When people negotiate, concessions are made. When the negotiating parties agree on the concessions presented, a compromise has been reached.
Concessions are determined when the negotiators respond back and forth with one another, reciprocity. To learn why reciprocity is triggered by concessions, we must look at the scenario subjectively from the negotiators perspective. When doing so, we learn the first reason, self-interest.
Combining the theory of rationality with the negotiation theory, we learn that people want to win, but also understand there is more to lose by not working with the other party. It is because of this, concessions are made.
After concessions are made, we evaluate them by comparing them to what we have given up and what is left to on the table to gain. The renunciation strategy clarifies how negotiators try to improve their position by giving things up.
Morally, when one person gives something up, the other person feels the need to reciprocate fairly. This is the second reason, moral and social obligations. When reciprocating, each party’s concession is most commonly fair due to the negotiator’s social obligation of giving as you have been given. In other words, the concession does not have to be the same weight, but it should be of comparable value. The other side to the reciprocation is the acceptance. In addition to the the comparable value, people feel as though rejecting a gift can offend the other party; there is a social obligation to accept a gift when presented.
Concessions are good for advancing towards to an agreement, but also bettering the relationship. Many industries require good relationships to be successful. When the other party reciprocates, we learn about their preferences which gives us information as to what they value. Concession also helps build the relationship for future endeavors, and perhaps, future negotiations. Concessions, compromises, and reciprocity are not just beneficial to negotiators, but are crucial for any negotiation to be successful. These tools are something that many negotiators use, but may have never thought as to why. Perhaps, it has just been the natural way to negotiate. Learning the reasons why people make concessions and what their expectations are, can most certainly advance the negotiating party’s outcome.
Further, understanding how concessions work makes the negotiator understand the consequences of each decision. Negotiation incorporates the willingness of negotiators’ reciprocity with a foundational understanding of concessions and compromises. Any person who wishes to advance their negotiating skills can do so by learning the art of concession and understanding not just the position of the other party, but the other party’s interest. This information can be used to their benefit and perhaps aid in deciding the next concession to win the deal.