Session #7:
Rational perspective to international negotiation
are predicated on several basic ideas.
•
Negotiators have a clear set of goals they want to
accomplish. Negotiation is one of the options
available to them in order to accomplish these
goals.
•
Negotiators are rational. Given a choice between
or among several alternatives, they will choose
that alternative that maximizes their expected
utility. In other words, they will choose the
alternative that has the highest possible prospect
of accomplishing their goals.
••
Each
Eachnegotiator
negotiatorbelieves
believesthat
thatthe
theother
otherside
sideis
is
also
alsorational,
rational,and
andwill
willchoose
choosethat
thatalternative
alternative
which
whichbest
bestserves
servesits
itsinterests.
interests.So
Sothat
thatififeach
each
side
sideknows—or
knows—orcan
canguess—what
guess—whatare
arethe
theinterests
interests
of
ofthe
theother
otherside,
side,it
itcan
canattempt
attemptto
topredict
predicthow
how
the
theother
otherside
sidewill
willbehave
behavein
inaagiven
givensituation.
situation.
••
In
Insituation
situationof
ofnegotiation,
negotiation,in
ingeneral,
general,and
and
international
internationalnegotiation,
negotiation,in
inparticular,
particular,the
the
negotiators
negotiatorsare
areinterdependent.
interdependent.This
Thismeans
meansthat
that
the
theresult
resultof
ofeach
eachside’s
side’sdecision
decisiondepends
dependson
onthe
the
decision
decisionof
ofthe
theother
otherside.
side.
•• Rational
Rationalchoice
choicetheory
theorycan
canprovide
provideaanormative
normative
benchmark
benchmarkfor
forthe
theanalysis
analysisof
ofnegotiations.
negotiations.It
Itcan
can
tell
tellus
usfor
foraagiven
givensituation,
situation,ifif(a)
(a)the
theparties
parties
should
shouldnegotiate,
negotiate,(b)
(b)ififso
sowhat
whatshould
shouldthey
theydo
do
during
duringnegotiation,
negotiation,and
and(c)
(c)ififthey
theydo
dowhat
whatthey
theyare
are
supposed
supposedto
todo,
do,what
whatwould
wouldbe
bethe
the“best
“bestpossible”
possible”
outcome.
outcome.
•• Very
Veryoften,
often,however,
however,rational
rationalchoice
choicetheory
theoryalso
also
attempts
attemptsto
tobe
bedescriptive,
descriptive,that
thatis,
is,tell
tellus
uswhat
what
actually
actuallyhappens
happensin
inthe
theprocess
processof
ofnegotiation.
negotiation.
•• Both
Bothlast
lasttwo
twoideas
ideasare
arecontroversial.
controversial.We
Wewill
will
criticize
criticizethese
theseideas
ideaswhen
whenwe
wediscuss
discusspsychological
psychological
approaches
approachesto
tonegotiation.
negotiation.
For
Fornow,
now,however,
however,we
wewill
willrely
relyon
onthese
theseideas
ideasas
as
the
thefoundation
foundationfor
foraarational
rationalchoice
choiceanalysis
analysisof
of
negotiation
negotiation
••
Understandingone’s
one’sgoals,
goals,and
andbeing
beingable
able
Understanding
tospell
spellthem
themout.
out.
to
••
Beingable
ableto
toprioritize
prioritizegoals.
goals.
Being
••
Beingable
ableto
tomake
maketradeoffs
tradeoffsamong
among
Being
competingvalues.
values.
competing
••
Beingconsistent,
consistent,choosing
choosingaccording
accordingto
tothe
the
Being
sameprinciple
principleevery
everytime
timeand
andunder
underall
all
same
circumstances.
circumstances.
••
Beingable
ableto
toincorporate
incorporateuncertainty
uncertaintyinto
into
Being
theanalysis
analysisand
andsolution
solutionof
ofproblems
problems
the
Whatis
isaaGame?
Game?
What
A“game”
“game”is
isaamodel
modelof
ofaagiven
givensituation
situationthat
that
A
containsfour
fouressential
essentialelements.
elements.
contains
Actors:At
Atleast
leasttwo
twoplayers
players(players
(playersassumed
assumedto
to
Actors:
berational
rationalutility
utilitymaximizing
maximizingentities).
entities).We
We
be
distinguishbetween
between2-person
2-persongames
gamesand
andnndistinguish
persongames,
games,with
withmore
morethan
thantwo
twoplayers.
players.
person
Eachplayer
playerhas
hastwo
twoor
ormore
more
Alternatives:Each
Alternatives:
coursesof
ofaction
action(or
(orinaction)
inaction)at
ather
herdisposal.
disposal.
courses
Wedistinguish
distinguishbetween
between simple
simple(2
(2××2)
2)games
games
We
andmore
morecomplex
complexgames
games
and
The juxtaposition of the actors and their alternatives
determines the outcome space of the game.
Preferences: a system for evaluating the outcomes of
the game, from the point of view of the players’ goals.
The outcomes of the game can be expressed either in
terms of cardinal utility values real tangible values
(e.g., money, size of territory, etc.), or they can be
framed in terms of ordinal preference ordering.
Rules. A set of principles, typically not under the
control of the players, that determines how the game
is to be played. It covers such things as the sequence
of play, the level of information available to players,
the number of iterations, etc.
Bynumber
numberof
ofplayers:
players:2-person
2-persongames
gamesversus
versus
•• By
n-persongames
games
n-person
Bystructure
structureof
ofpreferences:
preferences:constant
constant(zero)(zero)•• By
sumgames,
games,mixed-motive
mixed-motivegames,
games,cooperative
cooperative
sum
games.
games.
Bytypes
typesof
ofrules:
rules:Single-play
Single-playvs.
vs.iterative
iterative
•• By
games,simultaneous
simultaneousvs.
vs.sequential
sequentialchoice
choice
games,
games.
games.
Byinformation
informationstructure:
structure:Full
Fullinformation
informationvs.
vs.
•• By
gameswith
withlimited
limited(incomplete)
(incomplete)information
information
games
There are two voters (Row and Column) and two
candidates: John and Sarah. Row prefers John,
Column prefers Sarah. If there is a tie, it is broken
by toss of a coin
Column Player
Vote
Don’t Vote
Vote
John Wins
with prob. 0.5
John Wins
Sarah Wins
with prob. 0.5
Row Player
Don’t Vote
Sarah Wins
John Wins
with prob. 0.5
Sarah Wins
with prob. 0.5
Another way to represent this game
Assume that if one’s favorite candidate is elected
the voter gets a utility score of 1, and if the other
candidate is elected, the voter gets a score of -1.
Column Player
Vote
Don’t Vote
1×0.5+(-1)×0.5=0
Vote
Row Player
1, -1
1×0.5+(-1)×0.5=0
1×0.5+(-1)×0.5=0
Don’t Vote
-1, 1
1×0.5+(-1)×0.5=0
A husband and wife discuss their plan to go out in
the evening:
Husband: Wants to go to Ballet, does not want to
go to the boxing match, but prefers going to the
boxing match with his wife than going alone to
the Ballet.
Wife: Prefers the boxing match over the Ballet,
but would rather go to the Ballet with her
husband than to the boxing match by herself.
Wife
Swan
Lake
Swan
Lake
Boxing
Match
4, 3
2, 2
1, 1
3, 4
Husband
Boxing
match
Wife’s
utility
Both at the
boxing match
Nash’s
Nash’s
bargaining
bargaining
solution
solution
4
3
BATNA;
mixed
strategy
solution
Both at the
Ballet
2
Husband—ballet;
Wife--boxing
1
Husband—boxing;
Wife--ballet
1
2
3
4
Husband’s utility
Thisidea
ideareally
reallycaptures
capturesthe
thebasic
basicconception
conceptionof
of
This
negotiationsin
ingame
gametheory:
theory:it
itsuggests
suggeststhat
thatifif
negotiations
bothsides
sidescan
cando
dobetter
betterby
bycoordinating
coordinatingtheir
their
both
behaviorthrough
throughsome
somesort
sortof
ofagreement,
agreement,then
then
behavior
eachside,
side,and
andboth
bothcollectively,
collectively,can
cando
dobetter
betterthan
than
each
thebest
besteach
eachcould
coulddo
dowithout
withoutan
anagreement.
agreement.
the
Thisis
isthe
theconcept
conceptof
ofBest
BestAlternative
Alternativeto
toaa
This
NegotiatedAgreement
Agreement(BATNA).
(BATNA).If
Ifeach
eachside
sidecan
can
Negotiated
dobetter
betterin
inan
anagreement
agreementthan
thanwithout
withoutit,
it,then
then
do
thereis
isroom
roomfor
fornegotiations
negotiationsand
andboth
bothsides
sides
there
couldagree
agreeon
onsome
somelevel
levelof
ofcoordination.
coordination.
could
Column
Don’t
Swerve
Swerve
Swerve
C, C
C, D
3, 3
2, 4
D, C
D, D
4, 2
1, 1
Row
Don’t
Swerve
A Graphical Representation of the
Game of Chicken
CD
Column
4
CC
3
2
1
DC
DD
1
2
3
4
Row
Column
Cooperate
Cooperate
Defect
3, 3
1, 4
4, 1
2, 2
Row
Defect
A Graphic Representation of the
Prisoner’s Dilemma
CD
Column
4
CC
3
2
DD
DC
1
Row
1
2
3
4
An
Aniterative
iterativePrisoner’s
Prisoner’sDilemma
Dilemma(PD)
(PD)was
wasspecified.
specified.
People
Peoplewere
wereinvited
invitedto
towrite
writeprograms
programsfor
forplaying
playing
the
thePD
PDover
overaalarge
largenumber
numberof
ofiterations.
iterations.
Each
Eachprogram
programwas
waspitted
pittedagainst
againstall
allother
otherprograms
programs
in
inaaround-robin
round-robintournament,
tournament,such
suchthat
thateach
each
program
programplayed
playedeach
eachand
andevery
everyother
otherprogram.
program.
The
Thewinner
winnerwas
wasaasimple
simplestrategy
strategycalled
calledTit-for-Tat
Tit-for-Tat
(TfT).
(TfT).
The
TheTfT
TfTstrategy
strategyis:
is:cooperate
cooperateon
onthe
thefirst
firstmove,
move,and
and
emulate
emulateyour
youropponent’s
opponent’sprevious
previousmove
movethereafter
thereafter
First Generation
3rd Generation
2nd Generation
4th Generation
The Stag Hunt
Column
Stag
Stag
4, 4
Rabbit
3, 1
Rabbit
1, 3
Row
2, 2
CC
4
Column
CD
3
2
DD
DC
1
1
2
3
4
Row