Differentiate between the bargaining zone, the bargaining surplus and the ZOPA

Classmate 1

JD Discussion

1.) Differentiate between the bargaining zone, the bargaining surplus and the ZOPA. Give an example to illustrate.

ZOPA (Zone of Possible Agreement) and bargaining zone both are the range between the negotiators’ reservation points (Thompson 2015). According to Thompson, the final settlement will fall between the buyer and seller’s reservation points (39). The bargaining surplus is “the amount of overlap between parties’ reservation points.” The bargaining surplus depicts the size of the “pie” the negotiator will receive. An example would someone having a garage sell with a price tag of $50. A customer offers to pay $35 for. They both have established their reservation points and will look to overlap their reservation points in efforts to an agreement that benefits both.

2.) A good deal of time in Chapter 3 is spent on the first offer. What did you learn there? What has been your experience with first offer scenarios?

The first offer was new to me. Chapter three provided a lot of insight on the first offer. What I found to be the most important for me, was your first offer should never be a range (46). I feel victim to this in the past as I will share as my example. Next, a first offer is an anchor point for both parties, especially if it falls in the range of the bargaining zone (46). That makes it more likely for an agreement to be reached.

The first offer in my experience has always came with job interviews/applications. Until now, I never knew that this was people was of finessing someone into lower pay. So, after saying that, I have fallen victim to taking the shorter end of the stick because I typically gave a range of what I would like to be paid and never seemed to get the high end, but now I know why.

3.) What does your author say about lying in negotiations?

Thompson gives three reasons why lying is not in someone best interest. First, “Lying is unethical” (51). Self-explanatory, especially in such situations that involve money and the livelihood of others’ lives. Second, “Lying creates a face-saving problem if the other party calls your bluff” (51). Lastly, “Lying hurts your reputation” (51) which is much needed to do business with others in the future. This last reasoning reminded me of Law 5 in the 48 Laws of Power. “So much depends upon your reputation, guard it with your life.” It proceeds to explain reputation is the cornerstone of power. If you are lying or caught lying, you are not advancing yourself or the parties involved.

4.) What do fairness, social comparison and equity fit in here?

When negotiating, Thompson provides three methods of fairness that should be applied based on situations. The equality rule which stands for equal shares for all (54). Regardless of how much you or anybody ordered at dinner, everyone will pay the same amount. Next, the equity rule which allows for distribution to be proportioned based on the contribution given (54). Last, Needs-based rule.

Social Comparison happens when, “Negotiators who fell more envious about their counterparty’s outcomes, actually perform better in negotiations than those who do not feel envy” (56). This allows for the negotiator to real focus on the goals that he has set for themselves.

Equity is the equivalence of the outcome/input ratio of parties (58). Equity only occurs when all involved are equal.

5.) What did you learn about perspective taking and asking questions about interests and priorities to expand the pie in Chapter? How will you use this in your negotiations in this class?

Chapter 4 overview on perspective taking helps in understanding and acknowledging the other parties’ lenses. In a way, it makes the negotiation run smoother because you are able to relate to their point-of-view because you allowed yourself to switch positions for a while. “By taking the perspective of the other party, negotiators attempt to see the world through the counterparty’s eyes” (75). By assessing the situation from myside first, then assessing it from the counterparty’s side, it could help in me understanding what my classmate wants in our negotiation helping us come to a smooth conclusion.

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