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Anchor Points and the Bargaining Range

12. What are “anchor points” and the “bargaining range” in a negotiation?

The parties generally open up a negotiation with an “offer” by one party and a response to the offer or “counteroffer” by the other party. The opening offer and response are known as the parties’ “anchor points”. As the name implies, these opening proposals be each party generally anchors their positions. The parties generally will not (or cannot) seek more value than they request or seek in their initial offer. As such, the anchor points establish the “bargaining range” for the negotiation. Rarely do parties arrive at a negotiated agreement outside of this range. All of the options within the bargaining range, however, might not represent an acceptable outcome to both parties. That is, either party’s anchor point may be outside of the other party’s acceptable range or “below her reservation point”. If the parties are not willing to make concessions that bring the terms of the negotiation within the zone of potential agreement (ZOPA), the negotiation will fail.

• Discussion: Why do you think parties are rarely able to achieve greater value than is requested in their initial offers or proposals? How do you think it affects each party’s negotiation strategy or tactics if the anchor points by each party is already within an acceptable zone of potential agreement (ZOPA)?

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