In negotiation, the game theory explains the rational behavior
among negotiators acting interdependently to reach best possible outcome. The
best possible outcome for… for whom?? The negotiators have a common interest to
make the pie as large as possible, but they have to compete to maximize their
own share of same pie.
The Game theory negotiation – uncertainty promotes conflict?
And while competing, negotiators are anticipating and identifying the opposite party’s actions and reactions in order to response with a rational offer /decision. Since anticipations that implies for expectations are not entirely predictable, the uncertainty is essence of negotiation based on the theory of game. And as that, the “opportunities” for a conflict between negotiating parties are "great".
Vivid process of negotiation
The
theory of game is sometimes referred as the position bargaining, but I rather
call it a strategy of tactical negotiation. Because this is a strategy which
is, in parallel to both other strategies described in other blogs (the principled negotiation and the partnership negotiation) the hardest to
explain independently without explaining the belonging tactics used as tooling
during such negotiation. In whatever explanation of the theory of game
strategy, you have to use the content of different negotiation tactics in order
to explain this strategy correctly.
There
is no straight border between game theory negotiation and the principled or
partnership negotiation – in game theory approach, you can see elements of all.
All with the purpose of the negotiator to get as biggest piece of the pie as
possible.
ZOPA, the agreement zone
In all
three mentioned strategies, and the most pronounced in the game theory
strategy, it is important to get ASAP good filling where the zone of possible
agreement is. Identifying this would give you a first mover advantage. Finding
borders, comparing those with expectations of both parties to confirm that it
has potential to satisfy the interests of both, defining options within the
borders to deliver solutions that furnish contract. The solution that is not
necessarily in win-win benefit – remember, we are playing a game (theory)!
Where we end up in the contract zone it depends on bargaining power. The bargaining power usually depends on
- alternative opportunities if no bargain is reached (outside option), we will letter on called it WATNA (Worst Alternative To Negotiate Agreement) or BATNA (Best Alternative To Negotiate Agreement),
- relative cost of delaying the negotiation, if one of the parties measures this time as an opportunity cost,
- commitment strategy, the extent to which you can make the other party believe you will not budge.
Cooperation? Competition? Coopetition!
There is no “right way of negotiation”. Depending on your negotiation style, on the bargaining power and tactical approach (the use of negotiation tactics), you define your own negotiation style, a part of “your face”. Before all, you need have to be responsible as least as that much to know well, to be aware of your negotiation style. To know it and develop it constantly.
Roughly stating, there are 2+1 negotiation styles: the competitor or the cooperator + since in life, we should not live in extremes, the combination of both, the coopetitor. The features of all three are mirrored also in the negotiation tactics used.
While the cooperator may be too wicking to share data and information, collaborate and make concessions to the opposite party, the competitor might take the advantage on such offerings. Especially if reactions of the cooperator meeting the competitor are temperamental, this is just prove for the competitor, that he /she is successful in negotiation…
So, the right, healthy mix of both personalities will give you a balanced negotiator.
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