this
be a "one-shot" negotiation? Even if the parties are not likely to work together in
the future, will reputations be made in this negotiation that will follow the
negotiators in the community?
The issues involved in the negotiation are the topics to be negotiated. They are
also the questions and concerns that each party raises during the negotiation. It
is usually very helpful to frame the issues as questions to be answered rather
than statements that are made.
The positions in the negotiation are the solutions that each person has in mind.
Positions are the "What" that the negotiators want. Many different positions are
considered during a negotiation including, the opening position (demand), a fall
back position, a bottom line, and a BATNA (Best Alternative To A Negotiated
Interests are the basic needs that negotiators seek to be met in any agreement.
If you know the interests, you know "why" the negotiators take the positions they
do during the negotiations. Maslow's hierarchy of needs is helpful here.
Professor John Barkai
- Negotiations p. 7 -
(Fill in the blocks with information you know.)
When to disclose?
First Fallback:
Ways to improve:
Estimated Initial:
Estimated Bottomline:
Professor John Barkai
Estimated BATNA:
- Negotiations p. 8 -
Take time out.
Remember your BATNA!
Get another opinion.
Ask "how" they will negotiate.
If they don't know what "win-win" means,
they won't be negotiating that way.
Avoid multiple concessions
if your concessions are
not matched by their concessions.
Recognize "dirty tricks"
and comment on them immediately.
Professor John Barkai
- Negotiations p. 9 -
Think in terms of interests
Classify the type of negotiation:
Deal or Dispute
Distributional or Integrative
Expand the pie
Use a planning chart
Investigate the opposing negotiator
Consider both strategy and tactics
Set high goals for yourself
Practice before you negotiate
Determine your BATNA
Ask lots of questions
Separate the people from the problem
Generate alternatives by brainstorming
Frame your proposals as a gain to them
Flinch when you hear a high demand
Protect your facts when necessary
Be willing to make concessions, but only if they do too
Professor John Barkai
- Negotiations p. 10 -
Assume that everything is negotiable.
Have high aspirations.
Never accept the first offer.
Deal from strength if you can, but create the appearance of strength, regardless.
Put what you have agreed on in writing.
Recognize that the other party is probably holding back valuable information.
Flinch to create doubt in the counterpart's mind and to add value to a concession.
Find out what your counterpart wants. Don't assume that their wants are the
same as yours.
Concede slowly and call a concession a concession.
Keep your counterpart in the dark about your strategy and your stake in the deal.
Try to get your counterpart to lower to lower his/her level of aspiration.
Ask questions if you do not understand what is going on. Do not let your
counterpart deliberately confuse you.
Answer a question with a question to avoid giving away information needlessly.
Invoke the higher authority to buy more time.
Information is power - get as much as possible.
Verify anything you are told that you do not know to be a fact.
Be cooperative and friendly. Avoid abrasiveness, which often breaks down
Use the power of competition. Remember that power can be real or imaginary.
- from It's Negotiable, by Peter Stark (1994)
Professor John Barkai
- Negotiations p. 11 -
A Film
Preliminary meeting to discuss a wide range of ideas & to discuss
strategies and tactics. List ideas without evaluating them.
Ask for everything at once.
Narrow opponent down to determine what they really will take.
Dominating. Playing top dog.
Put opponent on the defensive. (Dig underneath)
Change in approach. Show you have information the other side does
not expect. Present new proposals or demands. Emotional outburst.
Pretending. Lying. A false show to catch the opponent off guard.
Give the impression you want one thing when you really want
Taking something bit-by-bit (one slice at a time) rather than the whole
thing. A small concession asked for at the end of a negotiation is
called a "nibble."
To postpone for a period of time. Take time out. "Let's take a break."
Knowing your opponent's time limit allows you to put pressure on
them. Set a time limit. Push your opponent to make a decision by a
certain time limit.
Good Guy,
Bad Guy
One person acts tough, a second person acts nice - hoping to induce
a concession.
Claim of not enough authority to be able to approve the deal on the
terms presented.
Fait Accompli
An accomplished fact. The thing is already done so argument is
By using silence, you hope the other side will speak (to their
Make opponent think you are unwilling to discuss the issue further.
The goal is to get them to reduce or give up their demand.
Speaking from the viewpoint of your opponent and incorporating
their interests, you make it sound like your opponent has gotten a
good deal from you. Also means to act in a different way than
Professor John Barkai
- Negotiations p. 12 -
Professor John Barkai
University of Hawaii Law School
ANGER (Real or Fake)
BOULWAREISM (Take-it-or-leave-it)
Professor John Barkai
- Negotiations p. 13 -
SALAMI (Piecemeal)
ULTIMATUM (take it or leave it)
YWHTDBTT (You Will Have To Do Better Than That)
Professor John Barkai
- Negotiations p. 14 -
Professor John Barkai
University of Hawaii Law School
When some people come to a course about negotiations, they hope to learn negotiation
tactics that will make them a better negotiator. Negotiation tactics are specific negotiation
behaviors that are used during negotiations. Sometimes tactics are considered the "tricks" of
negotiation. Some tactics are part of the normal, ethical behavior that takes place during
negotiations. Other tactics are considered to be "dirty tricks." Many of the tactics are not true
tactics but are really just personal styles of behavior of people who are engaged in conflict.
Tricks, however, are not likely to make you a better negotiator. Understanding the
negotiation process is the most critical thing to learn about negotiations. Nonetheless, most
people do hope to learn some new tactics at a negotiation course, and hopefully you have
learned some new tactics here. But if you are interested in more tactics, a whole range of tactics
are listed on the following pages. As the tactics are set forth here, no value judgment is made
as to their honesty or usefulness in negotiation.
If "dirty tricks" are used against you, the best response is to openly identify the tactic for
your opponent and to question its legitimacy.
For example, "You two aren't trying to use the old good-guy bad-guy ploy on me are you?"
Generally, your opponents will deny trying to use the tactic, but will also stop using it.
If you hope to keep the negotiation going, give them some room to back away from the dirty trick
gracefully and to save face.
Aggressiveness or the lack of it may be an unchangeable part of one's personality. It
might be useful in negotiations to force the other side into concessions or to make errors.
As with anger, aggressive or competitive behavior is likely to provoke a similar response
from the opposing negotiator.
Professor John Barkai
- Negotiations p. 15 -
Anchoring is fixing or establishing the focus of discussion around a certain point, whether it
is a figure, a range, or and issue, simply by asserting it. Anchoring plays on the human
tendency to fix attention on, and be influenced by, what someone says.
ANGER (Real or Fake)
Anger is a common emotion in many conflicts. It shows a serious disagreement with the
opposing position and may cause a party to reconsider the reasonableness of their
position or to reassess the resistance to that position.
The negotiator appears to have withdrawn from the process and yet still has the
negotiation covered through an associate or by other means.
After a few issues appear to be settled, a negotiator, to get his way on a new
issue, may threaten to undo the earlier agreements.
Blaming or assigning fault is an aggressive tactic which may invoke conciliatory behavior,
either because of induced guilt feelings or a sensed need to mollify. It may focus
negotiation on a substantively irrelevant, but psychologically volatile or conflictual, issue.
One of the negotiators might leave the negotiation without showing emotion or giving an
explanation. A negotiator might take some action and then claim that he did not know that
he was doing something in a way that the other side would object to.
BOULWAREISM (Take-it-or-leave-it)
Lemuel Boulware, former labor negotiator at GE in the 1940s, would do his research and
make what he thought was a fair and reasonable offer to the union. There was only one
offer made. Boulware did not offer any later concessions. It was "Take it, or leave it."
This tactic will not work if the other negotiator expects you to make high demands with
later concessions. In labor negotiations, such a tactic is now considered an unfair labor
practice and is illegal.
Set deadlines when you want them. "I need your answer by tomorrow at 3 p.m." Ignore
deadlines when you do not want them.
Negotiator organizes issues with least important issue first and most
important issue second; and then continuing to alternate less important and
more important issues. During bargaining, she deadlocks on the first issue,
but then concedes. She then also deadlocks on the most important issue,
but demands the other side concede since she conceded on the first issue
and there has not been a reciprocal concession.
Professor John Barkai
- Negotiations p. 16 -
Once a deal has been made, it often must be put in writing. The drafter might try to add
some unnegotiated terms into the document. The drafter can be protected from the other
party slipping something in the contract. Either volunteer to do the drafting or be prepared
to give the document a very careful reading.
A party to negotiation brings to the table a document drafted as a basic text
to set the agenda. It tends to set the agenda and focus the parties on a
prescribed resolution of issues. A means of taking the initiative in the
negotiations, leaving the other side to work with it, ignore it, offer a counterdocument, or use discipline in dealing with the document.
You are generally better off by acting as if you know less than everybody else. It defuses
the competitive spirit. This is the tactic often used by the TV detective Colombo.
Most negotiations progress from a set of initial high demands, through a series of
concessions, to a final, lower settlement. Sometimes a negotiator will break away from
this pattern and actually increase or escalate the demands during the course of the
Psychological research suggests that when people are faced with a small sure gain and a
risky, larger potential gain, they will generally go for the small, sure gain. However, when
faced with a sure small loss and a larger potential loss, people do not want the small loss.
They will hold out against the small, sure loss even if they risk a big, potential loss.
Therefore, you should frame your negotiating proposals as emphasizing gains. This
research suggests avoiding threats.
The loser in a dog fight often rolls over and exposes his neck and soft belly. The winner
usually stops the attack. Sometimes a weak opponent can get more by conceding
weakness. The more powerful negotiator may not always squeeze out the last drops of
blood, but may give a break to the weaker party. But, this is a big risk!
You present your opponent with a completed and seemingly unchangeable action. Your
opponent accepts rather than opening up the process again. For example, you can send
back a signed contract, but one in which you have made changes. You send a signed
check, but for less money than what they other side wanted.
False demands are similar to making large demands. False demands are extra issues
that the negotiator added to the initial demand so that they can be traded away as
concessions. Both false and large demands help to disguise the true bottom line and
interests of the negotiator.
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Psychologically when faced with a limited commodity, or the commodity becomes scarce
or restricted, people react by wanting more of it than when it was more available.
Negotiators use this psychology be suggesting that the opportunities are quite limited.
Agree with them until you can get them to agree with you. There are three verbal steps.
FEEL: "I understand the way you FEEL."
(Acceptance, not challenge.)
FELT: "Other people have FELT exactly the same way."
(Their responses are normal.)
FOUND: "However, those people FOUND that ..."
(Tell how other people have come around.)
An apparent move in one direction is used to divert attention from a move in the other
direction. You look left, and then pass to the right. Mislead them as to your present
intention. You stress goals that are unimportant to you and then give them up for
concessions from the other side that are important to you.
States an extreme demand, beyond or at the far margin of the range of credible or
reasonable offers. This has the effect of setting the perceived or apparent bargaining
range. Often combined with the tactic of splitting the difference.
React visibly (flinch) when you first hear the offer. Your nonverbal communication (you
can add the verbal too) says "That is much too much!"
Forbearance calls for delaying, holding off, and stalling rather than giving an immediate
response to your opponent’s requests. If you concede too quickly, your opponent might
gain a psychological advantage. Delaying your response might cause your opponents to
rethink their positions. Even when you know that you will reject their offer, if you delay
rather than give an immediate "no," you appear to have thoughtfully considered their
The bad-guy works with you first. He leaves the room and his partner, the good-guy,
takes over and apologizes for the other guy's behavior. The good-guy appears to be
your friend. He'll make you a good deal. Guess what? They are working together.
The negotiator appears to agree with your position, but has to report to a higher authority.
The higher authority is never present, and of course says "No deal" on those terms.
This tactic is very common when buying a new car. "I'd like to give it to you at the price
we talked about," says the salesperson, "but the boss said 'no.'" It is helpful to claim you
must take the proposal to a higher authority, - your client, boss, partner, spouse, mother,
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If they hand you a big problem, try to hand it back to them immediately or at least let the
stream out the potato.
Induced competitiveness converts what would ordinarily be a two party
negotiation into a multi-party negotiation where all the parties interested in
a particular good are forced to compete with one another for it. The
competition makes the item more desirable and drives up its price. An
alternative way of inducing competitiveness is to create an auction for the
Inscrutability often comes from using silence and not offering any reactions. This is the
classic poker player's tactic. Don't let them read your cards by reading your face.
Actually, the face often will not leak out nonverbal reactions. Look to the hands and feet
for the nonverbal leakage.
Negotiators can either set and respect limits or refuse to acknowledge them. If the
legislative session must end at midnight, the limits can be changed by unplugging the
Linkage attempts to expand the scope of a negotiation by bringing in issues
which, while not clearly related, one can make a plausible case for
considering. The effect is to change bargaining power and leverage, or to
change the focus and character of the dispute or the set of gains or
opportunities the parties are trying to decide. Adding issues or parties can
change the dynamics of negotiation.
The negotiator makes a low offer to attract the other side, but there is no intention of
going through with the deal on the terms offered. Later, they will say that there are
"additional" charges or that the circumstances have changed. This is a "bait-and-switch"
In theory, a party will make smaller and smaller concessions as bargaining
converges on his bottom line. Knowing this, negotiators can mislead the
other side by using a concession pattern that converges at a point above or
below his actual bottom line. The other side, reading the concession
pattern, may mistakenly conclude the conceder has reached his bottom
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The deal is done, or at least it looked that way. Now one of the negotiators asks for one
more small concession. The concession is so small that the other party often gives in just
so not to upset the deal.
Get others to join in on your side. Tom Sawyer was good at doing this. Get important
people to work with you. It is negotiating power by careful alliances.
No. No. No. Be persistent in your resistance. Say "no" until your tongue bleeds. The
refusal to move can test the other side’s firmness and uncover just how much
concession room there is.
Negotiators can advantageously manipulate the other side’s fears or
assumptions. Whenever a party discloses in some way that it has made an
assumption favorable to the other side’s bargaining position, the other side
can use that knowledge to its advantage.
As justification for refusing to do what the other negotiator wants you to do, you claim that
the desired action would set a bad precedent for you. "If I do that for you, I will have to
do that for everyone."
Setting a precondition to negotiation is a way of obtaining a concession without giving
any in return. Demanding satisfaction of a precondition may not only gain a concession
without cost, it may also reveal how eager the other side is to secure a deal. The
response to this tactic is to be clear you consider the precondition a part of the
negotiation, and that you expect a reciprocal concession.
Appeals to principle are often highly persuasive. One good way to prepare
for negotiations is to develop arguments of principle for the positions one
A red herring is a false, yet highly distracting, issue that a party can use to
bring pressure to bear on the other side. It is most useful in negotiations
where the parties represent outside constituencies that can be manipulated
to pressure a recalcitrant party. The false demand tactic is a version of the
red herring.
Treats concessions as rewards for desired concession behavior of the
other side. The concession follows the other side’s concession and is a
more than equivalent concession, the excess being the reward. This
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produces more concessions and even stimulates concessions to continue
even when the negotiator stops making reciprocal concessions.
Accept their offers very slowly. If you are too quick to accept, they will think that they are
giving you too much. They may even try to back out on you.
You move in the opposite direction. By appearing to go backwards (or sideways) you are
actually moving forwards.
SALAMI (Piecemeal)
Do not go for everything at once. Go for it piecemeal. Take one slice at a time until you
get the whole salami.
Sowing doubts about proposals, or curt dismissals of offers, and various
other kinds of put-downs can undermine the other side’s confidence and
cause it to make faulty judgments about the relative merits of its bargaining
When the parties are stuck at different positions, one solution is to each compromise half
the difference. With offers at $600 and $1000, the compromise would be $800. This
technique gives the "appearance" of fairness. But is it fair in your case?
Negotiations can be influenced when one side is consciously or
unconsciously impressed by the status, stature, or authority of the other
side, and either defers or makes unwarranted assumptions about the other
side’s power, strength, or resolve. Association is a similar tactic using
borrowed authority, where negotiators seek legitimization by making some
claim of important association (such as name-dropping).
You make an unexpected move or present a withheld goal. The other side has not
anticipated your shift in methods and arguments. Examples are escalation, walk outs,
new data, and emotional reactions.
ULTIMATUM (take it or leave it)
You claim that this is your last offer. They must take your offer or the negotiation is over. Say that this
is your best and last offer. However, in reality, nothing prevents you from making another offer at a later
time. In2 fact, most negotiations end when the parties think they have the best offer they can get.
Settlement is reached when each party believes that they cannot get a better deal without spending
more time, money, and emotional energy than the potential improvement over the current situation is
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The classic tactic in third-world markets and is often used here too. If you cannot get the price you
want, walk away from the deal and maybe they will follow you. This tactic is a bluff. To work effectively,
you have to be able to truly walk away from this deal and seek out your BATNA.
A potential buyer may play the seller off against another seller (whipsaw the seller with another source
of supply). If the third-party seller is real, they represent a real BATNA for the buyer. This tactic may
work well for a weak buyer. Sometimes, however, the buyer simply pretends that a another source of
supply may exist when in fact it does not.
YWHTDBTT (You Will Have To Do Better Than That)
If the other side is told "You will have to do better than that," often, they will make you a better offer.
Some people claim to not even read the first offer. They just ask for a better offer, no matter what the
first offer was. They assume that the person who made the offer made an excessive demand.
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by Max H. Bazerman
Psychology Today, v20, p54(5) (June, 1986)
... Failed negotiations may produce anything from minor inconveniences to nuclear holocaust.
In studying why negotiations fail, I have built on what other researchers have learned about decision-making
in general, concentrating on the biases that can undermine negotiations. I will describe five common cognitive
mistakes negotiators make and suggest some strategies for avoiding them.
Two sisters have a single orange to share. One wants to make orange juice. The other wants the peel to make a
cake. After much discussion, they agree to a distributive compromise. They each take half the orange, and end up
with a very small glass of juice for one sister and a very small cake for the other.
In this example, first presented by Mary Follett many years ago, the sisters overlooked an integrative solution
to their problem: One sister takes all the juice and the other takes all the peel. This way, each gets exactly what she
wants and twice as much as she actually received. Such integrative solutions reconcile the parties' interests and
yield a higher joint benefit than is possible through simple compromise. Unfortunately, too many negotiators have
the same "fixed-pie" bias that kept the sisters fighting over the orange: They assume that there is only a fixed
amount of profit or gain in what is being negotiated and that in order for them to win something, the other party
must necessarily lose it.
This is true in some negotiations, of course, but too often we assume it is without trying to think integratively. I
believe this comes from our highly competitive society. We experience so many real win-lose situations--in
athletics, in admission to college, in job promotion--that we apply the lessons learned indiscriminately. Faced with
negotiations that require both competition and cooperation, as most do, we think only of the competitive aspects.
This orientation produces a distributive rather than an integrative approach to bargaining.
Psychologists Dean Pruitt and Jeffrey Rubin describe the Camp David talks this way in their new book, Social
Conflict: "When Egypt and Israel sat down to negotiate at Camp David in October 1978, it appeared that they had
before them an intractable conflict. Egypt demanded the immediate return of the entire Sinai Peninsula; Israel,
which had occupied the Sinai since the 1967 Middle East war, refused to return an inch of this land. Efforts to
reach agreement, including the proposal of a compromise in which each nation would retain half of the Sinai,
proved completely unacceptable to both sides."
As long as the dispute was defined in terms of what percentage of the land each side would control, no
agreement could be reached. However, once both realized that what Israel really cared about was the security that
the land offered, while Egypt was primarily interested in sovereignty over it, the stalemate was broken. The two
countries were then able to reach an integrative solution: Israel would return the Sinai to Egypt in exchange for
assurances of a demilitarized zone and Israeli air bases in the Sinai.
The fixed-pie assumption reduces our ability to negotiate matters of day-to-day existence as well as those of
international politics. Consider a Friday evening dinner and a movie. You and your date like each other's
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company, but you have different tastes in restaurants and movies. Instead of haggling about each issue separately,
see if one of you cares more about the restaurant and the other more about the movie. If you do, you can work out
an integrative trade-off--one picks the restaurant and the other the movie--in which you both get what is most
important to you.
Similarly, while purchasing goods is usually thought of in win-lose terms, another approach is sometimes
possible. For example, a retailer may be willing to cut the price if payment is made in cash--especially, in some
cases, if you don't ask for a receipt or other documentation the IRS might find of interest.
While on vacation in a foreign country, you spot a very attractive ruby in a jewelry store window. You know
something about rubies, but you are far from being an expert. After some preliminary discussion, you make the
merchant an offer that you think is on the low side. He quickly accepts and the sale is made. How do you feel as
you walk out the door?
If you are like most people in this situation, you find yourself suffering from "the winner's curse," a sinking
feeling that you've been taken. Why else would the merchant have accepted your offer so quickly?
My research with economist William Samuelson suggests that a key factor in the winner's curse is that one
side has much better information than the other. A good negotiator must consider the knowledge and likely
strategy of the other side, but this is hard to do when our opponents know something we don't and can use the
information to selectively accept or reject our offer. This quandary was expressed humorously by Groucho Marx,
when he said he didn't care to belong to any club that would accept him as a member. Its willingness to take
him--to accept his offer--suggested that its standards were so low that the club wasn't worth joining.
Although we are all familiar with the saying, "Let the buyer beware," we seem to have difficulty putting it into
practice. We consistently under-value the importance of looking at a situation from the opponent's standpoint and
getting comparable information before we complete a transaction: a good mechanic's evaluation of a used car, an
inspector's assessment of a house we are considering buying, a jeweler's assessment of a coveted gem. To protect
yourself in negotiations of any sort, you need to develop or borrow the expertise to balance the quality of
information. If you can't get such information before making an offer, askyourself, "Will I be happy if the offer is
accepted quickly?" If not, reconsider your offer.
The Professional Air Traffic Controllers Organization (PATCO) strikes to obtain a set of concessions from the
government. When the government refuses to meet the demands, PATCO has two options: to back off and return
to work under the old conditions or to continue the strike, despite the threat of dismissal.
Shortly after the strike started, it became clear to objective observers that, faced with an unyielding
administration, PATCO had a weak negotiating position. Rational analysis would have led its leaders to end the
strike or at least reduce their demands before its members were fired. Instead, PATCO acted just as individuals,
organizations and countries so often do in this situation. It increased its commitment to the strike to justify the
earlier decision to proceed with it.
In negotiations, both sides often start with extreme demands, expecting to compromise somewhere in the
middle. But they get caught up in the struggle, feel they have too much time, money and ego invested to back off
and take a hard line instead of adopting a conciliatory or problem-solving approach.
Why does this happen, when rational outsiders realize that continuing or escalating the conflict is a mistake?
There are at least four complementary reasons. First, once negotiators make an initial commitment to a position,
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they are more likely to notice information that supports their initial evaluation of the situation. Second, their
judgment is biased to interpret what they see and hear in a way that justifies their initial position. Third,
negotiators often increase their demands or hold out too long to save face with their constituency. They may even
act against their constituents' best interest to "look strong" to them.
Finally, the competitive context of the negotiation adds to the likelihood of escalation. Unilaterally giving up
or even reducing demands seems like defeat, while escalating commitment leaves the future uncertain. It is easy
for negotiators to see this uncertain future as more desirable than the certain loss of concession. After all, the other
side may be ready to cave in.
This last point is illustrated by a game known as the Dollar Auction (see "Psychological Traps," Psychology
Today, March 1981). Someone offers to auction off a dollar bill to the highest bidder. The highest bidder will get
the dollar, but the second-highest must also pay what he or she bid and receive nothing.
The bidding typically starts out fast and furious until it reaches the 50-to-75-cent range, at which point
everyone except the two highest bidders normally drops out of the auction. What usually follows is an escalating
pattern in which both end up bidding far more than a dollar, since neither is willing to quit and accept a loss.
People escalate their commitment both to justify their earlier bids and to prevent the financial and ego loss of
coming in second.
No specific bid is clearly wrong, since it is rational to bid "just another 10 cents," if the other party is about to
quit bidding. But when both parties think this way, an escalatory spiral emerges that is very reminiscent of the
Vietnam War and other international and industrial failures in which both competitors get trapped by their
previous commitments.
To prevent this kind of escalation, negotiators must be aware of their tendency to justify past actions and must
constantly evaluate the costs and benefits of continuing along the same lines. Being aware of the tendency to
escalate can also be very helpful in anticipating how opponents are likely to think and act. People usually hold out
when they have too much invested in their position psychologically to give in. This suggests that a negotiator
should avoid pushing opponents into a corner, getting them angry or otherwise making them feel that they can't
afford to give up the struggle.
After a baseball player is in the major leagues for two years (three years, starting in 1987), he may choose
arbitration if he and his team are unable to agree on a contract. Under the system of final-offer arbitration, the two
sides submit offers and the arbitrator must accept one or the other, not a compromise. The challenge for each side
is to come just a little closer than the opposition to what the arbitrator thinks is appropriate.
Let's say the player's agent estimates that the team owner will offer $400,000 per year. The agent believes his
player is worth twice that but estimates the arbitrator will think $600,000 is right. What amount should the agent
A naive analysis would suggest an offer of, say, $775,000, a bit closer to $600,000 than the expected
$400,000 offer of the team. This reasoning illustrates a fourth common negotiator error. Individuals are
consistently overconfident of the reasonableness of their position and of the likelihood that an objective third party
will agree with them. In this case, if the arbitrator's assessment of the appropriate wage turns out to be $550,000
rather than $600,000, the agent's overconfident offer of $775,000 will cost the client hundreds of thousands of
dollars when the arbitrator accepts the team's offer because it is closer to his estimate.
Colleague Margaret Neale and I demonstrated this error in several experiments in which negotiator
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overconfidence showed itself in two areas. In simple two-party negotiations, negotiators consistently expected the
other side to concede more than objective analysis would suggest; and under final-offer arbitration, negotiators
overestimated the likelihood that their final offer would be accepted.
For example, while obviously only half of all final offers can be accepted in final-offer arbitration, the people
in our experiments estimated, on the average, a 65 to 68 percent probability that their offer would win out. This
overconfidence reduces the incentive to compromise, while a less optimistic assessment makes a negotiator more
uncertain and thus more likely to compromise further. In our studies, negotiators who were simply appropriately
confident were consistently more willing to compromise and more successful in negotiations than their
overconfident fellows.
Negotiators seem to follow the intuitive rule, "When in doubt, be overconfident." To avoid this, negotiators
should try to obtain objective assessments from outside experts to temper overconfidence and overestimation.
You bought your house in 1982 for $60,000. It is now on the market for $109,000, with a real target of
$100,000, which you estimate is the true market value. You receive an offer of $90,000. Does this represent a
$30,000 gain (compared to the original price) or a $10,000 loss (compared to your target price)?
Both answers are correct. But which way you think of the situation strongly affects your attitude toward the
offer. Research by psychologists Daniel Kahneman and Amos Tversky suggests that there are important
differences in how people respond to problems depending on whether they are framed in terms of losses or gains.
In a series of experiments covering situations as diverse as risking lives and risking money, they demonstrated that
if a situation is presented in terms that make it seem like a choice between a small sure gain and a risky larger
gain, most will take the sure thing. But if exactly the same situation is presented in a way that makes it seem like a
choice between a sure smaller loss and a possible larger loss, most prefer to gamble.
Neale and I extended this finding to the area of negotiations when we analyzed this hypothetical situation:
The union claims it needs a raise to $12 an hour and that, considering inflation, anything less would represent
a loss to its members. Management argues that the company can't remain competitive if it pays more than $10 an
hour; anything more would be an unacceptable loss. What will happen if both sides must choose between settling
for $11 an hour (a certain settlement) or going to binding arbitration (a risky settlement, since both sides must
agree to abide by whatever figure the arbitrator decides on)?
If both labor and management continueto view the matter in terms of what they have to lose, they are likely to
choose the risky road of arbitration. But if each side reframes the situation positively--the union seeing anything
above $10 an hour as a gain and management seeing anything under $12 an hour as a gain--then caution will rule
and a negotiated settlement of $11 is more likely.
Neale, Thomas Magliozzi and I confirmed the finding that people who frame the outcomes of negotiation in
terms of gains or profit are more willing to make concessions to obtain the sure outcome available in a negotiated
settlement. In contrast, negotiators who think in terms of losses or costs are more likely to take the risk-seeking
action of holding out and possibly losing all in an attempt to force further concessions from their opponent.
Negotiators need to be aware of how framing affects the decision process. If you are evaluating a negotiation
in terms of what you can lose, make sure you also consider what you can gain, and vice versa. Otherwise, your
behavior may reflect the distortion of framing rather than your actual preference for a particular action.
The framing effect also suggests that a negotiator should try to present information in a way that leads the
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opposition to see what they have to gain from a risk-free settlement. Finally, when third parties are trying to get
others to compromise, they should strive to frame suggestions in ways that show what both sides will gain from a
I have presented these common negotiator errors as separate problems, but clearly they overlap. To mention
just a few examples, negotiators who don't start out with a fixed-pie bias find it easier to avoid escalating demands
and to reframe their thinking and proposals in a positive way. Negotiators who try to understand an opponent's
thinking are less likely to feel overconfident in their judge prior to escalate demands needlessly. Negotiators who
are aware of the tendency to be overconfident in their judgment are more likely to consider what opponents are
thinking and to reframe their perceptions in positive terms.
Professor John Barkai
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Negotiation Lessons from the Pawnshop
By Jay Folberg – May 2008
JAMS Dispute Resolution ALERT, Vol. 8, No. 2, Spring 2008.
My resume is loaded with Alternative Dispute Resolution credentials: law school professor and then a
dean; teaching negotiation and mediation for decades on several continents; writing books and dozens of
articles; negotiating and mediating land use lawsuits, commercial cases, employment issues, institutional
conflicts, and many other types of disputes with up to eight-figure payouts; serving on umpteen advisory
boards and “blue ribbon” commissions. But my resume is not the reason you should follow my advice
about negotiation. The reason you should pay attention to what I have to say is that I am the son of a
The most important lessons about negotiating and reaching agreements were provided by my Dad, in a
pawnshop in East St. Louis. Since then, I’ve learned new, fancier names for some of the concepts I was
taught as a youth, and I’ve been involved in more complicated transactions and disputes, but the
pawnshop experience offered invaluable, practical lessons in how to negotiate. Here I will pass along to
you some of what I learned at my Dad’s side.
Schmooze and Learn
My Dad, a high school dropout, was a savvy and professional negotiator, but he didn’t come across that
way. His humble and friendly manner put customers at ease. Dad was a good “schmoozer,” who listened
more than he talked. He told me “we were born with one mouth and two ears so that we can listen twice
as much as we speak.” If by asking questions and listening you can learn what is in the head and heart of
someone, it is much more likely that you will make a personal connection, satisfy their needs, and in so
doing, get what you want. If you actively allow others to express themselves, they usually will tell you what
you want to know. The more you talk, the less they can say, and the less you can listen and learn. Dad
emphasized that you seldom learn anything new by speaking. When you do speak in a negotiation,
particularly at first, do so in a way that elicits more information, directly or indirectly, or that helps build
trust. Connecting with people, whether as a pawnbroker with a client or a lawyer with their opposing
counsel, makes our work worthwhile. Taking the time to establish a personal connection and trust is
usually time well spent.
Soda Pops and Reciprocity
Reciprocity works. People tend to return favors and are more likely to respond positively to those who
reach out by offering a small gift or show of concern. When someone seemed like a serious customer,
particularly in the hot summers in East St. Louis, my Dad would ask if they would like a cold pop (a “soda”
in the Midwest). This seemed to break the ice and created a sense of both trust and obligation. This is a
simple lesson practiced by fruit peddlers, who offer free samples, and by law firms, where a receptionist
asks, immediately upon greeting you, if you would like a cup of tea or coffee. In your legal negotiations,
look for a non-costly concession to make early. Giving a little something early on will likely trigger more
cooperation from the other side. My Dad’s offer of a cold pop helped turn reluctant “lookers” into more
relaxed customers who were more likely to reciprocate Dad’s sincere but calculated kindness.
The Secret Code
Legal folklore and some academic texts assert that when negotiating you should let the opponent make
the first offer. However, negotiators may have an advantage if they make the first offer. First offers, like
prices we placed on items in the pawnshop, act as an anchor point for bargaining. A pair of diamond
earrings with a $300 price tag is much more likely to sell for $200 than if marked $200. However, the first
offer or demand should not be so exaggerated that you are laughed out of the room or that bargaining
never starts because your offer (or price) is out of the bargaining zone. The important lesson is to aspire
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high, but have a realistic bottom line that you don’t forget. In the pawnshop the aspirational sticker price
was, typically, double the amount loaned on clothing and household items; triple the amount for jewelry,
musical instruments, guns, and tools. The bottom line was the amount loaned plus 10%.
Dad needed a code to keep the bottom line secret from others but clear to him and those of us who
worked in the shop. He went back to his fruit peddling days and used the 10-letter code “fruitandco,”
representing, from the first letter to the last, the numbers one to 10. With fruitandco in our minds, we could
count to 10 with 10 separate letters forming a secret digital code.
Each item for sale in the store had a tag with the “price” written at the top for all to see and at the bottom
the cost plus 10% written with the code “fruitandco” letters in smaller print. A bottom line amount of $5.70
would be written “tno”. All of us who worked in the store knew the code and never lost money on a sale –
we would walk away from the deal when we hit the bottom line. But we started every negotiation trying to
hit the goal – to come as close to the marked target price as possible, which was profitable but also fair
and reasonable.
Gold Plated Perceptions
In the pawnshop, I learned that deals take place when the offer on the table leaves
everyone better off than no deal. The same is true for settlements of lawsuits. In other words, you don’t
get any of what you want unless the other side gets at least some of what it wants. Wants, needs, and
values are matters of perception.
Pawnbrokers and lawyers try to change the other sides’ perceptions through persuasion that the unredeemed item for sale (or the lawsuit) is worth more and that buying it (or paying the claim) is a good deal.
The person on the other side of the store counter (or the lawsuit) points out flaws, highlights perceived
better alternatives, and argues that the goods or claim is worth less than we think.
Dad was a master at the art of managing perceptions. Behind the counter displaying used watches, he
kept a stack of high-end fashion magazines with glossy advertisements for expensive watches. He would
deftly flip one of these magazines open while a customer was looking at a pawned watch and bring the
customer’s attention to the price of a new watch that resembled one in the case. (Never mind that the
advertised watch was real gold and ours was gold plated.)
Similarly, a plaintiff’s lawyer will be quick to compare the amount of his demand to a large verdict for a
similar claim. The defense lawyer will point out why the current claim is, at best, a plated imitation of the
golden facts that resulted in the big verdict and more similar to a recent case resulting in a defense
verdict. By referring to carefully selected reference points by way of comparison, each negotiator will try to
change the other’s perception in a way that will result in a sale or settlement agreement.
The best thing that ever happened to boost our sales was when a jewelry store that sold only new
merchandise opened in the neighborhood. Once that store opened, my dad had a tool, even better than
glossy magazine adds, to deal with any customer who wanted too good of a deal. When anyone was
unsure about whether to buy at our shop, Dad would suggest that they visit the jewelry store down the
street and then do the BABULEW – which stood for “Best Alternative to Buying Used from Lew.” The
BABULEW comparison usually closed the sale.
This type of analysis was popularized in the best selling negotiation book, Getting to Yes, which
emphasized the importance of knowing your “best alternative to a negotiated agreement” (BATNA). Before
you decide if an offer is worth taking, compare what will happen if you don’t make a deal. The better your
walk-away alternative, the easier it is to walk away. In lawsuit settlement negotiations, the BATNA is
usually mediocre – further delay and costs along with the prospect of a risky trial.
If you can point out to the other side that their walk-away alternative might not meet their interests as well
as the deal you’re offering, they too, might do the BABULEW.
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Diamonds for Vacuum Cleaners
My Dad focused on his customer’s underlying interests rather than just the amount of money they offered.
He didn’t get hung up on a customer’s bravado or the occasional low offer or insulting comment.
Customers used monetary offers to communicate all kinds of things that had little to do with dollars. The
same is true with litigants. Plaintiffs in lawsuits ask almost exclusively for dollars in their complaints and
the defense invariably offers fewer dollars than the plaintiffs demand. But the dollars usually represent
basic human interests. These interests might be met more creatively if better understood.
People need money to satisfy material, social, and emotional needs. Finding out how the money will be
used or what needs must be met is helpful to fashioning a satisfactory agreement. I remember a customer
who brought in a modest diamond wedding ring to pawn. Dad wouldn’t give her the amount she wanted –
the ring wasn’t valuable enough to justify her asking price. Instead of just saying “no,” Dad asked why she
was pawning the ring and for what she needed the money. She said that she was recently divorced and
needed money to buy a vacuum cleaner for her housecleaning jobs. Dad had lots of unredeemed vacuum
cleaners and a mutually advantageous trade was made. Focusing on needs, not just dollar demands,
facilitated a deal in a situation that did not look promising.
People also have “process” interests in making deals and resolving differences in a way they consider fair
or, even better, advantageous. Our customers usually thought they did well, were treated with respect, and
had some fun bargaining with the pawnbroker. Dad was a master at making people believe they
“bargained him down.” He knew the importance of being able to come down from his opening price so that
the customer could get more than a good deal – she could get the satisfaction of successfully bargaining
for concessions. Dad knew it was important for customers to leave the shop feeling good – not just about
the final price, but about the way they got there. The same is true for lawyers with whom you negotiate.
Give and Take
Concessions are the incremental compromises a negotiator makes after an opening offer. Usually the
concessions made are offered in return for concessions from the other side. Making concessions can be
done strategically, knowing that the timing, amount, and nature of concessions are a form of communication by which each side sends signals about their values and reservation points. The pattern of concessions sends a message. By carefully considering what you want to communicate, you can manage
concessions to shape the message, particularly about how close you are to your bottom line. (Diminishing
concessions signal you are close.) Consider the following pattern of concessions and the message my
Dad was sending when selling a watch:
“Lew, that old watch isn’t worth $100. I will give you $50.” “Ok, business is slow; I can give you a 10% discount. $90 and it’s yours.”
“It’s only worth $50.”
“I can sell you that other watch in the case for $50, because it isn’t gold plated. This watch would cost you
$200 new.”
“You are a good salesman, Lew. Wrap it up and I’ll give you $60.”
“No, I can’t do that. Elgin watches are in demand and I don’t get them in often. If you want to take it right
now, I will accept $85. That’s it.”
“I know you are robbing me, but I will pay $75, if you will throw in a new band for it.”
“The band will cost you $10, so the total will be $95.”
“Lew, you’re going in the wrong direction.”
“No, you’re getting a real bargain and I can’t come down.”
Professor John Barkai
- Negotiations p. 30 -
“You don’t have to come down. I’ll pay $85 with the new band.”
“It’s past our closing time and I need to go. I will let you have the band at cost for $6, if you buy the watch
now for $85.”
You drive a tough bargain. Here is $90. Take it or leave it.”
“OK, you’re killing me, but I really do need to close the shop.”
The timing of concessions is critical. Concessions given in rapid succession early on may signal risk
aversion or desperation. Giving away too much in the initial stages of the negotiation depletes the reserve
of concessions that can be offered later when they may be more appreciated. A negotiator should space
concessions because while gains feel good, they only feel good for a little while, so it’s best to string them
out and get the most from them.
Concessions should be made in the context of reciprocal trade-offs or exchanges rather than given simply
to find the other side’s point of acceptance. Remember the caution not to “bargain against yourself.”
Demanding a concession in return both reinforces the value of what is being conceded and signals the
resolve of the negotiator making the concession. It also helps to build the process of give and take and
fuel movement toward agreement.
Leveraging Nylons and Jeans
I started working in the pawnshop after the end of World War Two. Dad had a good stock of some price
controlled items in short supply after the war – particularly nylon stockings and Levi jeans. This supply
gave him bargaining power in negotiating for the sale of other goods that weren’t price controlled, because
he could dangle the possibility of including one of these “scarce” items in a package sale with other less
coveted merchandise.
Dad did not put the nylon stockings on display, despite the fact that most women wanted them. Instead,
he would let it be known that he had quality stockings and would make them available if the buyer was a
“good customer,” i.e., one who spent a lot. “Buy this used suit and you could also get a pair of hard to find
nylon stockings for your honey.”
The nylon stockings and jeans gave Dad the scarce ingredient he needed to create a package that al
lowed him to move merchandise that was harder to sell. Both sides got what they wanted through
packaging, just as you can in settlement deals. For example, in land use disputes, municipalities may allow a developer more building density or height if the developer will include more scarce affordable
housing units or public amenities. Packaging works.
Power and Commitment – Please Don’t Try This
If my Dad had something in the store that a customer wanted, he had a degree of power because he
controlled if the customer got it. The customer, of course, had something Dad wanted – money. In any
negotiation there must a degree of power and motivation to fill a need on both sides. The negotiation
process, in part, is how each side shapes the perception of their power in the mind of the other.
Power is linked to commitment. If the other negotiator perceives that you are committed to give (or not
give) what he wants only if he gives you what you want, then you have power in the negotiation. A hostage
taker adds credibility to his bargaining position if he shoots one of several hostages, but in so doing he
also risks ending the negotiations. Similarly, lawyers who have trial experience and demonstrate a credible
commitment to go to trial, will do better in negotiations than lawyers who have only settled cases.
However, if her willingness to litigate is overplayed, a lawyer risks alienating the other side and forcing a
trial where a settlement would have been both possible and desirable.
Dad told me a story that illustrates the power of an irrational but credible commitment or threat. A man
walked into the pawnshop wanting to pawn a gun. He wanted $50. Dad would normally hold firm not to
Professor John Barkai
- Negotiations p. 31 -
give more than $20 on a similar gun. The man explained that he needed $50 to pay his rent, which was
past due, and if he didn’t get it he would kill himself. This threat would generally not move my father to part
with more money. However he looked into the man’s eyes, which were bloodshot from tears, and saw a
commitment that seemed real. The man got his $50. This may have worked in my Dad’s shop, but please
don’t try it in your next negotiation.
Playing “What If”
“Lew, you can’t outshoot me.” “Yes, I can.” “No, you can’t.” “Want to put your money where your mouth
is?” “Why not?” “Loser pays for all the ammunition.” “OK.”
My Dad’s pawnshop became well known for offering a staple item in rough and tumble East St. Louis,
unredeemed guns. We also sold ammunition for both personal weapons and hunting guns. Outside,
behind the store, we had a makeshift shooting range. A brick corridor four or five feet wide, formed by the
side of our building and the one next door, terminated in a brick wall, in front of which Dad layered wood
and metal to absorb the bullets. Paper bulls-eye targets were regularly blasted to bits in back of the shop.
My Dad was an excellent marksman.
Dad liked to challenge customers, including police officers who were regulars in the shop, to shooting
matches. The deal was that the customer would pay full price for all the ammunition used, but only if they
lost. Dad promised that if he lost, he would pay for the ammo. Perhaps my memory is colored by the awe I
had for my father’s shooting prowess, but I don’t recall Dad ever losing. The ammo sale was based on
who won the shooting match – a kind of “contingent agreement” – a commercial bet on an uncertain future
outcome, where each perceives that they are likely to win.
If parties in a negotiation have different predictions about future events or disagreement over the risks that
will flow from concluding a deal or reaching a settlement, they may reach impasse. However, if the
negotiators, like Dad, put their money where their mouths are, they can structure an agreement that builds
upon these differences. In appropriate circumstances, negotiators can agree to disagree and write
contingent outcomes into the deal. When are the appropriate circumstances? When the parties think the
risks are worth taking and they are confident of their shooting abilities.
Exploding Offers
Negotiations are like gas – they expand or contract to fill the space or time available. I’ve seen many
stalled mediations conclude only when the disputants become aware that the time to make a deal or settle
is running out. Sometimes the deadline is imposed by a court, and sometimes it’s self imposed, like a
plane to catch. As the end looms, concessions are offered and compromises are reached that would not
be considered earlier.
There comes a time in some negotiations, like in sales, when one negotiator thinks it is advantageous to
prevent the other side from exploring alternatives, getting more information, or having second thoughts. In
these situations, the negotiator may try to impose a deadline. Introducing deadlines into a negotiation is a
way to create a perception of a vanishing opportunity.
In the pawnshop we had to take inventory once a year to calculate merchandise taxes due. But just about
every other week I would hear Dad close a sale late in the day by saying “we are getting close to taking
inventory for the merchandise tax. Buy this right now and I will knock off another 10% so I don’t have to
pay tax on it.” The idea that the discount was fleeting made it especially alluring. (It was true that everyday
the inventory was closer to happening and if sold before then there would be no tax due on that item.) This
type of take-it-or-leave-it deadline is sometimes referred to as an “exploding offer.” Lawyers do something
similar when they say “you have until 5:00 p.m. to accept this settlement offer or it’s off the table because
tomorrow we start preparing for trial.”
A Good Loser
Professor John Barkai
- Negotiations p. 32 -
Never celebrate a victory, at least not in the presence of your opponent. If you can leave the other side
convinced they did well, there will be fewer issues going forward and less likelihood that the other side will
back out of the deal. The relationship between negotiators is strengthened if no one feels they were
beaten. There is value in the rapport established for future negotiations. Conversely, if an opponent or his
attorney loses face, he may feel compelled to “get even” at the next opportunity.
I will never forget hearing this exchange in the pawnshop at the end of vigorous bargaining between Dad
and a regular customer over the price of an electric fan on a hot summer day:
“Glen, you drive a hard bargain. You can take the fan for $17 on one condition; don’t tell anyone how little
you paid for it. I’m losing my shirt to you.”
“Stop your bellyaching, Lew. You gotta be making money. How else do you stay in business and feed your
family when you always lose money selling this stuff?”
“You’re right. I lose money on almost everything I sell, but I sell so much I can afford to lose more money.
It’s a matter of volume!”
Glen left the shop feeling like he had bargained well. The person you negotiate with should always feel
they got a good deal. A positive experience prevents buyer’s remorse and may bring them back for more.
When appropriate, congratulate your counterpart on the agreement achieved, but not too much.
Relationships Matter
Pawnbrokers, like lawyers, develop reputations and depend on relationships to succeed. The interest in
creating or preserving a relationship is particularly important when negotiating contracts and resolving
business disputes, where the parties see or once saw a benefit in working together and anticipate future
transactions. In the 1965 Academy Award-nominated movie “The Pawnbroker,” an old, lonely gentleman
pawned something every week just to have a reason to talk to the pawnbroker.
Some regulars at the pawnshop pawned their jewelry a few days before payday and retrieved it after
getting paid. Musicians would pawn instruments between gigs and come into the shop mid-week because
Dad would let them practice at impromptu jam sessions, which also drew in other customers. The
relationship between my Dad and his “band of regulars” was good for the soul and good for business.
Your relationship with other lawyers, including opposing counsel, is important for your long term success
as a negotiator.
Live and Learn
I can’t fully capture here all my Dad taught me about negotiation. There are too many good pawnshop stories and
lessons and too little space in this newsletter. I’ve shared a few of my favorites in the hope that you learn something
from my Dad that helps you negotiate better. But I hope you learn something else as well – that no matter what your
background, no matter what your parents did for a living, there’s a lot to be learned from a life well-lived that can
apply to the resolution of legal disputes. Mine were lessons from a pawnshop, what were yours?
Jay Folberg is Professor Emeritus and former Dean of the University of San Francisco School of Law. He is coauthor of Resolving Disputes: Theory, Practice and Law, Aspen Press, 2005.
Professor John Barkai
- Negotiations p. 33 -
Created by Students in Prior Classes
To make the first offer:
Well, this is how I see it...
Let me tell you what I had in mind.
Why don't we start at...
This is what X would like; what is your position?
After serious contemplation, I have come to this conclusion...
Would you be willing to try this?
Are you open to discussing serious offers?
Would you be open to accepting an offer at this meeting?
I think________is a good offer. What do you think?
If I could offer you______________, what could you offer me?
To get the ball rolling, we think X could offer...
(In your best Brando) I'm going to make you an offer you can't refuse.
I just want to get this resolved, so what if...
If this went to court it would cost us both a great deal of time and money; therefore...
Let's get down to it. What if ....
As a negotiator, when I want them to make the first offer:
We'd like to get this resolved today. What do you need?
How do you see this?
What do you think?
Look, tell me what you need and I'll tell you if we can work something out.
Why don't we just lay our cards out on the table so that we can start sorting out the details. Go ahead, tell me
what you want.
How much are you asking?
What will it take to get you to do____________?
What is your range?
What is your bottom line?
What do you think is a fair proposal?
What are you willing to do to resolve this dispute?
What is your solution?
Could you tell me what you need?
What would it take to preserve this relationship?
What do you think we should do?
Why don't you start us off in the right direction?
Could you fill me in on what you're willing to do here?
What would it take to close this deal right now?
What kind of figure would get you interested?
What is a reasonable starting figure for us today?
To get the ball rolling, how about giving me a ballpark figure?
(In your best Brando) Make me an offer I can't refuse.
I'm open to suggestions.
What do you truly want?
What are you interested in?
As a negotiator, to offer a concession:
We would be willing to pay X for Y.
Professor John Barkai
- Negotiations p. 34 -
What do you think of this?
What if I were to ....
I would like to offer a concession.
Does this meet your needs?
In an effort to show good faith, we are willing to?
Well, I think we can accommodate you there.
Perhaps we could provide?
Maybe this could work for both of us.
We can probably do something along those lines.
Because I want to see this thing work, I'll..
I am willing to ...
Although we feel we deserve X, we can live with Y.
If I were to agree to that, what would you be willing to do in return?
To get this going, I'll be flexible on this.
I really don't normally do this, but...
Would this solve our problems?
Because you are ..., I'll do this.
As a negotiator, to ask for a concession:
Can you do better than that?
We would agree to X, if you would do...
How much are you willing to come down?
Is that your best offer?
Will you take X for it?
I can’t go any higher than X.
What can you do?
We’re going to need something more than that.
What is your side willing to do?
Can you do anything to meet us halfway?
Would you consider making any concessions?
Now, I know that you must concede at least something.
You have to give to get. What are you willing to give?
As a negotiator, dumb is smart:
I don’t know much about this, but I was told that…
You probably know more about this than I do but…
I may be wrong, but my understanding is that…
I’m not really sure about this, and maybe you could explain it to me, but…
Okay, I’m trying to make sure I understand can you explain that again?
I’m sorry, but I really don’t think I caught the gist of this proposal. Could you run through it again, but in more
detail for me?
I’m not sure I understand. How does your solution make it better for both of us?
As a negotiator, when you want to delay decision:
I’m sorry, but I’ll have to give that more thought.
Let me get back to you on that matter.
I’ll have to check on that.
I’m not ready to go that far.
Professor John Barkai
- Negotiations p. 35 -
Why don’t we address that later.
I have an idea of what I want. However, I?d like to hear your offer first.
Before I provide you with that information, can you tell me how much this whole thing is worth to you?
That’s a question I’m not yet prepared to answer.
Perhaps if you provide me with information as to what your interests are, we may be able to find an appropriate
I’m going to have to digest this material a little longer. Do you mind if we break until after lunch?
Let’s go over this proposal one more time later. I really want to give it the attention it deserves.
Let me get back to you on that.
Can I have a couple of days to think about it?
Let me discuss it with my supervisor before I give you a solid answer.
I need to talk it over with my supervisor, but it sounds good.
Let me sleep on it before I decide.
The approval will take a couple of days. I’ll be in touch.
I’m late for an appointment, let me get back to you when I return.
I like what I’m hearing so far, but I need to have my accountants (or engineers, etc.) take a look at it.
Can we make our final decision on ____? That?s when everyone will have had a chance to look at the project
more thoroughly.
Now is not a good time because (excuse), how about we discuss it on___________?
Can you get me more information before I decide?
As a negotiator, use active listening tools:
I’m picking up that…
As I get it, you felt…
If I’m hearing you correctly…
So, as you see it…
I’m not sure I’m getting you, but…
So you feel that…
It sounds as if you are concerned about…
How do you feel about this situation?
How did you come to that conclusion?
If you were doing things over again, what would you do differently?
What do you mean by that?
Why is that important to you?
Tell me more about that.
What happened next?
What I am hearing is?is that right?:
Before you go on, do you mean…
Will you give some examples of what you mean?
I’m not sure I followed that. Could you explain it to me again?
Do you mean that…
That is interesting, but why ______?
You want to probe for underlying interests:
What do you think is important?
Why do you think that happened?
Why is that important to you?
What exactly are you after?
You say that bothers you. Why does that bother you?
In other words, your point is_______.
Professor John Barkai
- Negotiations p. 36 -
What are your other concerns?
Are there issues other than what you have already told me?
What were you trying to accomplish when you did________?
That?s interesting; tell me more.
Why are you opposed to that idea?
How will what you are asking for meet your needs?
____________seems to be very important to you. Could you explain why?
Our discussion always seems to come back to?.do you think we could specifically talk about that?
I sense that there might be something else.
Is there another spin to this?
So, how do you feel personally?
How does this sit with you?
What is your opinion?
Can you live with this?
Have you thought through the consequences?
What do you expect by the end of this negotiation?
Can you tell me why you feel that way?
Can you tell me why you think that is more important than_____?
What would be most satisfactory to you, and why?
How do you think I, as a mediator, can help you and your situation?
What are your goals?
Are there other things we should consider?
Professor John Barkai
- Negotiations p. 37 -
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