Negotiation Strategy Session:
Cooperate or Betray?
PRISONER’S DILEMMA (PD):
how does cooperation evolve?
 Paradox in negotiation decision-making analysis: a negotiation
in which two individuals/companies/countries acting in their own
best interest (i.e., acting fully "rationally") pursue a course of
action that does not result in an "optimal" (ideal) outcome
 As a result of following a purely logical (rational) thought
process to help oneself (through "betrayal"; aka "noncooperation"), both participants find themselves in a worse
situation than if they had "cooperated" with each other in the
decision making process of a negotiation
Non-Iterated/Iterated PD
If you believe this meeting will be a
Non-iterated PD (1x)
Dominant Strategy (DS): Defect (Betray)
Reasons: Fear, No trust, No future
Risk: Suboptimal results
If you believe the negotiation will be an
"Iterated PD" (>1x)
DS: Cooperate
Reasons: Future Relationship, Trust
Risk: Optimal results
Does logic prevent cooperation in pd?
yes
no
In a non-iterated PD scenario
(1x
"one-shot"
In Infinitely repeated PD (>1x
negotiation/meeting with other
"infinite
party):
negotiation/meeting
Even in an iterated PD with a
pre-determined
number
of
rounds, the DS can still
be
shot"
with
other party):
At the prospect of meeting
defection (betrayal) in the last
the
opponent
round.
incentive to defect (betray)
decreases.
again,
the
Bargaining for mutual gains
Similarity between
Prisoner’s Dilemma
Negotiator’s Dilemma
The manager as a negotiator
Negotiation
competition
Common interest
cooperation
Conflicting interest
Negative effects
Value Creator
(cooperater)
Value claimers
(betrayer)
 The negotiator could be exploited on an  Misrepresents one’s own preferences
issue of interest
 Impedes understanding of other’s
 Being creative might signal the
willingness to make more concessions
 Disclosure of shared interests could
be used as leverage to gain concession
interests
 Sours relationship and reduces trust
Results of tension between value creators and
claimers
Defection
cooperation
TIT FOR TAT
Drawbacks of Tit for Tat (TFT)
No tolerance for errors : computers are flawless
(always "rational") but human negotiators can be
both "rational" and "emotional" when negotiating
"Generous tit for tat" is not strong enough to
organise the emergence of cooperation.
Lessons from Tit-for-Tat
Be nice
Starts by cooperating. Most top-scoring
strategies do this.
Be forgiving
Quickly and happily returns to cooperation
without holding a grudge.
Be able to retaliate
Never allows defection to go unpunished.
10/10/13
Value of forgiveness
Generosity pays off under conditions of
uncertainty - economically and emotionally
Forgiveness prevents excessive retaliation or
revenge-seeking - thus maximising the
potential for "optimal" results through "mutual
cooperation"
Conclusion