Putnam’s Two-Level

Theory of Negotiations

Kishan S Rana

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Today, the distinction between the domestic and the external is increasingly difficult

to maintain, and economic diplomacy often gets into the domestic decision-making

process. In 1991 Robert Putnam put forward his two-level concept of modern

negotiation that captures very well the manner in which international negotiations

(Level I) today involve a parallel domestic negotiation process involving the home

principals (Level II), with the difference that the latter is informal, and not always

understood for what it is. In a modern democracy, where domestic opinion

parliament, political parties, the media, thinktanks and the foreign affairs community

is increasingly articulate on external policy, with the border between home-foreign

issues is porous, Putnam’s ideas help us to understand the way major international

negotiations unfold.

Putnam puts forward the notion of ‘win-sets’, the range of options is acceptable to the

negotiation partner, whether it is the foreign counterpart in a bilateral process, or the

home publics that have an interest in that issue. It is usually not easy to identify the

exact contours of the win-sets; but the effort to understand these win-sets is

worthwhile, because it helps to identify the range of possibilities that are going to be

acceptable, to the foreign partner and to the domestic stakeholders. (The win-sets are

distinct from Odell’s concept of BATNA, though the two are of course related;

BATNA refers to the minimum that the other partner is prepared to accept, and if that

minimum demand is not met, that partner will not be interested in that agreement.

Thus BATNA tells us that if we do not offer that minimum, the partner has no real

interest in the negotiations.)

The task of negotiation involves efforts to change the win-sets at both the levels, to

match one’s own win-sets. This is a dynamic and complex process. Consider the

following elements that govern the process:

� The narrower the win-sets, the less the scope for making concessions, which

forces the other side to move forwards, in achieving a settlement.

� Wider win-sets mean a weaker negotiation position. This is a counter-intuitive

point, but reflection shows its validity. The side that has narrow win-sets will be

inflexible, and must perforce take a strong position.

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� One may try and widen the domestic win-sets by offering good explanations to

convince stakeholders, and also perhaps through side deals.

� One needs to monitor the domestic debate in the partner country, to understand

and track their Level II process, and one may also try and influence their win-sets

through one’s ‘public diplomacy’, i.e. by reaching out and trying to influence the

relevant foreign publics and decision-makers. One example is of developing

countries that make common cause with the development ministries in OECD

states, to counter pressure from their trade ministries.

� Negotiators work under what is called ‘bounded rationality’, i.e. imperfect

knowledge of the win-sets of the other side, and sometimes even their own win-

sets.

� Is it worthwhile to convey false or misleading information to the foreign partner

on one’s own win-set? This is called the ‘negotiators dilemma’, and it features in

any difficult, prolonged negotiations. While it may produce short-term or single-

time advantage, misleading the other side is seldom wise. It is far better to keep

the trust of the other side. But if the other side develops an exaggerated

appreciation of one’s win-sets, of course it is best to let this impression persist, if

it is to one’s advantage. It is active deception that is dangerous.

� Where one encounters a heterogeneous structure on the other side, it makes it

difficult to estimate win-sets. But it also makes it possible to try coalition building

with like-minded elements.

� Often, negotiators from developing counties who enjoy wide local autonomy (e.g.

at an international process) have wide win-sets, which in effect weakens their

negotiation position.

Putnam’s singular contribution is to prompt us to think of the two distinct levels and

to plan strategy accordingly. A country such as Japan, which carries out extensive

harmonization of the domestic consensus prior to foreign negotiations gains in three

ways. First, it knows well the domestic win-sets and builds these into the official

stance. Second, the relative inflexibility this produces (because any new compromise

must be cleared with the home Level II) gives it a strong negotiating position. Third,

implementation of an accord is easy because of the consensus already established with

the stakeholders.

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