Creating Value in a Zero Sum Game

Creating Value in a Zero Sum Game

zero sum gameNegotiating or mediating a settlement of a legal matter could be seen as a zero sum game. The more one side gets the more the other side loses. There are ways to create value when it comes to negotiations so it’s not such a cut throat activity.

Creating as well as claiming value are two of the most fundamental parts of negotiation strategy that compete with each other, writes Brad Spangler. The parties need to decide if they want to be competitive, cooperative or some combination of the two. This has been termed the “negotiator’s dilemma” because the best outcome for one party may not be the best outcome for both. If both sides strive to get the best deal possible there’s a good chance neither will get it. They probably will end up with the worst outcome.

You can create value in negotiations by engaging in the cooperative process of integrative or interest-based bargaining.  Below are some tips for creating value in a zero sum game:

  • The parties find ways to increase the amount of beneficial goods (what they want or what will improve their situation) that will be divided up. This can be called “joint value” or “joint gains” because these new developments are considered improvements by both parties.
  • To create value you need to focus on the interests of the parties. Why do they want what they want?
  • By sharing information and openly communicating with each another the parties can find shared interests and create joint value.
  • Creating joint value makes it more likely both sides will obtain something they seek from the negotiations, making it a “win-win” solution.

Negotiations are not always this simple because one or both parties may want to be as competitive as possible to claim as much value as they can while the “fixed pie” is divided. This is associated with distributive bargaining, where each side tries to get as much of the pie as possible. As one side gets more, the other gets less. This is the “win-lose” negotiation.

You use competitive tactics to convince the other party he wants what you’re offering much more than you want what he has to offer. Tactics for “winning” at distributive negotiation include,

  • Starting very high or very low,
  • Conceding slowly to make it appear you’re giving in to the other party,
  • Exaggerating your concessions,
  • Minimizing the value of the other party’s concessions,
  • Hiding information,
  • Arguing forcefully for principles that support favorable settlements,
  • Commit only to accept highly favorable agreements, and
  • Being willing to outwait the other party.

Creating value and claiming value are linked but seem mutually exclusive. If new value is created it improves both parties’ outcomes. Once that new value is created there is still a “pie” to be divided. Creating that value was the result of cooperative strategies and they tend to undermine competitive strategies used to claim value (and vice versa).

  • Exaggeration and concealment needed for competition is contrary to open sharing of information needed to find mutual benefits.
  • If one party uses an open cooperative approach he or she is vulnerable to the hard bargaining tactics of a competitive negotiator.

When both parties cooperate the result is usually positive. If one cooperates and the other competes, the competitor normally comes away the “winner.” If both compete they often do worse than if they both cooperated. We assume that claiming value in cooperative situations will more likely be balanced because the parties should develop cooperative relationships and communicate freely.

By |2017-03-08T17:35:54-07:00July 31st, 2016|mediation, Pyschological Research and negotiations|0 Comments