Description (through illustration) of how bargaining works for two parties - buyer and seller - in a game interaction. Relevant for: public policy process; public management; business economics; and organizational behaviour.
1. Power, Politics &
Policy Process
Dr. Faheem Jehangir Khan
Research Economist, PIDE
faheemjkhan@pide.org.pk
2. FJK | 2015
PIDE, Islamabad
The Public & Its Policies
Arguing versus Bargaining
3. FJK | 2015
PIDE, Islamabad
FJK
Arguing versus Bargaining
Argue
Give reasons or cite evidence in support of an idea, action, or
theory, typically with the aim of persuading others to share
one’s view.
Bargain
An agreement between two or more people or groups as to
what each will do for the other.
6. FJK | 2015
PIDE, Islamabad
FJK
Arguing versus Bargaining
Negotiator 1
(Buyer)
Negotiator 2
(Seller)
Initial offer Max. acceptable offer
Initial demandMax. acceptable demand
Bargaining
Range
The ‘Bargaining Range’ or ‘Negotiation Zone’
is the range between the minimum price the
supplier will accept and the maximum price
the buyer will pay.
7. FJK | 2015
PIDE, Islamabad
FJK
Arguing versus Bargaining
Negotiator 1
(Buyer)
Negotiator 2
(Seller)
Initial offer Max. acceptable offer
Initial demandMax. acceptable demand
No deal range
No deal range
8. FJK | 2015
PIDE, Islamabad
FJK
Arguing versus Bargaining: Example
Negotiator 1
(Buyer)
Negotiator 2
(Seller)
Initial offer Max. acceptable offer
Initial demandMax. acceptable demand
No deal range
No deal range
Rs.50,000Rs.30,000
9. FJK | 2015
PIDE, Islamabad
FJK
Arguing versus Bargaining: Example
Negotiator 1
(Buyer)
Negotiator 2
(Seller)
Initial offer Max. acceptable offer
Initial demandMax. acceptable demand
No deal range
No deal range
Rs.40,000Rs.20,000
Rs.50,000Rs.30,000
10. FJK | 2015
PIDE, Islamabad
FJK
Arguing versus Bargaining: Example
Negotiator 1
(Buyer)
Negotiator 2
(Seller)
Initial offer Max. acceptable offer
Initial demandMax. acceptable demand
No deal range
No deal range
Rs.40,000Rs.20,000
Rs.50,000Rs.30,000
Bargaining Range:
30k – 40k
‘win-win’ situation