What is a Zone of Possible Agreement (ZOPA)?
The zone of prospective agreement, also known as the bargaining range, is an imaginary space where two or more sides to a negotiation can come to an understanding. Parties will often make concessions and agree in this area.
Parties engaged in negotiations need to have a shared objective and look for a middle ground that takes into consideration some or all of the ideas put forward by each other to settle or come to an agreement.
Understanding Zone Of Possible Agreement
No matter how much discussion occurs, an agreement can only be achieved within the zone of probable agreement. The parties’ needs, values, and interests in the negotiation must be understood for a deal to be reached.
Only when there is some overlap in what each party is ready to accept from a transaction can there be a ZOPA. For instance, John has to be prepared to spend at least $5,000 for Tom to sell him his automobile for that amount. John and Tom have similar bottom lines if John is ready to give $5,500 for the car. There cannot be a ZOPA or overlap if John’s bid for the vehicle is limited to $4,750.
Zones of Negative Bargaining
Negotiating parties are in a negative bargaining zone when they cannot achieve a ZOPA. In a negative negotiating zone, no agreement can be reached since no agreement can satisfy the interests and preferences of all parties involved.
For example, Dave wants to sell his mountain bike and accessories for $700 to get new skis and equipment. Suzy is limited to spending $400 on the bike and accessories. Dave and Suzy are in a negative negotiation zone; they have not achieved a ZOPA.
Harmful bargaining zones, however, may be overcome if both sides are prepared to become more understanding of one another’s needs and wants. For illustration, suppose Dave tells Suzy that he plans to purchase new skis and equipment using the money from the bike sale. Suzy is prepared to give up a set of excellent but lightly worn skis. If Suzy tosses in the old skis, Dave will accept less money for the mountain bike. As a result of the two parties’ ZOPA, a successful contract may be made.
Conclusion
- A negotiation range in which two or more negotiating parties may be able to come to an understanding is known as a zone of potential agreement (ZOPA).
- Only when there is some overlap in the expectations of each party about an agreement can there be a ZOPA.
- Negotiating parties are in a negative bargaining zone if they cannot achieve a ZOPA.
