Negotiation Management, Analysis and Support
Distributive Negotiations		9
Single issue negotiations

Issues in distributive bargaining

• Is there a positive contract zone?
• If there is a positive contract zone, how can I capture the largest share of the contract zone?

  If you are a potential buyer, when contemplating a first offer in a distributive bargaining problem, what are the risks of an offer that’s:

"too low" or  "too high"?

What about the seller who must set an asking price for the house?

• Opening offers and anchoring?

If the first offer is too extreme, you may antagonize the other side and they may conclude you are not a serious trading partner. On the other hand an accepted extreme opening bid gives you advantage in making future concessions.

If you are too generous, then you may immediately loss some of the potential surplus. The surplus may vanish alltogether if you have to make concessions.

Opening bids tend to influence people’s perceptions of the contract zone and anchor the negotiation.

An opening bid creates a focal point in the negotiation and it affects your opponent’s aspiration level.

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