#62 Quantifying Intangible Interests In Negotiation

Intangible Interests: image of a fairy

Intangible interests are subjective interests that are difficult to quantify, for example privacy, reputation, and honour. It is difficult to weigh one option against another when you know they are relevant but have trouble determining the extent of their value.

Below are three examples. In every case, one can estimate a value for the intangible by asking how much you would pay to have it magically given to you or taken away, depending upon the context.

 

1. A potentially positive outcome has a negative intangible interest associated with it

You believe you could win a $200,000 settlement in court after costs, but you would also feel a violation of privacy having your business dealings exposed to the public in the trial. How much less than $200,000 should you accept as a negotiated settlement?

Here is a way to think about it. If you were to go to trial, how much would you pay someone to wave a magic wand and make the public exposure disappear? Certainly $2,000 and probably not $60,000. But, what is your number? Say it is $15,000 to $25,000. Your range informs you that settling out of court for $185,000 down to $175,000 would be a rational range to consider.

 

2. A good offer entails the loss of a collection of positive intangible interests

You have been offered an $80,000 salary at a new job, which you think is fair, but you will have to work in a part of town you don’t like, far from amenities you are accustomed to such as good restaurants, river views, and a swimming pool where you can exercise at lunch.

If a fairy threatened to wave a magic wand and take away the amenities you currently have, how much would you pay the wand-waving fairy to keep your amenities? Possibly $3,500? Whatever your price, it suggests you should try to negotiate up your new salary offer by that amount to compensate for your potential loss.

 

3. A negotiated agreement has positive intangible interests

Contracting with a particular firm will positively elevate how your in-laws view you. How much would you pay a witch to put a spell on your in-laws that erased their uninformed negative view of your business capabilities? Say it is $10,000. Following the method above, you would be willing to pay for the contract what you would normally pay, plus your cost for the witch’s spell.

 

As with the quantification practice for negotiation outlined in the previous blog, this method is recommended as a decision-making aid, not as the decision-making method.

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