Artem has a doctor of veterinary medicine degree.
The Negotiator's Dilemma
Have you ever negotiated with someone? You likely pursued one of two strategies. You were either open and honest in the hope that the other party would be as well, or you purposefully played the other side with machinations in order to get your way. Perhaps you used a combination of both strategies at different points in the negotiation. These strategies are actually part of what's known as the negotiator's dilemma. Let's learn more about what this is.
The negotiator's dilemma describes a choice a negotiator must make between following a competitive strategy or a cooperative strategy when engaging with another entity. In the world of business, this involves two major facets of the dilemma: value-creating behaviors and value-claiming behaviors.
Value-creating behaviors are those that negotiators use to come to a cooperative, win-win situation; that is to say, a scenario where both parties gain in some way or increase their available resources for success. Negotiators who are seeking to create value display the following types of characteristics and behaviors:
- They are cooperative
- They are open and honest
- They are clear communicators.
- They seek to find and gain common ground
- They share information freely
- They look for numerous options for both parties
- They don't criticize
On the other hand, negotiators who are following a competitive strategy may use value-claiming behaviors. Value-claiming behaviors are those that help a negotiator gain the largest slice of the pie, so to speak. Examples of such behaviors include:
- The concealment of important information
- Downplaying the other party's concessions
- Exaggerating one's own concessions
- Starting at an extreme, such as a high price, and slowly conceding from there if necessary
- Resisting pressure and arguing forcefully for their side
- Being noncommittal unless circumstances are highly favorable
The Juxtaposition of These Values
In light of this, negotiators face a dilemma. Let's say Bob represents online retailer Rainforest in his quest to partner with movie streaming company Digimovies and offer Digimovies to Rainforest subscription customers. Anna represents Digimovies in this case.
If both Bob and Anna pursue only what's best for them (they both compete), then both will likely end up getting a mediocre outcome. Perhaps neither Rainforest nor Digimovies will make all that much money from this joint venture as Bob and Anna hold their cards really close to their chest. In fact, they might not even partner up in this case since they can't really trust one another, so they're back where they started, with a pretty mediocre outcome to their negotiations.
Now, if Bob pursues a win/lose (competitive) strategy and Anna pursues a cooperative (win/win) strategy, then Anna may be left with a smaller piece of the pie because she'll be taken advantage of. In other words, the cooperative negotiator (Anna) will be left with a horrible outcome, while the competitive one (Bob) will have a great outcome.
Let's say that Anna shares the number of Digimovies customers and the amount of revenue they generate. Bob knows that Rainforest has fewer people watching the streaming videos they already offer to their subscribers, but claims they have a lot more, since everyone knows Rainforest's overall customer base is very large. So he exaggerates his position and also diminishes Anna's in his competitive strategy. Anna, not knowing that Bob is playing her and not really cooperating, may make concessions as a result of this that hurt Digimovie's bottom line. Bob has a great outcome, and Anna has a terrible one.
If both negotiators can trust one another enough to pursue cooperative strategies, both will end up with good (albeit not great) outcomes. So if Bob and Anna both share their numbers in terms of the amount of customers they have and how much revenue they bring in by watching their videos, then they can fairly divide up the pie in ways that both end up winning in proportion to their contribution to the overall revenue. Of course, trust is the key word in this strategy, and therein lies part of the dilemma in choosing which strategy you should pursue as you consider the other party's strategy.
Logically, the answer is a cooperative strategy, since it is the best strategy for both parties. No one will get a great outcome, yet both will still get a good one, and at least no one will get a mediocre or terrible outcome, but in real life, you can't be absolutely certain what strategy the other negotiator is pursuing. So in light of this uncertainty, the best choice either negotiator has is actually a competitive strategy. That's because with this strategy, at worst, you'll get a mediocre outcome instead of a terrible one and, at best, you'll get a great outcome. If the other negotiator is cooperative, there's only more incentive to get a great outcome by being competitive. But since both parties are aware of this dilemma, they will both instinctively become competitive and both end up being worse off than had they been cooperative.
And that's the negotiator's dilemma.
Let's review some of what we've learned. The negotiator's dilemma describes the choice a negotiator must make between following a competitive strategy or a cooperative strategy when engaging with another party.
Cooperation involves value-creating behaviors, which are those that negotiators use to come to a cooperative, win-win situation. These behaviors include cooperation, honesty, and sharing information.
Competition involves value-claiming behaviors, which are those that help a negotiator gain the upper hand. Examples of such behaviors include concealing information, exaggerating one's concessions, and downplaying the other party's concessions.
The dilemma arises when you consider that the best option is for both negotiators to cooperate and create value. However, in the face of uncertainty about the true motivations of the other negotiator, the individual negotiator's best strategy is actually competition.
To unlock this lesson you must be a Study.com Member.
Create your account
Register to view this lesson
Unlock Your Education
See for yourself why 30 million people use Study.com
Become a Study.com member and start learning now.Become a Member
Already a member? Log InBack