This is the first in a series of short analyses of negotiation theory using President Trump’s style to illustrate key concepts. Because the President’s negotiation methods are so well known and on display almost daily, they provide ample evidence to use as a teaching tool to demonstrate important principles of negotiation. In this post, we will look at President Trump’s competitive style of negotiation and a related concept, reputation.
President Trump largely eschews integrative or interest-based bargaining. Interest-based bargaining, the model popularized by Getting to Yes by Roger Fisher, William Ury and Bruce Patton, taught the current generation of negotiators to focus on interests and not positions and “separate the person from the problem.” It is the prevailing approach to negotiation taught almost universally in classes in negotiation throughout the United States. Integrative bargaining prizes cooperation in negotiation to achieve a “win-win” outcome that meets the needs of both parties to a negotiation. (More on this model in another post.)
President Trump appears to be a “maximalist” negotiator, a term coined by Professor Gerald Williams in the 1980’s. As the name implies, the maximalist stakes out an extreme position in the initial stage of a negotiation. As a strategy, it has several advantages. It hides the bargainer’s real or minimum expectations. The counter-party may have little or no idea what the goals and objectives are of the maximalist. It minimizes the danger of committing to an overly modest evaluation of the strength of one’s bargaining power, it provides cover to learn what the counter-party’s real position is without revealing any useful information, and it also provides plenty of room to make concessions. Perhaps, most importantly, a maximalist position may cause the other side to lower its expectations.
However, the advantages of the maximalist style must be weighed against the risks and limitations. A maximalist is a competitive negotiator. It’s not just about maximizing the outcome for oneself, it’s also about “winning” the negotiation and ensuring that the other side “loses.” Indeed, there may even be pleasure and satisfaction in exerting power in an unequal bargaining setting to beat the other side. Interestingly, Professor Williams did research that examined the outcome of various styles of negotiation. He found that the maximalist competitive negotiator might prevail in some situations, especially when paired with a co-operative opponent, and achieve a very good result. But a maximalist was much more likely to experience a breakdown in negotiations that resulted in no deal being reached. While an ill-prepared opponent might use the maximalist’s opening to gauge the value of her case, a well-prepared opponent who has done a fair evaluation and arrived at a judgment of the true value of her position will see the high opening demand as unreasonable. The maximalist will lose credibility as a bargainer with whom to negotiate, and failure becomes a much more likely outcome.
In an earlier post involving the Prisoners’ Dilemma, the concept of singular versus repetitive negotiations was considered. If the negotiators would never meet again and the negotiation was a one-off event, it was more likely that a bargainer would take advantage of the other party and get as much as she could. Reality suggests that there really is no such thing as a one-off negotiation because our reputation follows us. If a party behaves badly and fails to pay back a loan to one bank, and then welches on another bank, fairly quickly word and one’s credit report get around, and no bank will lend this party money. Similarly, if one gets a reputation as making maximalist openings that are deemed to be unreasonable and subsequently loses credibility as a negotiator, then this reputation will follow this party in subsequent negotiations with different parties.
President Trump has a reputation for being a very competitive negotiator. In his campaign, he frequently talked about “winning” a variety of negotiations with countries that had economic and foreign policy relationships with the United States. He also has a well-documented business history. Others can comment on his success in business negotiations. All of us will have a front row seat to assess the outcomes of his maximalist approach to economic and foreign policy negotiations with our allies and our enemies.
