MGMT 160 Lecture Notes - Lecture 15: Reservation Price
22 Nov 2020
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Document Summary
A negotiation in which the parties compete to get the largest share of a xed pie. Competitive, zero-sum structure one party"s gain is another party"s equivalent loss. Need to gure out how large pie is. The bargaining zone is the space between the buyer"s reservation price and the seller"s reservation price. This is the zone of possible agreement (zopa) Positive bargaining zone: seller"s rp < buyer"s rp. Negative bargaining zone: seller"s rp > buyer"s rp. What to do when the zopa is negative. This case has a positive (but small) zopa. In other situations, the zopa can be negative (negative bargaining zone) In such situations, it"s typically better to resort to the batnas than to reach an agreement. But before doing so, make sure that the zopa really is negative. Never let a no from the other side end the negotiation. End either with a yes or with an explanation as to why not .
