What Is Negotiation Theory?

Negotiation theory is a field of psychological study that looks at decision-making processes within group settings. Several areas of human interactions are studied within this discipline, and many of the resulting theories have applications in the corporate environment. In business situations where groups of individuals commonly must make mutual decisions, knowledge of these theories and their implications can ease tensions considerably.

Certain conditions must be met before the tenets of negotiation theory can be applied. First, it is presumed that all parties involved in negotiations are rational and of average intelligence. It is also presumed that these parties actually wish eventually to reach an agreement and will actively work toward that end. Finally, it is generally presumed that each individual is working to achieve the best possible outcome for his or her own interests.

Many who study negotiation theory have come to see decision making in a group environment as a strategic competition. This viewpoint sees each negotiator as an opponent and is referred to as game theory. One of the driving tenants of game theory is that opponents must seek to minimize their potential for loss while maximizing their potential for benefit. As each person involved is operating with the same mind-set, the interactions can get quite intricate.

Knowledge of integrative analysis practices can ease negotiations by changing their structure. This study of negotiation theory investigates the effects of contact among the negotiators at various points of the talks. It further seeks to break the process down into smaller, more easily managed stages. By discovering potential periods of tension in the decision-making process, changes can be made to avoid problems in future talks.

Negotiation analysis theories examine situations where the negotiators are influenced by factors other than self-interest. Often, third parties are brought into these types of negotiations to counteract the effect of those outside influences. This branch of negotiation theory focuses on joint gains rather than individual gains. In short, it strives to minimize the potential losses and maximize the potential gains of all parties.

The fact is that, even when all the establishing criteria appear to be met, a successful conclusion to negotiations may not be possible. This occurs most often when one negotiator is acting in bad faith. Bad faith in negotiations can be unconscious, but more often, it is caused by a fundamentally unreasonable party wishing to appear cooperative. These individuals usually have emotional involvements that preclude compromise.