Pure Bargaining Versus Joint Problem-Solving

There are two diametrically opposed negotiating approaches: pure bargaining (PB) and joint problem-solving (JPS). PB is a way to cut up a pie; who gets what? The more you get, the less I get.
 JPS is a method for increasing the size of the pie.

Because JPS increases the size of the pie, there is more for everyone, and concentrating on it should benefit everyone. Its superiority has been demonstrated by the extreme wealth of western societies. One reason for our wealth is that we tend to be problem-solvers with its related values: objective analysis of information, relatively open communications, and emphasis upon trust.

Societies that emphasize bargaining, such as many Third World countries, are much poorer. They spend so much time and energy dividing up the pie that they don’t make enough of it. Tribal, caste religious, class, and other conflicts take too much of their time and energy; trust is minimal; objectivity and openness are rare, even despised.

However, there is another side to the story. The problem-solving approach benefits both parties only if they both use it. If one side is problem-solving, while the other is bargaining, the problem-solver will usually be exploited.

This pattern has occurred again and again in diplomatic and trade negotiations. America has the military and economic power, but it often gets terrible deals. As Donald Trump has repeatedly stated, “We got taken”

We lost these negotiations because many Americans are so uncomfortable with conflict that they try to wish it away. They want to work cooperatively even when they are negotiating with extremely competitive people.

This pattern has increased in recent years, and it will continue to increase because some schools and influential people are committed to anti-competitive policies. Some schools have even stopped participating in organized sports or giving grades such as A, B, C, D, and F because the decision-makers don’t want students to be competitive. When these students enter the real world, they will be unprepared for its conflicts and competition.

Conflict is an absolutely inevitable fact of life, and ignoring it will just make you vulnerable to those who can manage it. Base your strategic choice, not on your comfort or discomfort, but on a realistic analysis of the situation.

One of your most important tasks is to balance competition and cooperation, to select the appropriate point on the bargaining/problem-solving continuum (and it varies from one negotiation to the next). There are three critical issues:

  1. How much do your interests conflict? The more they conflict, the more appropriate bargaining becomes.
  2. How important is the long-term relationship? The more important it is, the more you should usually emphasize problem-solving.
  3. Which approach are the others using? If they are bargaining, and you’re problem-solving, you’ll probably lose, at least in the short term. Conversely, if you’re bargaining when they are problem-solving, you will probably win in the short-term, but damage or destroy your relationship.

Selecting the right approach is often difficult since you must balance, these three demands. Your task is complicated by the fact that bargaining and problem-solving are incompatible: Most actions that support one harm the other.

Ultimately bargaining is based on power, while problem-solving is based on trust and information, and almost everything that builds power reduces trust and the flow of information and vice versa.

For example, filing a lawsuit will strengthen your bargaining position, but it certainly inhibits problem-solving. Communicating openly creates trust, but reduces your power and makes you vulnerable. Let’s contrast the two approaches and discuss guidelines for choosing between them.

Contrasting The Approaches
PB Is Win-lose; JPS Is Win-win: Game theorists call win-lose games zero-sum. The gain for one side equals the loss for the other. For example, if you sell your car for $500 more, the buyer has $500 less. His loss exactly equals your gain. The net for both parties is zero.

Win-win games are variable-sum. Some agreements are better for both parties collectively. For example, if you’re selling your car to someone who lives 100 miles away, agreeing to exchange it when you’re both in the same place for other purposes saves both of you the expense, time, and trouble of making a special trip.

Some people, including a few alleged authorities, claim that you should always strive for a win-win approach. Such exhortations are naive, childish, and cowardly. The people making them simply lack the courage to face the reality that there are genuine conflicts of interest, that wars, strikes, and lawsuits are facts of life.

A silly and dishonest book, Getting To Yes, is based on the naïve premise that we should always use JPS, not matter what the situation is or what the other party is doing. It actually states:

“Principled negotiation [JPS] can be used whether there is one issue or several; two parties or many; whether there is a prescribed ritual… or an impromptu free-for-all, as in talking to hijackers. The method applies whether the other side is more experienced or less, a hard bargainer or a friendly one. Principled negotiation is an all-purpose strategy.”

That claim is such obviously dishonest nonsense that I attacked it in my book, Business Is A Poker Game.:

“That book claims to be based on research done at Harvard University, but deceitful or incompetent researchers have often twisted or even invented data to ‘prove’ whatever they want. Several critics have stated that Getting to Yes is based on anecdotes, not solid research. For example, the authors certainly don’t have any scientifically acceptable evidence that their approach works with hijackers. They just claim that it does, and some naive people believe them.

“No competent, honest researcher would claim to have discovered an all-purpose strategy for anything. Can you imagine a Harvard medical or economics researcher claiming he had discovered an all-purpose strategy for curing all our health or economic problems?”

Alas, some naive people have reached extremely high positions, including the American presidency. Jimmy Carter’s legacy in the Middle East, Panama, and many other places clearly illustrates the effects of wishing away conflict and being too trusting. A much better principle is the one that President Reagan repeatedly stated: “Trust, but verify.”

It’s equally foolish to overemphasize power-oriented pure bargaining. That was the basic premise of Winning Through Intimidation. It claimed that its extraordinarily aggressive approach worked in an extremely wide range of situations. You could be successful just by running over people.

Why did both ridiculous books sell very well? Because many people desperately want to oversimplify negotiations (and virtually everything else). But negotiations (and life) are not simple, and there is no substitute for analyzing situations and then selecting the approach that fits this situation and these people.

PB Involves Conflicting Interests; JPS Involves Common Interests: Price isn’t the only PB issue. War is the most power-oriented activity, and people negotiating to end a war would PB to divide territory, but they may JPS to settle common interests such as the treating prisoners humanely and reducing civilian casualties.

PB Is A Competitive Process; JPS Is A Cooperative One: Since your interests conflict, PB is naturally competitive: Both sides try to get the best deal for themselves. But, when you have common interests, you should cooperate to develop the best joint solution.

PB Is Based On Power; JPS Is Based On Trust And Information: Because your interests directly conflict, PB must ultimately be based upon power. You probably can’t convince them to lose for your gain, but you may be able to force them to do so.

Trust and information are the foundation of problem-solving, and trust is the critical element. Without trust, neither party will communicate openly, nor will they take actions that may give away an advantage.

Irrationality And Emotions Often Help PB, But They Interfere With JPS: Irrationality and anger can greatly increase a pure bargainer’s power. People may concede because they fear a lawsuit, walkout, strike, war or other punishment.

Distorted Communications Help PB, But Inhibit JPS: In PB it often pays to withhold or distort information by bluffing or lying. You can’t tell them your bottom line or weaknesses. However, distorted communications reduce both trust and information, the essential ingredients of JPS.

The communications pattern can also have extreme effects on your relationship. Many people regard lying or withholding information as immoral. Lying to them – even while pure bargaining – can ruin your entire relationship. Conversely, many other people feel that all’s fair in love and war, and negotiations are a form of warfare. They regard honesty and openness as signs of weaknesses and take advantage of your naivite.

The lesson couldn’t be clearer: Until you know people’s styles and values, be cautious and avoid either extremely open or extremely distorted communication.

Selecting The Right Approach
Since PB and JPS require fundamentally incompatible strategies and tactics, carefully analyze the situation before selecting your approach. Some people approach all negotiations competitively or cooperatively. They may rationalize that it produces better results, but it just makes them more comfortable. Effective negotiators select the right approach, even when it makes them uncomfortable.

Sometimes you should use only one approach for an entire negotiation. However, many negotiations require PB on some issues, JPS on others. In some negotiations or on some issues, emphasize JPS; on others bargain as hard as you can.

Your choice should be influenced by the other side’s approach. Do whatever you can to encourage them to use the approach that favors you, but you will often be unsuccessful. If you can’t influence them, adjust to them and the entire situation.

Emphasize bargaining when:

  • Your interests clearly conflict.
  • You are much more powerful.
  • You don’t need or want a long-term harmonious relationship.
  • You don’t trust them.
  • The agreement is easy to implement.
  • They are pure bargaining.

Even when they should be problem-solving, many people emphasize bargaining. For example, some people bargain on nearly all issues, even when they have important common interests. Some emphasize bargaining because they’re naturally competitive; they regard negotiations as a game that they want to win.

Even people who aren’t naturally competitive may emphasize bargaining because power is more tangible and less fragile than trust. Relying on power creates a feeling of security, while trusting almost always creates some risks. They can take advantage of you.

Emphasize JPS when:

  • You have important common interests.
  • You are weaker or power is approximately equal.
  • You need or want a continuing, harmonious relationship.
  • You trust them.
  • Implementing the agreement may be difficult.
  • They are problem-solving.

Even when they should be bargaining, some people try for problem-solving. They do so because they dislike or fear all forms of conflict, including competition.

Avoid both extremes. Ignore your emotions, study the situation and the other people, and then select the approach that will produce the best results.

This blog was taken from my forthcoming book, Negotiate to Win: Gaining the Psychological Edge, 2nd Edition. A Kindle edition will be published soon. For a free copy, click here.

To watch a free video based on this book, click here.