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Contingent Contracts and Negotiations

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Discuss the four ways, outlined in Chapter 9, in which contingent contracts can improve the outcomes of negotiations for both sides.

1. Bets build on differences to create joint value.
2. Bets help manage biases.
3. Bets diagnose disingenuous parties.
4. Bets establish incentives for performance.



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According to Eddy Kicker, "A contingency is basically a condition of a contract that allows one party an out if the condition is not met." A contingency contract is a kind of assurance for the buyer that they can cancel the contract if some conditions are not met as they have expected. Contingency contracts may not be favorable for the seller but it is a relief for the buyer's perspective. In making contingency contracts work, these four ways can help achieve a positive outcome in negotiations:

1. Bets build on differences to create joint value. Both parties have different expectations of the future but both are confident and it makes them hard to compromise. They have differences in their predictions and both of them would want to make things clearer in the event that these predictions happen ...

Solution Summary

518 words; 3 references; discussion of the 4 ways to achieve positive outcomes in negotiations