Zone of Possible Agreement (ZOPA)
Definition
A Zone of Possible Agreement (ZOPA) is the range in a negotiation where two or more parties’ acceptable terms overlap. It’s the bargaining range in which a mutually acceptable deal can be struck.
How it works
- Each party has a reservation price (the worst deal they will accept) and a BATNA (best alternative to a negotiated agreement).
- A ZOPA exists only when the parties’ reservation prices overlap. For example, if a seller’s minimum acceptable price is $5,000 and the buyer’s maximum is $5,500, the ZOPA is $5,000–$5,500.
- If reservation prices do not overlap, the parties are in a negative bargaining zone and cannot reach agreement unless something changes.
Negative bargaining zone — and how it can be overcome
- A negative bargaining zone occurs when one party’s minimum acceptable terms exceed the other party’s maximum.
- Example: Seller wants $700, buyer can pay at most $400 — no ZOPA.
- Negative zones can be converted into ZOPAs by:
- Adding or trading non-monetary items (e.g., goods, services, warranties).
- Identifying underlying interests rather than fixed positions.
- Reframing or expanding the scope of negotiation to create value for both parties.
Practical strategies to find or expand a ZOPA
- Clarify BATNAs and reservation prices before negotiating.
- Focus on interests (why each party wants something) instead of positions (what they say they want).
- Create multiple options and package trades across issues to increase overlap.
- Introduce additional issues or value-adding elements (timing, delivery, extras).
- Use objective criteria (market data, standards) to justify proposals.
- Share information selectively to build trust, but avoid revealing your reservation price.
- Consider who should make the first offer—anchoring can be powerful but risky if you lack information.
Common pitfalls
- Treating positions as fixed and ignoring underlying interests.
- Revealing reservation prices too early.
- Assuming no ZOPA without exploring integrative solutions.
- Focusing only on price when other tradeable items exist.
Key takeaways
- ZOPA is the overlap between parties’ acceptable outcomes; it’s where deals are possible.
- No overlap = negative bargaining zone; explore interests and add value to create a ZOPA.
- Preparing BATNAs and reservation prices, and using integrative negotiation techniques, increases the chance of reaching agreement.