Bargaining vs Negotiation: Key Differences And Important Intersections

Bargaining vs Negotiation: Key Differences And Important Intersections

Although people often think bargaining and negotiation are synonyms, these approaches have many differences separating them from one another.

However, there’s also a reason why these two get mixed up.

In a certain way, there is no bargaining without negotiation, as there is no negotiation without bargaining.

Here’s the full explanation. 

Positional Bargaining

When we think of bargaining, we actually refer to something called “positional bargaining” in theory. Also known as “haggling” or an “advocate approach,” it implies using various skills and tactics (often manipulative) to get what you want from a situation. 

Essentially, bargaining means negotiating with positions and not considering surrounding interests, alternative outcomes, or – perhaps most importantly – solutions to a conflict. It triggers a “win-lose” scenario, in which only one party can truly rip out the benefits from the outcome. Whoever gets the other side closer to their own position is the winner.

More specifically, this approach is usually related to negotiating the terms of sale and questioning the price of an item to try and make a better deal. Both sides typically begin with extremely low offers, only to meet in the middle. For example, if a car is sold for $47,000, the buyer could offer to pay $35,000, while the merchant would probably say they can’t go below $45,000. After a long string of exchanging “position” (in this case, price estimations), the car will likely be sold for around $40,000.

Obviously, bargaining is a poor conflict resolution method per se. This kind of shallow negotiating of the terms of an agreement isn’t the most efficient way to reach a solution. Most of the time, conflicts imply a complex amalgam of interest, positions, and irrational factors – making them impossible to manage by using simple haggling.

Does Positional Bargaining Ever Make Sense?

Despite the bad reputation bargaining may sometimes have, it can be a meaningful and purposeful negotiation tool. 

In fact, the exchange of positions, or “give-and-take”, is often an integral part of a more complex negotiation process. At one point or another, parties are often bound to make compromises and adjust to their initial positions.

Furthermore, there are a couple of scenarios when bargaining is preferred to negotiations. In highly complex situations, sometimes it’s more efficient to neglect “the whole picture” and “just” solve an urgent problem with a quick compromise. For instance, if two countries are disputing over a particular matter, it might not be wise to start more complex negotiations that would invite historical background, systematic problems, or other things that cannot be resolved that easily. Of course, bargaining is here to buy time, and it probably won’t bear fruit in the long run. But it’s also a way to avoid more severe conflicts and invite truce, however temporary it may be. 

Despite these exceptions, sitting down at the negotiating table with a bargaining attitude only will unlikely lead to any wise agreements. In such cases, the disputing parties are often too involved with saving their reputation and too focused on their losses that they can hardly see what they could potentially gain. 

The Essence of Negotiation

Unlike “win-lose” situations in bargaining, the most meaningful negotiations occur in a “win-win” field. Needless to say, resolving conflicts in such surroundings is much more effective and produces sustainable and durable agreements. 

Widely known as “interest-based negotiation,” this attitude can take opposing parties very far in coming up with a solution. Moreover, because it involves exploring the deeper motivations underlying parties’ stated positions, it identifies potential tradeoffs and win-win opportunities more accurately and efficiently. 

In other words, when disputants are not stuck in their own positions, they can think outside the box and come up with creative solutions that could benefit all parties involved. Furthermore, getting negotiations to occur beyond hard positions also means eliminating many of the irrational factors that usually temper the whole solution-finding process.

Of course, parties should put much greater effort into interest-based negotiations. As opposed to firmly sticking to your position, negotiation skills are more complex and cut deeper than pure bargaining. To be an effective negotiator, you must hone the following skills:

  • Communication
  • Emotional intelligence
  • Active listening
  • Creativity 
  • Patience
  • Adaptability
  • Persuasion
  • Planning

Lastly, even though each negotiating situation can seem unique and different in its own way (and, as a rule, it is) – leaning towards a “win-win” mindset is the best way to end it with success. Needless to say, interest-based negotiations can only occur when all the parties involved are ready to work together. When there’s strong competitiveness, bargaining is almost inevitable. 

Bargaining vs Negotiation Example

Whether we realize it or not, we all tend to take negotiating or bargaining stances in our lives. Every day, whenever we’re dealing with a problem. 

To put things in perspective here, it might be useful to close with an interesting example that perfectly depicts the difference between negotiating and bargaining.

There’s a classical story about two little girls fighting over an orange. To act as a mediator, their mum steps in and cuts the orange in half. Both of them get equal parts. But neither is satisfied. 

Why?

Because the first girl wanted to eat the inside of an orange, and the other intended to use the peel for baking a cake. If the mediator had explored these interests more deeply, she would have produced a win-win solution, with both daughters getting what they wanted. But she only applied the bargaining principle that ended with a compromise unsatisfactory to both sides. 

In other words, negotiation has the power to settle conflicts permanently. Bargaining doesn’t. It has its limited ability to break a negotiation deadlock quickly (had the girls both wanted to eat the orange, mum’s compromise would be the only way to prevent escalation). But it’s not a sustainable negotiation alternative and should not be used as such.  

Hone Your Negotiation Skills With CBU

In today’s complex world, negotiation has become a necessity. We negotiate our way through life, from demanding a salary increase to resolving large-scale disputes without resorting to litigation. 

Consequently, careers in conflict resolution are becoming more diversified, while negotiating skills are proving beneficial to almost every job title on the market.
If you need to gain in-depth knowledge on conflict resolution or want to build strong negotiation skills, download CBU’s prospectus to learn more about our programme, or contact us today with any questions you may have.

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