Zone Of Possible Agreement

Categories: Regulations, Banking

A zone of possible agreement, or ZOPA, is a zone where two parties trying to strike a deal may find common ground.

For instance, take a dog deciding whether or not to listen to its human, and the human deciding how many treats to offer the dog in order to get it to come inside (too many treats too often will make for an overweight doggo). Now...think of a Venn diagram with one circle being all the amounts of treats the dog would accept to listen (including the minimum amount of treats) and the another circle being all of the amounts of treats the human is willing to give out for the dog to come inside (including the maximum amount of treats). Where they would both agree on the amount of treats in exchange for the dog coming inside is where the two circles overlap, which is the ZOPA (yes, dogs can have ZOPAs, too).

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