Zone Of Possible Agreement

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Definition: Zone Of Possible Agreement


Zone Of Possible Agreement

Quick Summary of Zone Of Possible Agreement


In a negotiation or business discussion, that area in which the parties may eventually find common ground to resolve their differences and conclude a deal.




What is the dictionary definition of Zone Of Possible Agreement?

Dictionary Definition


In a negotiation or business discussion, that area in which the parties may eventually find common ground to resolve their differences and conclude a deal.

Such a zone can only exist if there is an area of overlap between the bottom lines of the parties involved.


Full Definition of Zone Of Possible Agreement


The acceptable range of outcomes from negotiation between parties.

The zone of possible agreement, also known as the negotiation range, is a hypothetical area where two or more negotiating parties might find common ground. It is in this area that parties will frequently compromise and reach an agreement.

To establish a settlement or an agreement, negotiating parties must strive toward a common goal and seek an area that integrates at least some of each party’s ideas.

  • A zone of prospective agreement (ZOPA) is a bargaining region in which two or more negotiating parties could be able to reach an agreement.
  • A ZOPA can only exist if the expectations of each party regarding an agreement are similar.
  • Negative bargaining occurs when negotiating parties are unable to reach a ZOPA.

No matter how hard you try, you’ll never be able to reach an agreement outside of the zone of possible agreement. Negotiating partners must understand each other’s requirements, values, and interests in order to establish a good agreement.

Only if there is any overlap between what all parties are willing to accept from a transaction can a ZOPA exist. For example, Tom must sell his car to John for at least $5,000, and John must be willing to pay at least $5,000. If John is willing to offer $5,500 for the car, then his and Tom’s bottom lines are similar. There is no overlap if John can only offer $4,750 for the car, so there can’t be a ZOPA.

Negative Bargaining Zones

Negative bargaining occurs when negotiating parties are unable to reach a ZOPA. A contract cannot be achieved in a negative bargaining zone because the wants and desires of all parties cannot be addressed in such a situation.

Let’s imagine Dave wants to sell his mountain bike and gear for $700 in order to get new skis and ski equipment. Suzy wants to spend $400 on the bike and gear and won’t go any higher. Dave and Suzy are in a negative bargaining zone because they haven’t achieved a ZOPA.

However, negative bargaining zones can be overcome if negotiating parties are willing to learn about one another’s desires and needs. Let’s say Dave tells Suzy that the funds from the bike sale will be used to purchase new skis and ski equipment. Suzy has a pair of high-quality, gently used skis that she is prepared to sell. Dave is willing to take less cash for the mountain bike if Suzy throws the used skis in. The two parties have established a ZOPA and can thus reach an agreement.


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Definition Sources


Definitions for Zone Of Possible Agreement are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 6th January, 2022 | 0 Views.