Lecture 4 Negotiating Strategy Sally Swansong 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: Involves? 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? Interests versus positions Zone of possible agreement: $0--$45k Interests versus positions Ego versus allocentric Issue of preparation
Interests? Sally: Opera: 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.) Respects affine transformations IIA (Independence of Irrelevant Alternatives) Pareto Efficiency Symmetry
Next Time Readings for Next Time: Optional: Raiffa, pages 251-274 & 288-299 Bazerman, pages 127-139 Nash: The Bargaining Problem Optional: Osbourne & Rubinstein, Chapter 13. An Introduction to Coalitional Bargaining