What is a ZOPA and Why Does it Matter?
A “Zone of Possible Agreement” (ZOPA) exists if there is a potential agreement that would benefit both sides more than their alternative options do. For example, if Fred wants to buy a used car for $5,000 or less, and Mary wants to sell one for $4,500, those two have a ZOPA. But if Mary will not go below $7,000 and Fred will not go above $5,000, they do not have a zone of possible agreement.
The ZOPA is critical to the successful outcome of negotiation, but it may take some time to determine whether a ZOPA exists. It may only become known once the parties explore their various interests and options. If the disputants can identify the ZOPA, there is a good chance that they will come to an agreement.
Foundations of ZOPA: BATNAs
In order for disputing parties to identify the ZOPA, they must first know their alternatives, and thus their “bottom line” or “walk away position.”
• Alternatives: Parties must determine what alternatives they have to any agreement. Roger Fisher and William Ury introduced the concept of “BATNA” (Best Alternative To a Negotiated Agreement). This is the best course of action that a party can pursue if no agreement is reached.1
For example, Mary might have two potential buyers. Georgio is willing to pay $6,950. Mary is now negotiating with Fred. If he will pay more than Georgio (Mary’s BATNA), she’ll sell to him. If he won’t pay that much, she’ll sell to Georgio. Likewise, if Fred has found another car he likes for $5,500, then he won’t pay more for Mary’s car than that…maybe even a bit less. Fred’s BATNA is $5,500.
• Bottom Lines or Walk-Away Positions: BATNAs determine each side’s bottom lines. If you have an alternative car available for $5,000, $5,000 is your bottom line. If you can sell your car for $7,000, that is your bottom line. If you don’t do better than that in the negotiation, you’ll walk away.
So, a zone of possible agreement exists if there is an overlap between these walk away positions. If there is not, negotiation is very unlikely to succeed. In fact, it will only succeed if one party either realizes that his or her BATNA is not as good as he or she thought, or she decides for some other reason to accept the agreement, even though an alternative option might have yielded better results. (This often happens when parties do not explore or understand their BATNAs well enough.)
Identifying the ZOPA
If both sides know their BATNAs and walk away positions, the parties should be able to communicate, assess proposed agreements, and eventually identify the ZOPA. However, parties often do not know their own BATNAs, and are even less likely to know the other side’s BATNA. Often parties may pretend they have a better alternative than they really do, as good alternatives usually translate into more power in the negotiations. This is explained more in the essay on BATNAs. The result of such deception, however, might be the apparent absence of a ZOPA, when one actually did exist. Shared uncertainties may also affect the parties’ abilities to assess potential agreements because the parties may be unrealistically optimistic or pessimistic about the possibility of agreement or the value of alternative options.2
ZOPAs in Distributive and Integrative Negotiations
The nature of the ZOPA depends on the type of negotiation.3 In a distributive negotiation, in which the participants are trying to divide a “fixed pie,” it is more difficult to find mutually acceptable solutions as both sides want to claim as much of the pie as possible. Distributive negotiations over a single issue tend to be zero-sum — there is a winner and a loser. There is no overlap of interests between the parties; therefore, no mutually beneficial agreement is possible.
For example, two people may be competing for one job. In the simplest case, there is no ZOPA because both people want the full-time job and are not willing to divide the job responsibilities and salary. One person must “win” and the other must “lose.”
On the other hand, integrative negotiations involve creating value or “enlarging the pie.” This is possible when parties have shared interests or are dealing with multiple issues. In an integrative negotiation, the parties can combine their interests to create joint value. To achieve integration, negotiators can deal with multiple issues at the same time and make trades between them. This is so that I might get more of something that I value while you get more of something that you value. That way both parties can “win,” even though neither gets all that they originally thought they wanted. In the example above, if rewriting the job description could create an additional job then the distributive negotiation would change into an integrative negotiation between the employer and the two potential employees. If both applicants are qualified, now they may both get jobs. The ZOPA, in this case, exists when two jobs are created and each applicant prefers a different one of the two.