By Doug Brod

In The Five Tool Negotiator: The Complete Guide to Bargaining Success (Liveright, $28.95), UCLA law professor Russell Korobkin uses concepts from economics, psychology, and game theory to make a compelling case for how to get what you want, ethically and intelligently.

Could you explain in a nutshell what the five tools of negotiating are and how they relate to the five-tool baseball player? Give me the elevator pitch for the book.

I use the baseball analogy because although every game is different, there are only five different things that baseball players do on the field. They run, throw, field, hit for average, and hit for power. And there are only five things that negotiators do that can give them an advantage in getting an outcome they want.

The first is to estimate the range of agreements that are possible in the negotiation. They can persuade the other party that what they’re offering is of very high value. They can try to design the deal in a way that will create more benefits for both parties. Then there’s the use of power, which is ultimately based on the threat of walking away. The last thing is to invoke a principle of fairness that will make the other party believe that the deal being proposed is one that they should feel good about.

Your best combination of these strategies depends on what exactly the other party is doing. But at the end of the day, there are really only these five tools.

Which tool is the most important, and can you work with one without the others?

Most negotiators—and we’re all negotiators—have developed some intuitive competency at using one or two of the tools. We mostly use those tools that we are comfortable with. The answer to your question is: It depends on the context, what you’re negotiating over. And it depends on your relationship with the other negotiator. In a typical sales negotiation, when you’re just negotiating a price with a stranger whom you’re never going to do business with again, then the tool of power can be extremely useful as a way to get a better price. But using power is much less useful if there are multiple issues to negotiate, not just the price, and it also can have significant negative consequences for the relationship. So you’re not going to want to use it when you’re negotiating with family or friends. 

How important are reservation points in negotiations?

If you’re a buyer in a negotiation, your reservation point is the maximum amount of money you’d pay for or trade for whatever it is you’re trying to obtain. Your reservation point is the point at which you would be indifferent between making a deal and not making deal. It’s really critical to understand your reservation point before you negotiate, because otherwise you’re at risk of committing what I call the two cardinal sins of negotiation. One is entering into a deal where you would have been better off if you hadn’t made any deal at all…if you had pursued the alternative, which I call your plan B. The second sin is walking away from a deal or reaching an impasse when it would have been possible for you to make a deal that would have left you better off. 

In the book, you tell the story of a high-school baseball player who walked away from a $4.9-million major-league deal and ended up working in Costco for $11.50 an hour.

Matt Harrington is a great example of someone who did not carefully determine what his reservation price ought to be. There’s nothing wrong with asking the team to pay you more, but when the team says, “This is the most we’re willing to pay,” you need to know at what point you should be indifferent between taking the deal and not taking the deal. At $4.9 million, Harrington certainly would have been better off saying yes. 

It seems as though one part of a negotiation is mathematical or strategic, and the other is humaneness or psychological.

That’s a great way to put it. Negotiation is both a strategic and social interaction, and in order to be a complete negotiator, you have to understand [both sides]. Let’s say, for example, I have an opera ticket that I can’t use and my reservation price for selling is $20—that is, I’d rather have $20 than not have a deal with you. You’re very interested in going to the opera, so your reservation price is $70: You would rather pay $69 and go, but you’d rather stay home if you had to pay $71. I’m willing to sell the opera ticket for anything more than $20, and you’re willing to pay anything up to $70—that’s the strategic part of our analysis. The social part is, we have to agree on some price between $20 and $70. We have to rely on social norms of what constitutes fairness in order to make a deal.

I talk in the book about three different social norms that negotiators rely on. One is reciprocity: If I ask for $60 and you offer me $40, then the reciprocity norm suggests that it’s fair for me to now make a concession. So maybe I’ll say, “I would take $50.” Now the reciprocity norm suggests it’s fair for you to make a concession, so you might say, “How about $45?” And then I say, “OK, deal.” We rely on this norm of reciprocity in order to feel like we’ve treated each other fairly.

A second norm is what I call convention—the idea that most of us think it’s fair to make a deal on the same terms as similarly situated people have made deals. In the example of the baseball player negotiating for a salary, if a team really wants a player, and the player really wants to play, there’s often a big bargaining zone. So what’s a fair salary? Usually these negotiations are resolved by looking toward what other players of similar quality have agreed to in the past.

The third set of fairness norms are about what constitutes distributive justice. One idea of justice is equality: Each of us getting half of something often seems fair because it satisfies the equality norm. Sometimes the justice norm of need comes into play. We tend to think that somebody who needs something more maybe should get more. The other justice norm is equity—that it’s fair for whoever contributes more to the creation of value of a resource to get the majority of that resource. These are all touchpoints that negotiators use to try to justify particular agreements as being fair, because if the bargaining zone is wide, we need some kind of social basis. 

How would you apply the five tools to selling a used car?

I want to start with tool number one, which is bargaining zone analysis. I want to figure out what’s my plan B: What am I going to do if you don’t buy my car? Based on how attractive that alternative is, I would determine the minimum amount I’d be willing to accept. And then I want to try to estimate, based on what I know about you and your situation, the maximum amount you would be willing to pay.

Tool number two is persuasion, so I’m going to try to convince you that whatever you think my car is worth to you, you really should reevaluate that and decide it’s worth more than that to you. If I’m ethical, I’m not going to lie, but I’m going to make sure you know about all of its attractive features. Hopefully then you will determine if I am successful at persuasion. You’ll say, “Gee, I thought that my reservation price was $20,000. But now that I understand how fabulous this car is, maybe my reservation price is $25,000.”

Tool number three is what I call deal design—that’s when we try to figure out if we tweak the deal to make it more attractive to both of us. Usually, we would think that the only issue for a used car is the price, and if we make a deal and you give me a check, I’ll give you the keys today. But let’s say I really need the car this weekend for a trip and you don’t need it at all until next week. Then we might agree to exchange the car and complete the transaction next week, rather than this week. That would help me out a lot, and it would not cost you very much at all. That’s a very simple example of how we can make the deal more mutually beneficial by redesigning it.

Tool number four is power. I’m going to try to convince you that I have a pretty high reservation point, because even if I persuaded you that my car is really great and you should be willing to pay up to $25,000 for it, if you think that I’ll sell it for $10,000, you’re going to prefer to pay $10,000. So power is about me trying to convince you that I won’t sell it for $10,000, that you’re going to have to pay closer to $25,000. One way to do that is for me to suggest that I’m gung-ho about my plan B, that I’m really excited to keep the car, or that I just put an advertisement on the internet and I think lots of people are going to come this weekend for a test drive, and somebody is going to offer me full price. You’re going to have to pay me a high price in order to get me to agree to the deal.

Finally, I’m probably going to have to convince you that the deal is fair, that it satisfies some social norm of fairness. I might refer to the Kelley Blue Book or to what similar cars have sold for, as a way to show you that $22,000 is a fair price. I might try to convince you that I’m not going to sell it to you for less than $22,000, because I prefer to pursue my plan B of trying to sell it to somebody else. And at the same time, I’m probably going to try to convince you that $22,000 is a fair price, so you’ll feel good about that agreement.

You write about how the success of the NordicTrack exercise equipment was helped along by just one tweak in the final plea of the commercial.

The infomercial for the NordicTrack became more successful when the author of the script that was read on the television screen [essentially] changed the text from “Call now—operators are standing by” to “Call now—and if all lines are busy, please try back later.” We tend to think things are of more value if they’re scarce or if we’re afraid we can’t get them.

We see a lot of negotiation on TV shows and in films—business negotiation, hostage negotiation. What’s an example of one that really gets it right?

My favorite is from Monty Python’s Life of Brian, where Brian is being chased by Roman soldiers who think he’s Jesus and want to crucify him. As he’s running in the bazaar in Jerusalem, he sees a vendor selling fake beards, and he needs to get one so he can disguise himself. The vendor says he wants 20 shekels, and Brian tries to give him the 20 shekels. He offers to pay the asking price. In a consumer situation, oftentimes you assume that it’s fair to pay what’s being asked. But this is not the typical social norm of the bazaar. As the seller of the beard says, “You have to haggle.” We call that doing the negotiation dance. The seller asks for a high price. The buyer offers a low price. Then the seller grudgingly makes a concession. Then the buyer grudgingly increases his offer. And it goes back and forth until they finally meet in the middle. It’s such an ingrained norm that this kind of behavior is a fair way to reach an agreement in some situations.

I sometimes think that I could teach my entire negotiation class just by showing movie and television clips. I can hardly watch a movie or show without seeing some good examples of at least one of the five tools. We live social lives. We have to interact with other people. We have to convince other people to assist us in achieving our goals. And, in return, we have to assist them in achieving theirs. And that’s what gives rise to negotiation every day.