How to Win a Pie-Eating Contest: Thinking Beyond Integrative Bargaining

Posted By Melanie Young, Nov 19, 2012

Law students are often taught to “play nice” when negotiating on behalf of a client. This is because integrative bargaining has been the hallmark of negotiation scholarship and teaching since “Getting to Yes” was published in 1981. Integrative bargaining is a negotiation strategy in which parties collaborate to achieve a “win-win” solution in a multi-issue dispute. In theory, as parties make trade-offs across issues and agree on others, the potential for joint value increases and the “pie” over which they bargain is enlarged. 

In contrast, distributive bargaining approaches negotiation as a way to determine how to distribute a fixed resource. The parties assume there is not enough of the resource to go around and focus on getting as many slices of the “pie” for themselves as possible. This approach has been critiqued as of late. Although the benefits of integrative bargaining are many, integrative tactics can be less valuable than distributive tactics in some circumstances. The following discusses three reasons why this is so and illustrates why lawyers should think beyond integrative bargaining when trying to claim the most pie for their clients.\

Choosing the Best Pie 

One way integrative bargaining can produce suboptimal results is by encouraging parties to transact with each other over issues that would be better transacted with outside parties. Unfortunately, integrative negotiation’s myopic focus on cooperation can blind parties to the possibility that outside parties might provide better outcomes. For example, if X is purchasing a car from Y, X may be better off purchasing floor mats from a third party rather than adding floor mats to the bargain package with Y. Integrative tactics would commend adding floor mats to the package to increase the cooperative surplus available to the parties. But this may create less value overall for each party than they could have achieved through an alternative course of action.

Keeping it Simple

In real world negotiations, fewer opportunities exist to add complexity to baseline transactions and increase available surplus than academic literature might suggest. This is due to market response. For example, when car buyers value floor mats more than sellers value what they give up to provide them, auto dealers’ standard baseline transactions will include floor mats. In such a case, customers and salespeople would not have to identify the opportunity to create value by bundling issues (floor mats with cars) because the manufacturers would already offer the mats as part of the “car package.” However, it should be noted that trade customs usually evolve only after early movers employ integrative tactics to package industry-specific deals in way that is optimally efficient.

Slicing the Pie

Negotiators who skillfully use integrative tactics can increase the chances that they will benefit from distributive tactics. Even in a negotiation in which an integrative approach appears to have far more profit potential than a distributive approach, and the cooperative surplus increases (or the pie gets larger), the surplus must still be divided. Therefore, even in integrative negotiations, negotiators’ skill in using distributive tactics will determine the ultimate price.  Thus, the integrative potential of a negotiation can make distributive skills more, not less, important.  So remember to keep your distributive bargaining skills sharp because, eventually, that pie will need slicing!

For more information on thinking beyond integrative bargaining, see Russell Korobkin, Against Integrative Bargaining, 58 Case W. Res. L. Rev. 1323 (2008).