Negotiation skills are the abilities and techniques used to reach mutually beneficial agreements through effective communication, problem-solving, and conflict management. These skills—including active listening, emotional intelligence, persuasion, and strategic planning—enable individuals to navigate diverse settings including business, diplomacy, and everyday interactions.

Negotiation occurs in our everyday life, in many forms. You may need to negotiate with your boss for a higher salary, with a telecommunications call center for a better monthly phone rate, or with your partner when deciding what food to order for dinner. The negotiation process will continue until both parties involved in the exchange agree upon a resolution. Sometimes, you and the other party will have shared preferences (isn’t it great when you both want the same takeout?!), but other times, you have opposing preferences. To succeed in these instances, you will need strong negotiation skills.¹

Effective negotiation isn’t just about the outcome—it’s also about the process of reaching that agreement. If you get what you want, but it leads to tension with your boss or resentment from your partner, it may not feel like a successful negotiation. 

There are a few key skills that will help you navigate negotiations and reach an agreement: planning, communication, and creating value. 

• Planning: Before engaging in a negotiation, it is key that you take the time to determine your desired outcome, how much you are willing to budge, and where your boundaries lie. Without strong planning skills, it will be hard to justify your points or know when a resolution satisfies your needs and stays within your limitations. 
• Communication: All the planning in the world won’t help you if you’re unable to clearly articulate your point and your desired outcome. It’s also important to keep your emotions in check and have civil discussions to avoid outbursts or hard feelings. 
• Value Creation: In a negotiation, both parties are trying to get their desired outcome. To be successful in your argument, you should focus on explaining how your outcome can benefit the other party as well. This also means considering what some of their arguments will be and having counterarguments prepared.² 

These are just three of the key skill areas for successful negotiations—there are dozens of strategies and psychological tactics that can improve your chances of success. 

Anchor: The first offer made by either party which acts as a subconscious reference point throughout the negotiation.⁴ The anchoring bias reveals that we rely heavily on the first piece of information we are given, so setting an effective anchor is essential to help guide the conversation within the parameters you’re comfortable with. 

Concessions: Things that you are willing to give up in order to reach an agreement. Naming the concessions you are making can be an effective way to demonstrate to another party that your goal is to reach a mutual agreement even if it deviates from your optimal path forward.⁵

Zone of Possible Agreement: The parameters of a negotiation that would result in all parties benefiting. Determining the zone of possible agreement will help you frame the offer as mutually beneficial and can lead to a faster resolution.⁵

Best Alternative to a Negotiated Agreement (BATNA): The best course of action if a given negotiation does not work out. Knowing your BATNA will make you a more confident negotiator, as you have a plan if you are unable to reach an agreement that is acceptable to you (because it doesn’t satisfy your reservation price). A BATNA helps you avoid feeling forced to make a deal. 

Reservation Price: The minimum you are willing to accept to come to an agreement. For example, the lowest salary you are willing to receive when negotiating an employment contract. It is important to know your reservation price, informed by your BATNA, so that you do not accept a deal that doesn’t meet your needs or reject an offer that fulfills your needs. It’s also a great skill to try and gauge what the opposing party’s reservation price is—conversely, the maximum they are willing to pay—to know how far to push them during the negotiation. For example, if you know the company is desperate to get the role filled, you likely have more leverage in the negotiation.⁶ 

Framing: The way you present an offer to another party. The framing effect describes how we are influenced by the way information is presented to us. Presenting the situation and your desired outcome in the most positive light possible makes someone more likely to agree with you.⁷ 

Logrolling: A negotiation strategy where you trade something of lesser importance to you, but of greater importance to the other party. It is vital that the other party does not know this is of low importance to you so that it seems that you are willing to make concessions, potentially encouraging them to do the same. For example, in a divorce, if you don’t care about keeping the car you share, you may present this as a concession you are willing to make in order to target another asset that is more important to you.⁸ 

So long as people have interacted with one another—so, since the dawn of human history—negotiations have occurred. Humans depend on one another for survival, so we need to be able to come to mutually beneficial agreements. In ancient societies, people engaged directly with each other through bartering for goods and services. Resources were scarce, and being an effective negotiator was crucial to getting what you needed to survive.⁹ 

In the 1930s, as a response to rapid industrialization and globalization that engendered complex labor negotiations, economists like John von Neumann and Oskar Morgenstern began developing game theory. Game theory is the study of how people interact when they have opposing interests, under the assumption that individuals make decisions to try and maximize their benefits.¹⁰ Game theory provides people with a foundation for making rational decisions while in negotiation to maximize their outcomes. Primarily, Neumann and Morgenstern analyzed zero-sum games, where one person’s gain is equal to another player’s loss, as is the case for instances where there are fixed resources. For example, a $60,000 salary represents a $60,000 win for the employee, and a $60,000 loss in the company’s revenue, as they cannot allocate these funds elsewhere.¹¹ 

This scientific approach to negotiation was also prompted by the end of World War II, when nations realized that due to the development of nuclear weapons, another world war could end humanity as we know it. There was a growing desire to approach conflict management scientifically and methodically to ensure successful resolutions.12 Post-war negotiations like the Treaty of Versailles and the creation of the United Nations brought negotiations to an international domain to maintain peace.¹³ 

American mathematician John Nash came up with the Nash bargaining solution in the 1950s, a cooperative form of negotiation where an agreement maximizes collective benefit. For example, if a union is asking a company for higher wages, it is actually in the best interest of both the union and the company to reach an agreement. If no agreement is reached, workers will go on strike and not receive pay while the company’s productions come to a halt. In Nash’s bargaining game, both parties ask for a portion of a good without knowing how much is available. If the total amount requested by both parties is less than what is available, they both get what they requested.¹⁴ Although both parties might have been able to achieve a better individual outcome, this bargaining model focuses on the collective benefit. 

In 1982, Ariel Rubinstein developed the Rubinstein bargaining model to address situations where there are an infinite amount of offers that can be made by both parties. Previous models only accounted for a limited number of offers and sometimes only made by one party, whereas the Rubinstein bargaining model reflects that in real life, either party can continue to propose offers until one is accepted.¹⁵ The model accounts for the fact that the value of the deal decreases as time goes on—you may know the saying “A dollar today is always worth more than a dollar tomorrow.” The model shows that the person who is more patient and can wait until a deal that suits them is proposed has more power in the negotiation. For example, if you really needed to find an apartment quickly, you wouldn’t have as much negotiation power, especially if the landlord was happy to wait until they found a tenant who would pay the rent they were looking for. A good negotiator will understand the level of urgency of the other party and know how to use this to their advantage. 

Today, negotiation skills are recognized as essential in nearly every area of life, from business and international diplomacy to personal relationships and everyday decision-making. Modern negotiation strategies incorporate considerations outside of economic theory, understanding that psychological factors and emotions impact negotiations and must be well-managed. 

John von Neumann

An American mathematician who is well known for applying mathematical concepts to real-world situations (applied mathematics). Together with Oskar Morgenstern, Neumann laid the foundation of game theory in their 1944 book, Theory of Games and Economic Behavior. During World War II, Neumann also worked on the Manhattan Project, a government program to develop the first atomic bomb, as well as other various war projects due to his expertise in physics and hydrodynamics.¹⁶ 

Oskar Morgenstern

A German-American economist, best known for the co-development of game theory, which provided a mathematical framework for understanding strategic decision-making. Throughout his career, Morgenstern applied mathematical models to economic situations, helping to formalize and advance the field of economics. Morgenstern was a professor at Princeton University, where he met John von Neumann.¹⁷ 

John Nash

An American mathematician best known for developing the Nash equilibrium, a theory that states a player has the best chance of getting their desired outcome by not deviating from their initial strategy, for which he was awarded the Nobel Memorial Prize in Economic Sciences in 1994. Nash also devised the Nash bargaining solution, a way to approach negotiations with a win-win mindset.¹⁸ 

Ariel Rubinstein

An Israeli economist best known for his contributions to game theory through the development of the Rubinstein bargaining model. The model describes a situation where players take turns making offers, and the more patient individual is more likely to get their desired outcome. Rubinstein also researches how human limitations affect decision-making, known as bounded rationality.¹⁵ 

Negotiation skills shape outcomes in most facets of life, from high-stakes environments like global peace to mundane day-to-day interactions. The consequences of strong—or weak—negotiation skills ripple across society, influencing peace, progress, and everyday decisions.

International Peace

To say negotiation skills are important is an understatement. Richard Holbrooke, an American diplomat who supported many peace-keeping negotiations, once said, “World War I was not inevitable, as many histories say. It could have been avoided, and it was a diplomatically botched negotiation.”¹⁹ Peacebuilding is a constant negotiation process between nations, which is why intergovernmental organizations like the United Nations were created in the wake of World War II, to ensure peace and aim to minimize war. Whether it’s mediating ceasefires, drafting treaties, or rebuilding relationships after conflict, skilled negotiation serves as the critical foundation for diplomacy.

Corporate Success

One of the areas where negotiations are non-negotiable (if you can imagine) is in business. Whether it be salary negotiations, resource management, or mergers and acquisitions, we constantly face negotiations in the corporate world. There are competing priorities in these environments, but also a need to cooperate for the overall success of an organization. 

As operations and organizations become more complex, the ability to negotiate effectively is a cornerstone of success. Some of the important skills in corporate negotiations involve active listening, building strong relationships, and creating win-win environments where colleagues are motivated to come to mutual agreements.²⁰ 

Everyday Decision Making

Negotiation skills aren’t only important in high-stakes situations, they can impact us on a day-to-day basis. We all have our own preferences and desired outcomes, but as social beings, they compete with the preferences of others, so we are constantly engaging in negotiations. This can range from convincing your children to eat vegetables, deciding with your partner what to eat for dinner, or pleading with your pet to let you sleep in just a bit longer.

Having strong negotiation skills can help us make intentional choices, achieve our goals and even improve our relationships if we approach negotiations with a win-win mindset.²¹ By framing the negotiation as a problem that requires cooperation to resolve, you are more likely to have happy, healthy relationships with others.²² 

Negotiation is a vital skill for resolving conflicts and achieving agreements, but it can be hard to resist our natural human impulses and emotions to be effective negotiators. There can be downsides to focusing too much on our self-interest, potentially leading to unintended consequences.

Resistance to Negotiation

Although negotiation is necessary for maintaining harmonious relationships, many people are averse to it. Biologically, we are wired to perceive conflicts as threatening, which triggers our fight-or-flight response, a physiological reaction resulting from the activation of our sympathetic nervous system. If it appears that our interests are in jeopardy, we tend to want to withdraw and avoid the situation completely or fight for what we want. It requires effort for us to overcome that initial impulse, let our parasympathetic nervous system take us back to a state of calm, and be willing to negotiate with someone, with each party making concessions to arrive at a conclusion. Humans are risk averse, and negotiations pose risk as they ask us to put our objectives on the line.¹² 

Emotional Biases

To be successful in a negotiation, people are often advised to keep their emotions at bay and focus on objective matters, but that doesn’t change the fact that we are irrational beings who often let our feelings run the show. Emotions can cause us to focus on the person we are negotiating with instead of the problem at hand, making us stubborn, ego-driven negotiators.²³ 

In a divorce, for example, we may feel deeply hurt by the other party. In our desire to hurt them back or resolve our feelings of injustice, we may be unwilling to make concessions or have an unreasonable reservation price. Even if you don’t care about the car, you know the other party does, so you become unwilling to give it up. This will likely lead to a long, drawn-out negotiation and result in a lose-lose situation. 

Winning at What Cost?

Being an expert negotiator can help us get what we want—but at what cost? Leveraging negotiation skills and preying on the biases and emotions of other people can sway them in the direction we want, but also cause a lot of resentment. 

Perhaps you can negotiate with an employee asking for a raise to renew their contract at the same salary, but it could cause them to feel unhappy, be unmotivated, and potentially push them to look for another job. You might think you’ve won the negotiation until you get their notice and lose a valuable employee.

That’s why the best negotiators are not people who always get exactly what they want but people who can be flexible in order to come to mutually beneficial agreements.

Negotiating the US Tax System

In 2012, when President Barack Obama was reelected, he had to address the fiscal cliff that was threatening the United States. National debt was increasing, but the Congressional Republicans were unwilling to support new tax legislation. In this instance, Obama had to leverage his negotiation skills to reach an agreement and begin to make up the financial deficit.

Obama knew that he had stronger bargaining power than the Republicans, as the public supported taxing the wealthiest Americans. He also knew that his fallback position would favor Democrats, as if he was unable to reach an agreement with Congress, it would trigger Clinton-era tax codes and spending cuts that were better than no new tax legislation at all. That meant that Obama’s BATNA was better than the Republicans’. This information allowed Obama to take a hard stance and say that he was unwilling to consider any legislation that would not raise taxes on the wealthiest Americans. Eventually, Congress had no choice but to pass Obama’s legislation.⁹ 

This example shows that a strong negotiator will have a clear understanding of their own position as well as the opposition’s. As Obama was aware that he had the stronger position, he knew that he did not need to make concessions and could take a firm stance.

Negotiating with Michael Scott

The Office is a TV mockumentary of a typical American office featuring Steve Carell as the charismatic protagonist Michael Scott. The show offers comedic relief, but can it also teach us something about negotiation skills?

In an episode of The Office, Scott has started his own company, Michael Scott Paper Company, which is on the verge of financial collapse.²⁴ His competitor and former employer, Dunder Mifflin, wants to try and buy out their company. The negotiation opens with the competitor stating that they are ready to make a generous offer, to which Scott replies, “We are prepared to reject that offer,” later turning to his colleague to say, “You never accept their first offer.” Scott is asserting his power, demonstrating to the opposing party that he will not fold to their demands. In fact, Guhan Subramanian, the chair of the Program on Negotiation at Harvard Law School, agrees with the philosophy that you should never accept the first offer, commending this approach in an interview.²⁵

As the conversation continues, the Dunder Mifflin representative offers Scott $12,000 for the company, setting an anchor for the negotiation. However, Scott quickly rejects the anchor, stating that it is insultingly low. This shows that for Scott, the $12,000 is nowhere near his zone of possible agreement, and he is unwilling to accept an offer below his reservation price.²⁵ 

Scott then tells Dunder Mifflin that their company is “losing clients left and right. You have a stockholder meeting coming up, and you’re going to have to explain to them why your most profitable branch is bleeding.” Here, Scott has assessed the opposition’s best alternative to a negotiated agreement, deeming that it is worse than coming to a mutual agreement, and leverages this to his advantage. He then says, “So they may be looking for a little change in the CFO, so I don’t think I have to wait out Dunder Mifflin, I think I just have to outwait you.” Here, Scott is drawing on the Rubinstein bargaining model. He’s aware that his opposition is less patient and needs to make a deal before the stockholder meeting, which provides him with more power.²⁴ 

As a result of his negotiation skills, Dunder Mifflin representatives offer Scott $60,000—a significantly higher offer than their original (or second) offer. Maybe Scott should replace his “World’s Best Boss” mug with a “World’s Best Negotiator” one!

The Weight of the Anchor Effect

Although society has moved away from relying on bartering for the trade of goods and services, when we enter a store we are still entering a negotiation—how much money are we willing to pay for an item? There are negotiation skills that the salesman or store uses to influence what we think of as a good price. In this article, our writers Dan Pilat and Dr. Sekoul Krastev explore the power of the anchor effect, where the original price of an item shapes our perception of a sale price. 

Are We Innately Selfish? What the Science Has to Say

The success of humanity depends on our ability to cooperate, which requires us to be effective negotiators. Our ability to cooperate with people outside of our close circle is one of the things that makes humans unique when compared to other species. However, our instinct is often to be selfish, which can be an obstacle to cooperation. In this article, our writer Tony Jiang explores these two competing facets of humans by explaining the two systems of our psyche. 

1. Dhir, R. (2024, June 4). Negotiation. Investopedia. Retrieved December 2, 2024, from https://www.investopedia.com/terms/n/negotiation.asp
2. Miller, K. (2023, May 11). Negotiation skills. Harvard Business School Online. Retrieved December 3, 2024, from https://online.hbs.edu/blog/post/negotiation-skills
3. BrainyQuote. (n.d.). Negotiation quotes. Retrieved December 2, 2024, from https://www.brainyquote.com/topics/negotiation-quotes
4. Lares, A. (2022, July 18). What is anchoring in negotiation? Shapiro Negotiations Institute. Retrieved December 2, 2024, from https://www.shapironegotiations.com/negotiations/what-is-anchoring-in-negotiation/
5. Watershed Associates. (n.d.). Glossary. Watershed Associates. Retrieved December 2, 2024, from https://www.watershedassociates.com/learning-center/glossary
6. Program on Negotiation. (n.d.). Reservation price. Harvard Law School. Retrieved December 2, 2024, from https://www.pon.harvard.edu/tag/reservation-price/
7. Chowles, B. (2019, October 29). The art of framing in successful negotiation. Red Bear Negotiation. Retrieved December 2, 2024, from https://www.redbearnegotiation.com/blog/the-art-of-framing-in-successful-negotiation
8. Program on Negotiation. (n.d.). Logrolling. Harvard Law School. Retrieved December 2, 2024, from https://www.pon.harvard.edu/tag/logrolling/
9. MyEducator. (n.d.). Chapter 1: Introduction to Negotiation. MyEducator. Retrieved December 2, 2024, from https://app.myeducator.com/reader/web/1816b/chapter01/gp80b/
10. Aligned. (2023, April 25). The art of negotiation: Game theory and strategies for aligned negotiation. LinkedIn. Retrieved December 2, 2024, from https://www.linkedin.com/pulse/art-negotiation-game-theory-strategies-alignednegotiation/
11. Hayes, A. (2024, June 27). Game theory. Investopedia. Retrieved December 2, 2024, from https://www.investopedia.com/terms/g/gametheory.asp
12. Benjamin, R. (2024, October 15). The natural history of negotiation and mediation: The evolution of negotiative behaviors, rituals, and approaches. Mediate.com. Retrieved December 2, 2024, from https://mediate.com/the-natural-history-of-negotiation-and-mediation-the-evolution-of-negotiative-behaviors-rituals-and-approaches/
13. Jensen, K. (2024, July 2). The history of negotiation. LinkedIn. Retrieved December 2, 2024, from https://www.linkedin.com/pulse/history-negotiation-keld-jensen-waudc/
14. Wikipedia contributors. (2017, February 14). Cooperative bargaining. Wikipedia. Retrieved December 2, 2024, from https://en.wikipedia.org/wiki/Cooperative_bargaining
15. GameTheory101. (n.d.). Rubinstein bargaining. GameTheory101. Retrieved December 2, 2024, from https://gametheory101.com/courses/bargaining-101/rubinstein-bargaining/
16. Poundstone, W. (2005, July 22). John von Neumann: Princeton, 1930-42. Encyclopaedia Britannica. Retrieved December 2, 2024, from https://www.britannica.com/biography/John-von-Neumann/Princeton-1930-42
17. St. Andrews University. (n.d.). Oskar Morgenstern. MacTutor History of Mathematics. Retrieved December 2, 2024, from https://mathshistory.st-andrews.ac.uk/Biographies/Morgenstern/
18. Kenton, W. (2022, October 24). John F. Nash Jr. Investopedia. Retrieved December 2, 2024, from https://www.investopedia.com/terms/j/john-f-nash-jr.asp
19. Holbrooke, R. (1999, November 22). Interview with Richard Holbrooke: The Kosovo Conflict. FRONTLINE. PBS. Retrieved December 2, 2024, from https://www.pbs.org/wgbh/pages/frontline/shows/kosovo/interviews/holbrooke.html
20. Lundberg, I. (2024, July 26). Mastering communication and negotiation in today's complex business world. Forbes Coaches Council. Retrieved December 2, 2024, from https://www.forbes.com/councils/forbescoachescouncil/2024/07/26/mastering-communication-and-negotiation-in-todays-complex-business-world/
21. Segarra, M. (2024, April 11). Negotiation strategies for everyday life. NPR. Retrieved December 2, 2024, from https://www.npr.org/2024/04/11/1196979026/negotiation-strategies-for-everyday-life
22. Jacob, J. (2021, April 15). 6 everyday negotiation situations that you probably mistake for regular conversations. Medium. Retrieved December 2, 2024, from https://jenninejacob.medium.com/6-everyday-negotiation-situations-that-you-probably-mistake-for-regular-conversations-55b092a3d76b
23. Emamzadeh, A. (2020, December 15). The psychology of negotiation, explained. Psychology Today. Retrieved December 2, 2024, from https://www.psychologytoday.com/ca/blog/finding-new-home/202012/the-psychology-negotiation-explained
24. Blake. (2022, August 2). He should be our next President [Video]. TikTok. https://www.tiktok.com/@blakelieving7/video/7011164865368706310
25. Shonk, K. (2024, September 2). Michael Scott: Negotiation genius—Lessons from TV negotiations. Program on Negotiation at Harvard Law School. https://www.pon.harvard.edu/daily/batna/michael-scott-negotiation-genius-lessons-from-tv-negotiations/