1. Lecture 4 Negotiating Strategy
Sally Swansong
Axiomatic (Nash) Bargaining

2. 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?

3. 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.

4. Sally Swansong What is the ZOPA? Interests versus positions
Zone of possible agreement: $0--$45k
Interests versus positions
Ego versus allocentric
Issue of preparation

5. 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

6. Nash Solution
Axioms (Assumptions that we’ll use to solve a bargaining problem.)
Respects affine transformations
IIA (Independence of Irrelevant Alternatives)
Pareto Efficiency
Symmetry

7. Next Time Readings for Next Time: Optional:
Raiffa, pages &
Bazerman, pages
Nash: The Bargaining Problem
Optional:
Osbourne & Rubinstein, Chapter 13. An Introduction to Coalitional Bargaining