Giving Up Control

Giving up control can also increase your negotiating strength.^[5] If you prove that you are not authorized to pay more than a certain amount, you may favorably contract the sale price range. In our first example,

Value of Good to the Buyer = $1300

Value of Good to the Seller = $1000

The seller would benefit by, say, convincing the buyer that she couldn’t sell the item for less than $1250. Of course, the buyer might suspect that the seller is lying to increase her negotiating strength.

Giving up control to an agent who has a different objective than you can often enhance your negotiating position.^[6] Imagine that in the above game the buyer hires a professional negotiator who has a reputation for either getting a great deal or walking away from the negotiations. Although the buyer would be better off paying $1250 than not getting the good, the agent would prefer to terminate negotiations than ruin his reputation by getting a poor deal. If the seller knows about the agent’s reputation, then the possible price range should shift in the buyer’s favor.

^[5]See McMillan (1992), 55.

^[6]Schelling (1960), 29.