In legal disputes, contested insurance claims, and similarly adversarial
negotiations, one party is likely to open with an inflated claim or a
lowball offer. And if the other side’s position is unreasonable, it may
make little sense to be reasonable yourself. But if everyone routinely
came to a dispute with a realistic starting position, the offers would
be more or less aligned, and any negotiation that followed would most
likely be relatively civil, speedy, and fair. How can a negotiator who
wants to be fair from the start ensure that his or her counterpart will
be reasonable as well? The authors propose the final-offer arbitration
challenge, which leverages an approach first applied in labor
negotiations in the 1960s. You can employ this tactic by opening with a
demonstrably fair offer and then—if the other party is
unreasonable—extending a challenge to take the competing offers to an
arbitrator who must choose one or the other rather than a compromise
between them (the usual outcome of conventional arbitration). The
authors describe how AIG used the approach and how other companies can
begin to adopt it. INSETS: A Primer on Final-Offer Arbitration;Saving
the Deal. [ABSTRACT FROM AUTHOR]