Against Integrative Bargaining | Ideas And Criticism

 “Against Integrative Bargaining” ideas and criticism

Russell Korobkin (“the Author“) of “Against Integrative Bargaining” (“the Article“) argues that distributive bargaining (which side gets more resources from a negotiation) is ultimately of relatively greater importance than integrative bargaining (creating more value to both parties of the negotiation) especially in legal negotiations. I will challenge this idea by reviewing the Author’s basic assumptions and in addition, I will share some of my thoughts on the matter. I will start by explaining some of the basic assumptions the Author makes in the Article, then I will review those assumptions and share some of my agreement and disagreement on the Author’s arguments.

The Article’s governing assumption is that “most negotiators would wish to choose whether to emphasize integrative or distributive bargaining tactics based on which type offers the greatest potential for creating cooperative surplus for their clients“. In addition, the Author stated in the Article that: “The relative opportunity for distributive gains depends on the degree of competition in the market for the goods and services that make up the negotiation package“. The Author claims that the greater the competition the less distributive bargaining power the negotiator has and vice versa. Furthermore, he argues that the amount of value that can be gained (using integrative bargaining) is often significantly less than what is assumed in cases: “where the acquired wisdom of industry-specific custom that informs the baseline for transactions in the real world is rarely assumed“. The Author argues that in cases where negotiations in a particular industry have reached maximum efficiency, it is almost impossible to create a significant amount of value, thus distributive bargaining is of higher importance than integrative bargaining. That being said the Author acknowledges that on some occasions there are special circumstances leaving a possibility for value-creating in a maximum efficiency industry (mostly depends on the ability of the negotiator).

The Author notes that for an integrative agreement to be appropriately labeled integrative, it must create a more cooperative surplus than the terms of whatever type of agreement would be customary under the circumstances. The Author points out that it is difficult to say that creating more value in specific negotiations between the parties is truly optimal. There are cases, however, when a person can purchase the correlated products or services from a third party and by doing so sometimes can create additional value in a later negotiation.

My thoughts and criticism

The Author points out the difficulty of knowing whether an optimal value has been created, even though he recognizes that the likelihood that a person will purchase a correlated product in a second negotiation is low and hardly exists. The Author ignores the fact that in the real world there are transaction costs, as well as sometimes there is difficulty in quantifying accurate numerical value for assets. The aforementioned basic assumptions, as well as the assumption that the negotiator needs to choose between distributive and integrative bargaining methods, raise a few points of disagreement and criticism on the Author’s arguments:

If the opportunity for distributive gains depends on the degree of competition, then in a capitalist world like ours there is almost no need for distributive bargaining (in most cases there is already a high degree of competition). This leads to an opposite conclusion from the Author’s conclusion which is that in negotiations distributive bargaining is more important than integrative bargaining.

Furthermore, the Author gives almost no weight to special circumstances in negotiations and argues that in particular industries – which have reached maximum efficiency – there is not a lot of value that can be created. This statement indicates that the Author is a person that is “against” integrative bargaining in more than one way. The Author also probably does not believe that innovation is always possible.  I agree that on some occasions there is stagnation in the law and in the general practice, but that’s due to the fact that alternative dispute resolution mechanisms (“ADR“) takes place outside of the courthouse and those agreements usually remain hidden from the public. That does not mean that in a specific negotiation using innovation will not bear fruits. In my opinion, there is always room to grow, and in reality, there is no industry that has reached maximum efficiency status.

Moreover, if we accept the Author’s definition for integrative agreement, then in every case that the negotiators did not create value, the case will not be considered as an integrative agreement. It means that if indeed we live in a capitalist world with maximum efficiency industries, we do not get the option to choose between the two bargaining options and the Article is therefore redundant.

Sally Soprano is one of the best-known role-play simulations (Operatic Role-Play Simulation). In the Bucerius negotiation course during our simulation, we as “new players” in the show business industry had to come up with new norms (for us – due to lack of knowledge) and to make a deal between Sally Soprano and the opera house. Norms that already existed in the show business industry – can that really be considered as not creating more value because its industry norms? In my eyes in the 21^st century with our multi-data problem, we need to be creative as a tool to reach new heights and to evolve the common practice. In other words, there is constant change, players (in our case lawyers) come and go, and each new generation and its players bring a breath of fresh air to the negotiation table. The Author’s definition for an integrative agreement has an unreasonable perception of reality as there is no such thing as an industry that reached maximum efficiency.

My conclusion

Although in this essay I stated some of my disagreement with the Article, I also agree with some of the Author’s ideas and some of the arguments which have merit. First and foremost, the Article makes the reader contemplate the fact that different bargaining methods can be applied. The negotiators during a negotiation have to keep in mind, that after creating value (when possible) they must also make sure to not give to many concessions to the opposite side. I believe that integrative bargaining is the first step for creating value as foundation for having more distributive power. The bargaining methods are meant to complement each other and not to compete with one another. Moreover, the negotiation method one chooses is often related to his or her personality. For example, a more competitive person will resort to a more distributive bargaining style and a cooperative person will lean to a more integrative bargaining style.

Competing & Collaborating – my bargaining style

In Richard Shell’s “Bargaining Styles Assessment Tool” (“the Test“) my “score” was 11 out of 12 competing and 9 out of 12 collaborating (“the Score“). I strongly agree with the “Score” for the following reasons: In the competing sense, I love to win and I usually have a good sense in matters such as leverage and ultimatums; In the collaborating sense, I love to solve problems in interactive ways, to think outside of the box and to find unique solutions. In addition, I like to bring forth interests and, on some occasions, I tend to complex simple situations. The Score reflects my bargaining styles perfectly as it was apparent during the first time, I played the game “Bohnanza”. I had a good sense of what was my leverage is and I often made what I considered to be “good” deals. At the same time, I also made offers for trades that were more than a card for card trade. This got even more apparent at a later time when I played Bonanza again with my roommates and my “deals” became more and more creative (as I understood the game better). On a later occasion during our team negotiation (buying goods with a service pack), I wanted to win more than I wanted a deal. I was prepared to walk away if need be (which was almost the case). During the negotiation, I was the most dominant team member of my team (which in light of the passive nature of my team members turned out to be beneficial). Another thing worth mentioning is that during the comparison of outcome in the course I constantly checked how my team performed in comparison to the other teams. All that in order to satisfy my competitive side (which aligns with the Test results as my major bargaining style is competing). In conclusion, I am a competing type, that shares a lot of collaborating characteristics.

I will end this essay with an outside of the class bargaining story: Shortly after the negotiation course was over, I went on a trip to Italy. Near the Colosseum in Rome I was approached by a street seller and offered to buy a selfie stick for 15 EUR. I then countered with a 2-3 EUR offer. The seller then offered 7 EUR, 5 EUR and finally 4 EUR – at that point I refused and walked away stating that my finale offer is 3 EUR. The seller followed me and accepted my final 3 EUR offer. I then gave the seller 3.5 EUR because what I was looking for was the fun to WIN the negotiation and less to pay the lowest price.

“Against Integrative Bargaining”, Russell Korobkin, Case Western Law

Review (2008).

Page 7.

Page 8.

Page 14 and 21.

Page 13-14.

Page 5.

Page 12.

The Author agrees and also mentions that usually, most litigation cases resolve outside of the courthouse (page 16-17).

In my opinion, one can influence and acquire an opposite-bargaining-style to his personality, but only to some extent.

Based on Bargaining Styles Assessment Tool; Bargaining for Advantage, Richard Shell (2006 edition).

I put the word “score” in quotes because I do not believe there is a perfect bargaining style. Each person adopts the negotiation techniques that suit his or her character and qualities.

A bargaining card game.