Declaring that an issue or concession is extremely important so that you can gain more credit or advantage when you give it up.
Hollywooding a trade is a type of Bluff. It is a Bluff because the item or issue you are Hollywooding is not as valuable to you as you proclaim. You are not Bluffing about whether you will do the trade, but you are Bluffing about the value of the trade.
Expect this tactic to be used as part of one of these Negotiation Strategies (competitive, collaborative, avoidance, accommodation, compromise) and in these stages of the Negotiation Process (Preparation, Exchange, Bargain, Conclude, Execution).
Negotiation Strategies: Collaborative and Competitive
Negotiation Stage: Exchange and Bargain
Use of Hollywooding in Collaborative Negotiations
If used sparingly and with respect to the relationship, Hollywooding a concession can be an effective tool in collaborative negotiations to earn credit for a concession you didn't really care about. There is minimal risk of losing trust because it is almost impossible for the other side to know for sure if the concession was of any value to you.
For example, if the other side asks if they can push delivery by two weeks, and in truth it is no problem for your organization, but rather than say so you react in a way that indicates this is a painful concession and then agree to it if you get something else in return, you have Hollywooded the value of the concession to get something else of importance to you in the negotiation.
Defend Against Hollywooding
You can't really prevent Hollywooding, but you can defend against it. Your primary defense against the other side Hollywooding a concession that is otherwise of little value is BNP: 16 Use the Power of the Negotiator's Probe. Ask open-ended questions to determine why the concession is so important and you are likely to reveal a more accurate assessment of its value.