How to Make the Other Side Play Fair: The final-offer arbitration challenge gives negotiators a valuable new tool.
HBR September 2016, p76
By Max H. Bazerman and Daniel Kahneman
This lovely little article discusses a new trick to try and break the outrageous claims mentality that currently infests negotiations. Simply put, the challenge is for each side to put their best case forward and an arbitrator chooses one or the other. No mixing and matching by the arbitrator. The result is that since each side has only one shot, the shot has to be reasonable and backed up with rational arguments. This won’t work everywhere and there are limits on its effectiveness. The article delineates four conditions needed to use this technique:
- “You have made a reasonable offer that has been countered with an unreasonable one.”
- “You are confident of what a fair resolution would be.”
- “Escalating the dispute into litigation would be costly.”
- “Neither side can easily walk away.”
The article also points out that using this technique builds your reputation for fairness and that will stand you in good stead with future negotiations.