Applying integrative bargaining in a business environment

The dilemma of trust and the dilemma of honesty should play a huge part in integrative bargaining.

The dilemma of trust relates to how much of what you believe the other party tells you is the truth. By assuming that all the information the other party discloses is the truth, a party leaves themselves open to be taken advantage of. In my experience the best way to combat this dilemma is to find out all the information you can about a transaction prior to entering into negotiation. This will allow you to corroborate information provided or identify when the other party is not being completely forthcoming or truthful. In mortgage sales, employees were taught to sell benefits to the borrower while downplaying the actual terms of the loan. This acted as a method of distributive bargaining disguised as integrative bargaining. The loan officer would point out several areas in which the loan was accomplishing the interests of the borrower. Focusing on these interest caused the borrower to believe the loan officer was focused on accomplishing the borrowers objectives. Thus, causing the borrower ignore the point of contention (the rate and costs).

The dilemma of honesty relates to how much does a party disclose to the opposing party. Disclosure can further weakened the position to the borrower. Loan officers were taught to seek out the underlying interests of the borrower and use those interests like a weapon to charge higher rates and collect larger fees. Borrowers who provided honest and accurate information seldom ever got better deals.

This is not to say that I believe that disclosing honest interests is a bad thing for a negotiator to do, but a negotiator must first address the trust dilemma. This can be accomplished by verifying the information given prior to disclosing truthful information about one's own interests. Researching as much information as possible prior to starting negotiations is one way to combat the trust dilemma.