Bargaining for Advantage: Negotiation Strategies for Reasonable People

G. Richard Shell presents a systematic approach to negotiation that he calls "Information-Based Bargaining," a method grounded in thorough preparation, careful listening, and attention to the signals exchanged during bargaining. Shell organizes the book into two parts: six "Foundations" that underlie every negotiation and a four-stage process for conducting one.

Shell opens by framing negotiation as a universal human activity that causes widespread anxiety. He argues that this anxiety leads people to cling to oversimplified labels like "win-win" or "win-lose," when no two situations are identical. The First Foundation is one's personal bargaining style: the personality-driven tendencies shaped by family, culture, gender, and early experience. Shell identifies five generic strategies (avoiding, compromising, accommodating, competing, and collaborating) and cites a study by Professor Gerald R. Williams showing that roughly 65 percent of American lawyer-negotiators exhibited a cooperative style and that over 75 percent rated "effective" by peers were cooperative types. Research by Professor Linda Babcock showed that only 7 percent of women MBA graduates negotiated their starting salaries compared with 57 percent of men, with those who negotiated earning roughly $4,000 more regardless of gender. Shell identifies four habits shared by effective negotiators: willingness to prepare, high expectations, patience to listen, and commitment to integrity.

The Second Foundation concerns goals and expectations. Shell distinguishes goals (aspirations beyond past achievements) from expectations (considered judgments about what one ought to accomplish), arguing that expectations carry emotional weight because falling short causes genuine disappointment. He urges negotiators to orient toward ambitious goals rather than fixating on a bottom line, citing an experiment by psychologists Sydney Siegel and Lawrence Fouraker in which subjects given a $6.10 profit target achieved a mean of $6.25, far outperforming those with a $2.10 target who averaged only $3.35. He illustrates goal commitment through Sony founder Akio Morita, who in 1955 rejected a massive order from Bulova because Bulova required the radios to carry its own brand rather than Sony's, choosing to protect the long-range goal of building Sony into an independent global brand. Shell prescribes a five-step process: identify what you really want, set an optimistic but justifiable target, be specific, commit by writing the goal down, and carry it into the negotiation.

The Third Foundation addresses authoritative standards and norms. Shell argues that people have a deep need to appear consistent, a tendency he calls "the consistency principle." He illustrates the role of standards through the Ifugao people of the Philippines, among whom a dispute over repaying borrowed pigs centered on the tribe's standard "natural rate of increase" for livestock. Both parties agreed on the standard but interpreted it differently, and a mediating elder kept two of the five pigs as his fee. Shell defines "normative leverage" as the skillful use of standards the other party already accepts and warns against "consistency traps," in which a negotiator secures agreement to an innocent-sounding principle and then reveals its harmful implications. He also discusses using sympathetic third parties as "audiences," illustrating the concept through Indian independence leader Mahatma Gandhi's strategy for riding first-class on a South African train despite a racist seating policy: Gandhi sat beside an English gentleman who intervened when the conductor objected.

The Fourth Foundation is relationships, rooted in the norm of reciprocity, which Shell defines through Dr. Alvin Gouldner's description of obligations arising from prior interactions. He illustrates reciprocity through financier J. P. Morgan and industrialist Andrew Carnegie during the Panic of 1873: Morgan bought Carnegie's partnership interest but then returned $10,000 that Carnegie had mistakenly undercharged, earning Carnegie's lasting loyalty. Shell explains the "ultimatum game," in which one party proposes how to divide a sum and the other accepts or rejects, showing that people routinely reject unfair offers even at personal cost. He warns against three traps: trusting too quickly, falling for manipulative reciprocity ploys, and negotiating high-stakes deals with close friends.

The Fifth Foundation focuses on the other party's interests. Shell argues that understanding the other side's perspective is the most critical and most difficult negotiation skill. Research by Professor Leigh Thompson found that negotiators failed to identify shared goals about 50 percent of the time. Shell illustrates the value of discovering ancillary interests through waste-hauling contractor Kelly Sarber, who won a garbage contract for Oceanside, California, at a premium price by offering to return from Arizona dump sites with clean sand for the city's eroding beaches.

The Sixth Foundation is leverage, defined as situational advantage based on which side has the most to lose from no deal. Shell identifies three types: positive (you control something the other party needs), negative (you can make the other side worse off), and normative (the other party feels bound by its professed standards). He traces all three through the 1977 Hanafi Muslim hostage crisis in Washington, D.C., in which armed sect members seized three buildings and held 134 hostages. Police built positive leverage by meeting deliverable demands and normative leverage by engaging the leader in discussions of Islamic theology through three Muslim ambassadors, until he released all hostages. Shell challenges three misconceptions: that leverage equals conventional power, that it is static, and that it depends on objective facts rather than perception.

In Part II, Shell walks through the four-stage process. He begins with preparation, introducing the Situational Matrix, which categorizes negotiations by the importance of the future relationship (high or low) and the level of conflict over stakes (high or low): Tacit Coordination, Transactions, Relationships, and Balanced Concerns. He illustrates these through examples including J. P. Morgan's 1901 purchase of the Mesabi ore fields from the Rockefellers, a Transaction brokered by a neutral intermediary at $80 million, and Benjamin Franklin's "meal deal" at age 16, a Balanced Concerns negotiation in which Franklin proposed taking half his boarding fee in cash to buy his own food, saving his half-brother money while gaining funds for books.

The second stage is exchanging information. Shell stresses that this is the most overlooked part of the process, citing data showing skilled negotiators spent 38.5 percent of their time asking questions, testing understanding, and summarizing, compared with 17.9 percent for average negotiators. The third stage covers opening and making concessions. Shell argues that well-informed negotiators benefit from opening first because initial offers anchor later expectations, a phenomenon psychologists call the "anchor and adjustment" effect: the first number proposed shapes the range within which subsequent bargaining occurs. He distinguishes distributive bargaining (haggling issue by issue) from integrative bargaining (trading across issues) and warns against large early concessions, which signal eagerness.

The fourth stage is closing and gaining commitment. Shell identifies two key psychological forces: the scarcity effect, the tendency to value things more when availability seems limited, and overcommitment, the tendency to escalate investment to avoid admitting that prior effort was wasted. He argues that the real goal is commitment, not mere agreement, distinguishing four degrees: social ritual, public announcement, accountability, and written or legal agreement.

Shell devotes a chapter to ethics, presenting three schools. The Poker School treats negotiation as a game in which bluffing is integral. The Idealist School holds that lying is wrong except in rare circumstances. The Pragmatist School views deception as sometimes necessary but prefers honesty because credibility is a long-term asset. Shell outlines the legal boundaries of fraud, catalogs common manipulative tactics including lowballing, phony issues, fake authority ploys, and the "nibble" (a small last-minute request for extra concessions), and offers practical alternatives.

Shell concludes with tailored checklists: seven tools for cooperative people (including developing alternatives, creating accountability, and practicing assertive phrases) and seven tools for competitive people (including asking more questions, relying on standards, and protecting the other party's self-esteem). He argues that effective negotiation is 10 percent technique and 90 percent attitude, requiring realism, intelligence, and self-respect.