Former professor Antonios “Tony” Antoniou has dedicated much of his career to teaching students about finance and economics. Antonios Antoniou now serves as CEO of Financial Research, Training & Consulting, LLP. He has particular interest in topics that answer how economics is used in conflict resolution.
As an economics concept, negotiating consists of complex discussions and compromise to an agreement. There are two types of negotiations, distributive and integrative. The latter takes a win-win approach, in which all parties make decisions that are equally beneficial to all. Integrative negotiation, also known as collaborative or transformative, can include non-monetary benefits and trades that help balance a deal’s final outcome.
Conversely, distributive negotiation results in one party receiving more than another, thus creating winners and losers. This is basically a zero-sum game, which means no additional factors can be considered or offered.
For example, an integrative negotiation regarding budget cuts may result in all parties agreeing to take a minor loss in order to avoid major financial strain to a single party. However in distributive negotiation, no party would agree to these terms. Rather than yielding a loss for all involved, negotiations would continue until one side successfully achieves a more beneficial outcome for itself.