Distributive bargaining

Definition

Distributive bargaining is a negotiation strategy in which parties compete to divide a fixed amount of resources or value, often referred to as a 'zero-sum game.' In this approach, one party's gain is seen as the other's loss, making it crucial for negotiators to strategically claim value while minimizing concessions. This method is commonly used in one-time transactions where long-term relationships are not a priority.

5 Must Know Facts For Your Next Test

1. Distributive bargaining is often used in scenarios like salary negotiations, real estate transactions, and sales agreements, where the focus is on splitting a limited resource.
2. In distributive bargaining, negotiators must be aware of their own reservation price to avoid making unfavorable agreements.
3. Tactics such as anchoring, where one party sets an initial offer to influence the negotiation, are common in distributive bargaining.
4. This approach may lead to competitive and adversarial interactions since each party seeks to maximize their own gain at the other's expense.
5. While effective for single-issue negotiations, distributive bargaining may not be suitable for complex situations requiring ongoing collaboration or relationship-building.

Review Questions

• How does distributive bargaining differ from integrative bargaining in terms of objectives and outcomes?
  • Distributive bargaining focuses on competing to divide a fixed set of resources, where one party's gain comes at the expense of another's loss. In contrast, integrative bargaining aims for collaborative solutions that benefit all parties involved, promoting win-win outcomes. This fundamental difference shapes the strategies employed and the relationships formed during negotiations, as distributive bargaining often results in a more adversarial dynamic.
• What strategies can negotiators employ during distributive bargaining to maximize their outcomes?
  • Negotiators can utilize various strategies in distributive bargaining to optimize their results. One common tactic is anchoring, where they make an initial offer that sets the tone for the negotiation. Additionally, knowing their reservation price helps negotiators avoid accepting unfavorable deals. They can also use pressure tactics or leverage time constraints to influence the other party's decisions, thereby increasing their chances of securing a more advantageous agreement.
• Evaluate the implications of using distributive bargaining in business negotiations and its potential impact on long-term relationships.
  • Using distributive bargaining in business negotiations can yield immediate gains but may jeopardize long-term relationships due to its competitive nature. When parties focus solely on claiming value rather than collaborating, it can create animosity and distrust. As a result, future interactions may be strained, impacting potential partnerships and ongoing business opportunities. Understanding when to apply this strategy versus integrative approaches is crucial for balancing short-term success with sustainable relationships.

Related terms

Integrative bargaining: A negotiation strategy that focuses on win-win outcomes, aiming to create value by finding mutual benefits for all parties involved.

Reservation price: The lowest acceptable offer a negotiator is willing to accept before walking away from the negotiation.

BATNA:

Best Alternative to a Negotiated Agreement; the best outcome a negotiator can achieve if the current negotiations fail.