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Love Thy Neighbor (Negotiation – Reservation Price)

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A fictional case study by Gregory Taketa. Negotiators and Financiers can enjoy this simple, quickly applicable case of using a financially beneficial asset literally next door: your neighbor! Here, we explore how a lousy water user in a drought (i.e. a Californian) can save money by striking a mutually beneficial deal with a water-conserving neighbor. The frightening thing is that you really can implement this deal within 24 hours!

Bad news: you’re in a drought.

Worse news: you suck at water conservation. You use more than 100 gallons of water daily than your neighbor.

Worst news: the more water you use on average per day, the higher the rates. There is significant pressure to make the highest water users pay outrageously higher rates than their more efficient peers.

But wait! A flash of inspiration: what if you just pay your more virtuous neighbor to use some of their water? Their rates would not go up much higher, and you would rather pay those rates than the nasty ones the Utility Company meant for you.

[End Preview – Please Download the CASE PDF & CASE DATA XLSX near the top of this article to become great at Quantitative Negotiations]

Gom bui!