The Prisoners Dilemma

When negotiating and choosing which strategy best fits a given scenario one would consider two main factors, the importance of the relationship, versus, the importance of the outcome.  In the scenario where an individual is selling a vehicle on Craig's list, the seller and purchaser would most likely focus on the importance of the outcome.  The chances that both parties are acquainted with one another are small, therefore the importance of the relationship is low.  Neither party would have an interest of how the negotiation effects the relationship because there is no past, current, or future relationship once the vehicle transfers ownership.  The negotiation would be competitive in nature and each party would be negotiating for their best outcome.  Referencing the Prisoner's Dilemma, the best outcome for both parties in this situation is unlikely.  Being that their is a low concern for the relationship because there is no current relationship, there would likely be a low level of trust making a collaborative and cooperative negotiation unlikely.  It would be important for each party to have an understanding of their own BATNA and in this case the buyer would need an understanding of what comparable options are out there and how much they are willing to spend.  The seller would have to have a reserve price in mind and during negotiation the two would ideally meet in the middle, above the sellers reserve and for the buyer below the original asking price.   If both parties pursue their own interest as in the Prisoner's Dilemma, the outcome would be worse than if both parties cooperated.  In this situation, the best outcome would be for both parties to defect or bargain and the outcome would be second best, both parties would benefit in some manor and neither one party or the other would feel as though they compromised more than the other.  If the buyer gets the price reduction they want then the seller is likely to be unsatisfied with the deal not getting the price they wanted.  If the seller does not budge on price the buyer is likely to be unsatisfied.  If the buyer pays full price the seller should be satisfied but may wonder if they could have fetched a higher asking price.  Defecting would create an outcome for both buyer and seller to be somewhat unsatisfied but still feel as though they received what they wanted if they had a BATNA in place to revert to.  It may not be the ideal outcome but it would be second best outcome if both parties cannot establish a high enough level of trust to cooperate over compete. 

A scenario where one would be negotiation snow removal for their business differs from the used car example.  The business owner and the snow removal contractor may not have had a past relationship prior to negotiation ensuing, but they have a vested interest in the future of the relationship.  The business owner may be negotiating to obtain the best price but should keep in mind that soft negotiation or cooperative negotiation would ensure both parties a better outcome.  Price is a factor as it is in most scenarios, but the timeliness of the snow removal to ensure the business can open would also be a factor.  If negotiation is competitive with no regard to the future of the relationship, an agreement may be struck but if the contractor feels they lost the negotiation and conceded more than the business owner their mentality may be to leave that contract for last.  The business owner could incur loss of income if their customers cannot park in the lot and patronize the business.  Being that the business owner has a small parking lot and only 100' of sidewalk he's already beginning negotiation at a disadvantage, the contractor may have less interest in cooperating being that it's a small contract.  The business owner should focus on relationships and try to sweeten the pot by offering to refer the contractor to other businesses if their business relationship works out.  That would add incentive for the contractor to want to cooperate, they may not score a large contract in this scenario, but the lines are open for future potential referrals if this relationship turns out to be favorable.  With the focus of relationship in mind both parties may be open to a cooperative negotiation and the satisfaction of both will be higher when an agreement is reached.