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Bargaining is the process of negotiating and determining acceptable conditions of matters that are, for example, political, social, economic, or legal in nature. Bargaining is a common feature of relationships associated with these and other areas. There are five types of bargaining processes. Together, these are referred to as “five levels of exchange” within the “anatomy of the negotiation process,” according to Chester Karrass and Gary Karrass—two worldwide leaders and well-known negotiation trainers and the founders of Karrass Ltd.
- Share-bargaining process: Share bargaining is the process of negotiation that concentrates on financial divisions, issues pertaining to property, and power/status.
- Problem-solving process: The problem-solving process, as the name suggests, is concerned with solving a problem by reaching a solution or set of solutions amicable to all parties involved in the bargaining process. In this interactive process, communication is essential and forms the basis of understanding the position of each party.
- Attitudinal bargaining process: Attitudinal bargaining is a part of every negotiation, particularly in the case of individuals involved in a long-term relationship. Karrass and Karrass identify five dominant relationships: (1) extreme aggression, (2) mild aggression, (3) mutual accommodation, (4) open cooperation, and (5) direct collusion.
- Personal bargaining process: The classic “man versus himself” conflict characterizes the personal bargaining process, whereby an individual experiences an internal struggle and is part of a course of action(s) to resolve conflicting needs and desires.
- In-group bargaining process: In-group bargaining refers to negotiators working for other people or parties—these negotiators can be representatives in the case of organizations or companies.
The importance and nature of bargaining differ from one region of the world to another. Often, there can be strongly opposing cultural norms that govern the process(es) or concept(s) behind bargaining and negotiation. In North America, bargaining is guided by the societal facet or dimension in which it takes place. For example, bargaining in social situations cannot be expected to follow the same rules as bargaining in political or legal contexts. This can be said of other regions of the world as well. Bargaining among commercial vendors and private buyers is less frequent (as set prices typically regulate this form of interaction); however, in Southeast Asia (i.e., Indonesia, Malaysia, Vietnam, and Thailand, among other countries in the region) and in some other parts of the world, bargaining constitutes a major component of local and nonlocal commercial interaction. In some cases, vendors preclude the possibility of bargaining by indicating that “fixed prices” are in effect. This means that bargaining is not acceptable in that particular venue exclusively, while indicating that cultural norms are either changing or at risk. In many cases, it can be difficult for people to understand when or where bargaining is acceptable. This idea is not limited to the context of businesses, vendors, or commercial outlets. Corporate business culture and politics in various places can be either misleading or misrepresentative of the acceptability of bargaining in those places.
In the workplace or in companies, the process of collective bargaining takes place when there are negotiations between employers and a group of employees who attempt to improve a certain set of working conditions, usually over a long period of time. In the case of collective bargaining, the interests of many workers are taken into consideration and are represented by one or more employees who permissibly speak on the group’s behalf. In such a case, a collective bargaining agreement is the main goal of the representative during the negotiation process. An agreement can signal the end of the collective bargaining process. There is no established rule for the type of issues that can be brought up during the bargaining process; however, typically, matters such as wages, hours, promotions, benefits, and other conditions of employment are discussed. A collective bargaining agreement cannot address every single issue that might arise in a workplace. Additionally, bargaining in this context cannot overturn the rights of workers or of individuals who are protected by law in a given country. For example, in the United States, workers have the right, under the National Labor Relations Act, to form, join, or assist in a workers’ union at any time.
Dilip Abreu (Princeton University) and David Pearce (Yale University) have built on the theoretical foundations of bargaining by arguing that not only do personalities determine the bargaining processes and outcome but also the “presence of behavioral types profoundly influences the choices of optimizing types.” They explain, moreover, that “behavior is determined endogenously as part of a social equilibrium.” Processual theory sets apart aspects of the overall bargaining process to build a clearer picture of the entire negotiation process that takes place between people or groups of people in various settings. Bargaining range, critical risk, and security point constitute three main elements in this theory. Integrative theory states that parties take part in a negotiation strategy that attempts to reach a “win-win” outcome. Narrative theory focuses on the discursive features of a bargaining or negotiation process as opposed to logical factors such as financial gain.
- Laruelle, Annick and Federico Valenciano. Voting and Collective Decision Making: Bargaining and Power. Cambridge, UK: Cambridge University Press, 2008.
- Meyer, Erin. The Culture Map: Breaking Through the Invisible Boundaries of Global New York: Public Affairs, 2014.
- Muthoo, Abhinay. Bargaining Theory With Cambridge, UK: Cambridge University Press, 1999.
- Osborne, Martin J. and Ariel Rubinstein. Bargaining and Markets. New York: Academic Press, 1990.