I looked up ‘negotiating’ in Wikipedia and learned about different types of negotiations, but none that fit what I’ll describe below.
My cousin changed careers and was looking for housing. A couple he has known for decades had 2 vacant bedrooms because their daughters had left the nest. The friends offered to let him live with them. They own a home outside the SF Bay Area, where rent is very high, so the offer would save Cuz a lot of $$. I’ve called the discussion that followed ‘upside-down bargaining’, but I’m sure there’s a better term for it. Both parties were bargaining in their opponents’ favor. The couple suggested no rent at all. Cuz counter-offered somewhere below $1000; eventually they agreed somewhere in the middle. I think it was around $400/month.
So is there an accepted term for this? Is there a humorous term for this?
There probably is a term, but really it’s just a normal negotiation. The difference is that they are negotiating for the social cost, which is inversely correlated to the dollar price.
For the homeowners, there is a high social cost to charging full price–how could they do that to a close friend? For the cousin, there is a high social cost to being a complete freeloader. The social cost curve isn’t linear, though, so paying some nominal amount is much better than paying nothing–you aren’t a mooch if you pay something (though it couldn’t just be $1, either). And for the couple, charging a heavily discounted price is much more socially acceptable than the full price they’d charge to a stranger. So they meet in the middle, both avoiding the worst social outcomes, while not also being optimal for either (just like a normal negotiation).
Dr. Strangelove already gave a good Explanation for what the real item of negotiation was; but speaking more broadly: everybody/Group that is thinking Long-term will take their opponents aim into account, too.
Negotiating styles can be traced back to the worldview of the People behind it: do they believe life, and therefore trade, is zero-sum or not?
If trade is zero-sum, then their win will the opposite’s loss and vice versa.
But if both sides believe trade is non-zero-sum, then they can both aim for win-win, and suceed.
E.g if Unions and industry negoiate, and the wages rise, short-term industry might make less Profit, but mid-term the workers have more Money to spend = consumers buy more = economy gets a boost. (See why Ford had Weekends off and paid high wage, which every Company owner in the US since seems to have forgotten over short-term stock market gains).
If you want a one-time trade deal, you might concentrate only on what’s best for you. But if you want to Keep Relations good between your Company and the supplier for the next 20 years (because only they have Access to or the Special Technology to supply you) then you Need to take their wishes into consideration, too, otherwise they will go broke, or Switch to your competition.
The Reputation that you are a fair, honest and reliable trading Partner/ Country can open a lot of doors that short-term, my-win-only attitude Closes, especially if competitors exist, or arise suddenly.