Agree or Walk-Away?

In a negotiation, do not agree when it would not be wise to do so. However, also do not walk away from a mutually beneficial outcome.

The “Agreement Trap” is the tendency to agree to a deal that is inferior to other available options.  We sometimes buy from a store even though a significantly better deal is possible elsewhere. One can fall victim to the agreement trap for many reasons.

First, one party may hide or distort information. For example, a contractor might use “Add-On” tactic to overcharge a homeowner for a renovation project.

Second, parties may be reluctant to walk away from a below-par deal due to the significant time, money, and energy they have invested in the negotiation process. Negotiation is a sunk cost. Avoid using sunk cost in deciding whether to make further commitments. Frequently negotiators try to recoup the losses.

Third, a desire to strengthen the relationship and appease the other party may prevent us from recognizing that it is time to walk away.

What causes negotiators to walk away from deals that are superior to what they could achieve elsewhere?

We often approach negotiations with the assumption that the “size of the prize” is fixed. , a mindset that leads to a circular argument and win-lose scenario. Negotiation is a process of bargaining in which parties trade items of lesser importance to gain things of greater importance. It is true that when you are negotiating just a single variable, such as price, then it is merely “haggling.” However, most negotiations involve many more issues, such as delivery, service, financing, and time.

You can avoid these traps through skilled preparation. On the negotiating continuum, know the bargaining arena, where the power balance is equal. Understand your and other party’s issues, objectives, and “walk-away.”