Transcript Sally Swansong

Lecture 4
Negotiating Strategy
1. Sally Swansong
2. Axiomatic (Nash) Bargaining
Sally Swansong
• Quick Exercise: After interacting, think about
BATNAs.
– Sally’s Agent: Write down what you think the most the
Lyric would have paid?
– Lyric: Write down what you think the least Sally would
have accepted?
• Do you think your BATNA was stronger or
weaker than the other side?
Sally Swansong
• The Obvious:
– Your goal is not to reach an agreement,
– Goal is to create value and do well for yourself.
• Involves?
– Improving your BATNA
– Not doing deals that don’t make sense
– Trying to find ways of creating joint (or solo) value.
Sally Swansong
• What is the ZOPA?
– Zone of possible agreement: $0--$45k
• Interests versus positions
• Ego versus allocentric
• Issue of preparation
Interests?
Sally:
•
Making a comeback
•
Proving she still has it
•
Reputation
•
Performing star role (and being treated as such)
•
Salary precedent
•
Firm contract
Opera:
•
Successful Norma
•
Not creating salary precedent
•
Finding best talent
•
Not losing money
•
Publicity
Nash Solution
• Axioms (Assumptions that we’ll use to solve a
bargaining problem.)
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Respects affine transformations
IIA (Independence of Irrelevant Alternatives)
Pareto Efficiency
Symmetry
Next Time
• Readings for Next Time:
– Raiffa, pages 251-274 & 288-299
– Bazerman, pages 127-139
– Nash: The Bargaining Problem
• Optional:
– Osbourne & Rubinstein, Chapter 13. An Introduction to
Coalitional Bargaining