Zone of Possible Agreement (ZOPA)

In negotiation, each party has a 'walk-away threshold' (BATNA)—they will not accept terms worse than this. An agreement is structurally feasible only when both parties' thresholds overlap, creating a zone of possible agreement. The final deal within this zone is determined by information asymmetry and relative bargaining power.

Read the daily articles behind this idea on the Chinese edition.

Related principles

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  Signal vs. Noise: Inferring Business Intent from Supply Chain Actions
• → Links
  Strategic Exit: Identity Shift from Strategic Partner to Financial Investor
• → Links
  Schelling's Paradox of Deterrence
• → Links
  Coordination Problem