Book Description
Stuck in a “win-win versus win-lose” debate, most negotiation books focus on face-to-face tactics. Yet table tactics are only the “first dimension” of Lax and Sebenius’s path breakingtion™ approach, developed from their decades of doing deals and analyzing great dealmakers. deal makersheir “second dimension”—deal design—systematically unlock economic and non-economic value by creatively structuring agreements.
But what sets the 3-D approach apart is its “third dimension”: setup. Before showing up at a bargaining session, 3-D Negotiators ensure that the right parties have been approached, in the right sequence, to address the right interests, under the right expectations, and facing the right consequences of walking away if there is no deal. This new arsenal of moves away from the table often exerts the greatest impact on the negotiated outcome.
Packed with practical steps and cases, 3-D Negotiation demonstrates how superior setup moves plus insightful deal designs can enable you to reach remarkable agreements at the table, unattainable by standard tactics.
Customer Reviews:
Buy it, Read it, Do it!.......2007-09-01
This is a text book of modern negotiation. A great place to start your studies for the classic ideas, or a great place to go for the expert looking for fresh ideas. This book is worth while because the method works! Basically, the authors use the most advanced problem solving approaches and apply them to the study and practice of negotiation. Nice work!
A strategic approach to negotiations.......2007-03-26
Most books on negotiation combine the hardball win-lose tactics with the more effective win-win approach. 3-D Negotiation is different: it adds a new third dimension to negotiation, mainly the need for developing a dynamic strategy on how to set up and shape the optimum situation and overall conditions for negotiations (away from the table), and well before negotiations start. Of course, the authors believe that negotiators must employ all three dimensions as needed during most negotiations.
This new third dimension includes, among other things, "acting to ensure the right parties have been involved, in the right sequence, to deal with the right issues that engage the right set of interests, at the right tables, at the right time, under the right expectations, and facing the right consequences of walking away if there is no deal."
Here is real-world example of acting to ensure the right parties and the right sequence: A US firm was looking to establish a joint venture in Mexico and had identified three potential partners (one excellent, one good, and one that barely meets the set criteria). Should this firm start negotiations with the best prospect, and if those negotiations fail, then move to the next, and so on? Or wouldn't it be far better if this US firm makes it known in the industry (in Mexico) that they are looking for a joint venture partner, and induce these three prospects to come to the US firm? Negotiating simultaneously with the three potential partners was indeed better, especially that the US firm set up the negotiation conditions whereby the three Mexican prospects were rushing to compete for the joint venture!
Although this book introduces a third dimension to negotiation, the other two dimensions are also well covered by the authors, with a large number of real-world examples. The second dimension covers designing value-creating deals, including the traditional concept of enlarging the pie, and how to make lasting deals. The first dimension focuses on the tactics at the negotiation table, including problem-solving tactics such as shaping perceptions, setting ambitious target prices, interpersonal skills, cultural empathy, and many other tactics familiar to those who have read traditional negotiation books.
In short, 3-D Negotiation is a welcomed addition to the topic of negotiation, especially due to its strategic approach to negotiations. I particularly like the idea of backward mapping the negotiation process, starting with the desired target or outcome, then mapping all the parties, their interests, no-deal options. I was also intrigued by the authors' philosophy and the 3-D strategy of: "Let them have your way", as well as their concept of "Zone of Possible Agreement".
Although this excellent book is written with important and complex deals in mind, the 3-D approach can be indeed applied to simpler deals and negotiations. In fact, the reader will find a large number of examples of negotiations ranging from the simple ones such as buying a car or a house, to the more complex ones such as negotiations between countries, or among large international organizations.
AN OUTSTANDING AND SUBSTANTIVE BOOK!.......2007-02-12
Most books on negotiating fall into the win-win or win-loose categories, or some hybrid, but all of these focus primarily on the face-to-face tactics at the negotiating table. This book distinguishes itself by focusing not only on at-the-table tactics, but also on two other critical dimensions: 1. deal design, concerning value, substance, outcomes, and occurring "on the drawing board" and 2. setup, concerning architecture, and happens away from the table.
The authors delve into each of these three dimensions (tactics, deal design, and setup) in great depth, providing a powerful analytical framework, cases, and numerous guidelines and creative insights. This is a an outstanding and substantive book!
An excellent overview.......2007-01-20
For an experienced business negotiator, this paints a broader, "global" negotiating paradigm that is well worth read.
excellent, groundbreaking work.......2007-01-05
Not as readable as "Getting to Yes" or "Getting Past No", but very well-written. Not too academic, but deep enough for the professional negotiator. Accessible for those first being exposed to the topic.
Customer Reviews:
Everyone should read this book.......2006-09-08
"The Strategy of Conflict" changed the development of game theory in several ways, but none was more important than Schelling's focus on real life examples, situations or games that are relevant to what we encounter in our daily lives. Before Schelling, game theory analysis was abstract and mathematical; it focused on zero-sum games, where interests were purely conflicting and there were no incentives to cooperate. Game theorists built convincing abstract models for these types of games, but its application was limited, since most interactions were a mixture of conflict and mutual dependence. In other words, analysis focused on pure conflict, a limiting cases of real world interactions, while in "The Strategy of Conflict" Schelling attempts to generalize game theory analysis to richer games that are `played' in the real world. His generalization introduced the concepts, commitments, threats, promises, communication systems, focal points, and randomization of strategies into game theory (chapters 1~8), which was then used to analyze the its applications in national security (chapters 9 and 10).
If you are studying game theory, this book is a must read. If you are just interested in game theory, I'd recommend reading this book too.
Good intro read.......2006-02-17
Along with Dixit & Skeath, Schelling is a great intro read for anyone interested in game theory.
NOBLE PRIZE WINNER ON CONFLICT.......2005-10-11
The 2005 Nobel Prize for Economics was awarded to Robert Aumann and Thomas C. Schelling. Schelling is professor of Economics at the University of Maryland and applied game theory to conflict. His focus was on the weapons issues but his ideas have been applied to a host of business issues.
In this review, we will apply some of Shelling's concepts to how companies fire employees.
Schelling says "uncertain retaliation is more efficient than certain retaliation" when bargaining and "the capability to retaliate is more useful than the ability to defend." Now let's get practical.
GOODBYE SCENARIO
As a verb, "goodbye" is the act of parting. It is also an acknowledgement of parting. A goodbye scenario assumes that once employees physically leave the building, they will never be a factor for the company's future. The relationship was transactional and the transaction is now over.
If the firm defines the termination as a goodbye scenario, the firm should be guided by a business model that says, "What's the least expensive way of terminating this relationship?" And Board members should ask tough questions about paying too much.
AUWIEDERSEHEN SCENARIO
"Auwiedersehen" is German for "Until we meet again." It has a more open-ended quality than the English "goodbye." In an auwiedersehen scenario, the assumption is that once employees physically leave the building, they may continue to be a factor in the firm's future. But it is unclear what that factor may be.
After their non-compete contracts are over, they may join a smaller competitor and become potential allies or opponents in your firm's efforts to develop strategic alliances or acquire the firm.
They may join firms that touch your industry and become potential referral sources of new business for you or a potential source of caution to others about using your company.
They may attend alumni programs at their schools and encourage/discourage graduates from joining your firm.
Each of these scenarios assumes capability of retaliation plus uncertainty of retaliation.
The best practical defense in terminating employees under these conditions is "Treat people with dignity on the way out because the assured costs of such positive treatment are less than the potential downside retaliatory risks.
AUWIEDERSEHEN VS IT'S NICE TO BE NICE
We work with companies that treat departing leaders with dignity
on the grounds that "it is good public relations and good for morale if we help former employees achieve a `soft landing.'" This positive rationale works only in cultures supportive of such a rationale.
The Schelling rationale does not depend on an organizion having a specific culture for treating people with dignity.
It develops a contingency approach to management based on a risk assessment.
There may be times when a "goodbye" scenario does indeed make good sense. There are other times when "auwiedersehen" makes better economic sense.
In applying Professor Schelling's theories, management's failure to take defensive measures with those possessing abilities and options to retaliate is is just bad economics. One sees it at work every day.
(...)
Major contribution and still relevant after decades.......2003-11-09
Since its first publication in 1960, the strategy of Conflict is still relevant today. His concepts of strategic moves and random strategy can still be applied to the increasing complicated international affairs. It's definitely a timeless classic for game theoretical study of international relations.
fascinating.......2002-12-07
I disagree with the review that describes Schelling's primary contribution here as the idea of focal points. This is one of the key insights in the book, but only one. He also has a fascinating discussion of threats, promises, and credibility and the relation of these issues to national security issues. The connection is explored further in Schelling's Arms and Influence, while this book is more theoretical in its orientation. I highly recommend this book to anyone who knows a little game theory but is frustrated by the level of abstraction which pervades the theory.
Customer Reviews:
Primer for life - negotiation is a daily activity.......2001-12-16
Negotiating is a normal process of life no matter what you do. Daily negotiations include with employees, supervisors, children, co-workers, or just about anyone that you run across. The book goes over the steps of negotiating including identifying your weaknesses and your opponent's weaknesses, breaking a deadlock, handling difficult people, when to mediate, etc. The book gives specific strategies for specific situations. How you would negotiate a better price for a purchase is different for how you would negotiate a pay raise and these differences are discussed and illustrated. The author also discusses common traps that negotiators set up for the unwary as well as blunders to be avoided. I was pleasantly surprised to go to an appliance store where the prices are clearly marked on the appliances and find that I was able to negotiate a better price with the salesman. I guess that even when it states a firm price, things are still negotiable if you know how to approach it.
Book Description
Michael H. Watkins' best-selling book The First 90 Days has become the business bible for accelerating leadership transitions. Now, Watkins zeroes in on the most critical skill leaders must master to secure new roles and accelerate their transitions: negotiation. In Shaping the Game: The New Leader's Guide to Effective Negotiating, Watkins draws from extensive research and practical consulting work to reveal four fundamental objectives that should guide new leaders' actions in every negotiation they undertake: create the most possible value, capture that value for yourself and your company, carefully tend to key relationships, and preserve your reputation. Watkins lays out hands-on strategies for becoming a world-class negotiator, including how to match your negotiation strategy to the situation, influence the perspectives of key counterparts, shape negotiation outcomes in your favor, and create the learning discipline necessary to become a world-class negotiator. Navigating the myriad complex, high-stakes negotiating challenges that confront new leaders, this book provides all the tools readers need to make the right moves up the career ladder--and succeed in those roles once they get there.
Customer Reviews:
Excellent.......2007-08-28
An excellent book that shows how important it is to adjust one's negotiating strategy to fit the situation. Unlike so many other books on negotiation which offer a cookie cutter approach, Watkins does a superb job in helping you develop strategies that will work in just about any situation.
A great companion to the book "Bargaining for Advantage" by Shell.
Outstanding primer on negotiations at work.......2007-06-04
Michael Watkins , author of 2003's classic "The First 90 Days: Critical Success Strategies for New Leaders at All Levels" has followed it up nicely with "Shaping the Game: The New Leader's Guide to Effective Negotiating." Whereas the earlier book was a step-by-step guide to what a new leader needed to accomplish, the latest book focuses on how negotiation skills can play a key role in successful transitions.
Watkins, an expert in leadership transitions and in negotiation, has come to believe that, "...effective leaders negotiate their way to success in their new roles." This book is meant to help ensure success in that endeavor.
Watkins sees four objectives for negotiations during career transitions:
1. Create value for both the new leader and for the organization.
2. Ensure that the new leader captures a fair share of that value.
3. Build and sustain relationships by the way the negotiations are conducted.
4. Enhance the new leader's reputation as a tough, creative and trustworthy individual.
His framework for negotiation likewise contains four elements:
1. Matching negotiating strategy to the reality of the situation. No more one-size-fits-all negotiation strategies.
2. Planning to learn and influence.
3. Shaping the game - strategies to change the negotiation game to better suit your strengths.
4. Organizing to improve your skills as a negotiator, and those of your organization.
I like the way Watkins has organized the book. He provides plenty of clear, visual models of the negotiation process. Each chapter is concluded with a checklist that summarizes the key things to watch for when negotiating. The book is a fast read, and it will be easy to find what I need to help in specific situations later.
If you are entertaining several options for future employment, or entering a new position, consider using two books as guides. First, use George Bradt's The New Leaders 100-Day Action Plan: How to Take Charge, Build Your Team, and Get Immediate Results as the most practical step by step guide to early success in the new role. And use Watkins book to help you understand how to do some of the tougher steps in Bradt's book.
If you have any need to negotiate in your current role (and all of us do), pick up Watkins book to help you improve your ability to create and capture value. His stuff will work whether or not you are a new leader.
Great ideas.......2007-05-14
This provides a nice clear layout of the ideas behind successful negotiations. It's helpful to think clearly about the values and motivations of all the 'players' in the process. Great book and easy but thoughtful read.
High Quality Guide.......2006-12-21
In "Shaping the Game: The New Leader's Guide to Effective Negotiating", Michael Watkins came up with a high quality book on critical skills required for successful negotiations. The author wrote an interesting and insightful book on achieving effective negotiations. Negotiation involves getting people who both have common and conflicting goals to be able to present and discuss issues and reach an agreement acceptable to all parties.
This is a very useful book that presents the negotiation process methodically, which helps the reader to follow and understand the process. The ideas you learn from the book are very helpful in any negotiating situation, whether one is interviewing for a job, buying a car, leasing a house, making a sell or negotiating between managers and workers for salary increase and conditions of service or a major contract.
This is an excellent book that is essential reading for all managers who need to learn the techniques, strategies and practices of effective negotiations. The author reinforces his well presented arguments, proposals and solutions with an interesting story of Paul whose duties require him to be involved in various challenging negotiating scenarios that should assist readers in reinforcing the concepts that they would have learnt.
Very useful strategic guide to negotiating -- and leading........2006-11-23
This excellent guide to negotiation is concise, highly readable and eminently practical. Author Michael Watkins simply and clearly outlines the essentials every negotiator must know. More importantly, he situates negotiation where it belongs - at the very center of every leader's required set of skills. He duly notes that negotiations differ in many ways, and that a negotiator needs to adapt a strategic approach to each situation and context. Where appropriate, he draws on the work of other writers about negotiation, sometimes correcting their broad generalizations and oversimplifications. He illustrates his advice about negotiation with the story of Paul, an executive whose career exposes him to various negotiating situations requiring a range of skills. This tactic could be hackneyed or hokey, but in Watkin's hands, it works well. We highly recommend this book as an excellent tool for honing your negotiation and leadership skills.
Book Description
Game theory, the formalized study of strategy, began in the 1940s by asking how emotionless geniuses should play games, but ignored until recently how average people with emotions and limited foresight actually play games. This book marks the first substantial and authoritative effort to close this gap. Colin Camerer, one of the field's leading figures, uses psychological principles and hundreds of experiments to develop mathematical theories of reciprocity, limited strategizing, and learning, which help predict what real people and companies do in strategic situations. Unifying a wealth of information from ongoing studies in strategic behavior, he takes the experimental science of behavioral economics a major step forward. He does so in lucid, friendly prose.
Behavioral game theory has three ingredients that come clearly into focus in this book: mathematical theories of how moral obligation and vengeance affect the way people bargain and trust each other; a theory of how limits in the brain constrain the number of steps of "I think he thinks . . ." reasoning people naturally do; and a theory of how people learn from experience to make better strategic decisions. Strategic interactions that can be explained by behavioral game theory include bargaining, games of bluffing as in sports and poker, strikes, how conventions help coordinate a joint activity, price competition and patent races, and building up reputations for trustworthiness or ruthlessness in business or life.
While there are many books on standard game theory that address the way ideally rational actors operate, Behavioral Game Theory stands alone in blending experimental evidence and psychology in a mathematical theory of normal strategic behavior. It is must reading for anyone who seeks a more complete understanding of strategic thinking, from professional economists to scholars and students of economics, management studies, psychology, political science, anthropology, and biology.
Book Description
This book, by East-West marketing consultant Chin-ning Chu, is must reading for any Westerner in business, government, or academia who negotiates in the Orient or wants to.
It is the first to reveal to Westerners the deep secrets of the Asian psyche that influence Asian behavior in business, politics, lifestyle, and battle.
Ms. Chu points out that Asian mind games have become so finely tuned over the centuries that Americans seldom realize that Asians view the marketplace (and by extension, the world) as a battlefield, and act accordingly.
She has extracted the principles of successful negotiations from centuries-old Chinese texts that have influenced all of Asia, and provides her readers with examples of their application in the modern world.
In the Western world, the ability to formulate cunning and subtle strategies for getting your own way in business, politics, and everyday life is regarded as a matter of intuition. In Asia, however, strategic thinking is a formal discipline studied by people from all walks of life. Amazing as it may seem, contemporary Asians base their outlook and behavior on the teachings of the ancients. In China, even children are familiar with the "36 Strategies," formulated by Sun Tzu, a famous military strategist, in the fourth century B.C.
Throughout Asia today, business people as well as political figures study Sun Tzu's Art of War and apply its strategies to all their activities, while Americans read The One-Minute Manager and All I Really Need to Know I Learned In Kindergarten. No wonder, Ms. Chu comments, that when it comes to business and political negotiations, the Chinese refer to Americans with a word that means "innocent children."
Ms. Chu brilliantly analyses how Chinese thought and culture have affected Japan, Korea, and Taiwan, and how Japanese conquest and culture have had their effect on the rest of Asia.
With United States trade and political alliances shifting increasingly to the Pacific rim, it becomes ever more urgent to understand the Asian mind. Ms. Chu, born in China and educated in Taiwan, spells out the makeup of the Asian psyche as no Westerner could.
Customer Reviews:
Helpful, not just for anyone doing business in Asia.......2007-04-10
I just got back from China as an English teacher, granted I taught in a small city which automatically gave me the celebrity status, but after reading this book all I can say is I wish I picked this up before I went to China in the first place.
For those who want to understand the "Art of War" and the "36 Strategies" this is a good book to learn how it applies not only to war and business, but also to other aspects of working in China. It explained many inner workings about how things are done.
As for the "stereotypes", of course they are not 100% true. But it's a good idea to read her views on the Chinese mind set to understand some of the cultural and historical influences that are shaping China of today. Being there, I met many people older than me who still have been influenced by the Cold War and Mao's "anti-imperialist" propoganda. Many of the youths I met still hate the Japanese with a passion.
Of course, I've only read the 1988 publication of the book, so it doesn't factor in many huge changes in Chinese hisotry, such as the reutrn of Hong Kong and Macau to China or even the alliance with the Communist party and the Nationalist party in Taiwan. You will find no references to the 50 year plan of one country, two systems they use to ease Hong Kong and Macau back into Mainland territory.
My only problem with this book is that even though she writes about the many cultural problems that Westerners will face going in these countries, she doesn't give many good suggestions as to how to surmount them. To tell you the truth, if I ever go back to China, this book does sometimes make me feel paranoid not knowing who is friend or foe.
Asian Mind Game.......2005-12-15
A very informative and helpful book to understand cultures and the way business is conducted
The Asian Mind Game.......2005-09-08
Without question this is one of the most incisive books written about living and working with Asians, especially the Chinese and Japanese. Put this together with some knowledge of Group Dynamics and you will have two very powerful tools to engage in business with Asians.
Flawed but helpful.......2005-02-26
Yes, the book is unsubtle, as some reviewers have complained. And the stereotypes are exaggerated. They're also a bit dated, since the book was written in 1991 -- before China's private economy had blossomed, before Taiwan and Korea had become such important high-tech centers, and before Japan went bust.
The book also sensationalizes the degree to which people may be trying to deceive you, and the degree to which this deceit is based on your being a Westerner. Often the deceit, when it happens, is just a cultural way of dealing with embarrassment.
But when I was a beginner with Asia, I found this book a helpful eye-opener. I'd never heard of "The 36 Stratagems", which another reviewer calls tedious (this was before Asian video games based on Chinese military classics became popular here). It turned out that just about all educated East Asian people I met, men and women, knew them to some degree. The book also describes some relevant differences among East Asian cultures - a cure for the usual Western point of view that lumps Japanese, Koreans, Chinese and others all into one "Asian" category.
By now, most of my time in the past 9-10 years has been spent involved with East Asia and East Asian people. This has been at both a business and personal level, including through marriage and working for a Japanese company. From that perspective, I can also say the book's lack of political correctness and its hype about military strategy are kind of virtues.
How? On its surface, the book is about Asian-Western interactions. But underneath, the book illustrates a lot about how people from different Asian cultures regard each other, both cross-culturally and intraculturally.
Chairman Mao may have used the phrase "politically correct" from time to time, but in its current form it's a Western concept, and a recent one at that. It's also something that comes easier to the lips than to the heart or mind. My friends from Asian countries are usually more direct -- they often express quite stereotypical (and negative) views about people from neighboring countries, even when they make exceptions for individuals. More than once has some really balanced or sweet person mentioned to me after a pause, "But you know, I really can't stand people from X."
Business practices and politics often can be pretty manipulative even against colleagues within the same company. (Watch just about any Japanese TV drama about office life, if you don't have a chance to experience the real thing.) And I've run into plenty of East Asian managers and executives who think they're great strategists in the style of the Chinese classics, even though in fact they're about as clumsy as you or I would be.
Read this book with a grain of salt. But you can definitely benefit from having read it.
An interesting read.......2004-07-13
This is a frank discussion of the Oriental mind-set by an Oriental living in the US. I found the historic context quite fascinating. I had heard about the "The Art of War" and it was nice to get some background as well as a summary. I particulary liked the historic illustrations of use of the strategies.
Insights into business etiquette, social hierarchy and what to be aware of in each of the regions is given.
Since the book was written (1990) the economic miracle of Japan has stalled, so it would be interesting to get an update as to how the attitudes of workers may have changed in the intervening period where job security is no longer assured.
Book Description
In Business, You Don't Get What You
Deserve, You Get What You Negotiate.
Now more than ever, successful people are turning to Karrass and The Negotiating Game. Chester L. Karrass is the leader in the field of negotiation, and more than 260 of the Fortine 500 license the Karrass program.The Negotiating Game will teach you to:
- recognize that you have more power than you think -- in every negotiation
- determine the right price and terms at which to sell, and when to close with any customer
- persuade others to work with you, rather than against you
- set and meet budgets
- complete and administer contracts effectively
- work on and solve problems with people in your organization
- deal effeciently with service people
- avoid or, if necessary, break impasses
Customer Reviews:
Analysis of principles and forces at play.......2007-08-21
In this book Dr Karrass is discussing the principles of negotiating. There many things to take into account other than just power, even though power is obviously the most important single factor. Topics include the results of some experiments in negotiation, analysis of factors like who makes the concessions first, the role of motivation and sef-esteem, the importance of preparation, sources of negotiating power, perceived power vs real power, basic principles and some special cases of power, etc. The author has obviously given much thought to what makes a good negotiator. I recommend all of his books highly, starting with this as an introduction.
Boring and Not Useful.......2006-03-10
I am the CEO of a medical device company. I've bought and sold scores of companies, products and licenses. While I've done an awful lot of negotiating, I always want to learn how to do it better.
Unfortunately, this book didn't help me very much.
The book is extremely boring. It goes on an on, yet never lays out a coherent negotiating strategy. Every 20 pages or so, it lays out a complex chart that is impossible to follow, let alone understand. It provides many negotiating examples. But, most of them involve Purchasing Departments or country-to-country foreign policy-related negotiations.
In an attempt to make credible points, the author often quotes negotiating "research." Many of the research designs he cites are so subjective and uncontrolled that no reputable business journal would want to report on them. It doesn't really matter though since most of the conclusions the author pulls from this "research" are very obvious. The few ideas from the research that sound genuinely new and intriquing are rarely developed adequately as the book meanders on.
In its favor, the book stresses the need to aim high when negotiating. That's great advice. The book also notes how confident people usually make the best negotiators. The book also made an inriguing point about negotiating with aggressive parties. You want to alternate between being tough and soft, not just one or the other. That's a great point and, in a rare moment of glory, the book does a very good job of developing this point.
However, if you're gearing up for a big negotiation and you want to get some useful negotiating advice beforehand, you won't get it from this book.
Jeff
Chet and Gary Karrass are the masters of negotiation.......2005-05-29
I have reviewed over and over again this material since 1987 and it never gets old. We don't need a lot of words here, if you want to be a better negotiator get your hands on as many of the Karras programs as you can. You will never regret it
Negotiation in life........2005-03-13
The author makes the point that negotiation is not just for the buyer and/or seller. It is for everybody. Husbands negotiate with wives. Children negotiate with their parents. Workers negotiate with their bosses. To be an effective negotiator, you need to know yourself and your wants, your opponents wants and needs, and organize and plan your negotiation. In this way, you can learn to have negotiations and agreements that satisfy the wants of both you and your opponent. Ineffective negotiators will not meet their needs and become unhappy.
This is a great book to read to learn more about yourself and how you rationalize your decision making. Negotiation is indeed a great tool in everyday life (home and business). I commend the author for writing on this topic. This is a rare book that will help the reader with both his family and business. The only negative is the author putting much too much focus on theories when simple stories would suffice. This is why I gave this book a four star.
The negotiating game.......2000-03-24
This book is excellent and really gets to the heart of the very nature of negotion. It is both insightful, and practical. I reccomend this book strongly and give my compliments to Chester L. Karrass!
Book Description
This volume brings together all of Ken Binmore's influential experimental papers on bargaining along with newly written commentary in which Binmore discusses the underlying game theory and addresses the criticism leveled at it by behavioral economists.
When Binmore began his experimental work in the 1980s, conventional wisdom held that game theory would not work in the laboratory, but Binmore and other pioneers established that game theory can often predict the behavior of experienced players very well in favorable laboratory settings. The case of human bargaining behavior is particularly challenging for game theory. Everyone agrees that human behavior in real-life bargaining situations is governed at least partly by considerations of fairness, but what happens in a laboratory when such fairness considerations supposedly conflict with game-theoretic predictions? Behavioral economists, who emphasize the importance of other-regarding or social preferences, sometimes argue that their findings threaten traditional game theory. Binmore disputes both their interpretations of their findings and their claims about what game theorists think it reasonable to predict.
Binmore's findings from two decades of game theory experiments have made a lasting contribution to economics. These papers--some coauthored with other leading economists, including Larry Samuelson, Avner Shaked, and John Sutton--show that game theory does indeed work in favorable laboratory environments, even in the challenging case of bargaining.
Customer Reviews:
Game Theory Works, but Not Always Binmore's Way.......2007-07-12
Ken Binmore is the Renaissance Man of game theory, combining a strong analytical presence and an excellent record of empirical research with a deep appreciation for the social role of game theory and its relationship to evolutionary biology, anthropology, and philosophy. "Does game theory work?' is mainly a compilation of his bargaining experiments, but it includes an new introduction explaining the issues behind the title of the book and offering an answer to the question.
The main issue behind the question is the body of experimental results that show that individuals often behave in ways not predicted by classical game theory. This body of data includes the investigation of logic and decision-making by Nobel laureate Daniel Kahneman and his coworkers on Bayesian rationality and the more recent body of experiments on strategic interaction in social dilemmas.
I agree with Binmore's answer, which is that game theory does work, but I think he is wrong and/or misleading in many of the points he makes in the books introductory chapter. For a broader treatment of these issues, see Herbert Gintis, "Behavioral Ethics Meets Natural Justice", Politics, Philosophy and Economics 5,1 (2006):5-32. Since I am one of the "behavioral economists" who comes into criticism in this chapter, I shall begin by stating my own views. Classical game theory holds that rational actors are self-regarding in the sense that they care only about their own material payoff in games, and they will play in ways that implement Nash equilibria. I think the evidence overwhelmingly supports this prediction in market-like interactions in which individuals cannot affect the behavior of others through strategic interaction. Indeed, Vernon Smith received the Nobel prize in economics largely for showing that this is the case. However, when individuals come into direct, personal, strategic interaction, the classical predictions fail. This is not in the first instance because there is any problem with game theory, but rather because the self-regarding model of human preferences is incorrect. Rather, people care about fairness, honesty, trustworthiness, and are strong reciprocators in the sense that they prefer to return kindness for kindness and unkindness for unkindness, even when this is personally costly in material terms.
Binmore's position, by contrast, is that there is nothing wrong with the neoclassical model of the individual as a largely selfish maximizer of personal material gain, and the apparent value of fairness, reciprocity, and ethical virtue exhibited in experimental settings arise because either the monetary stakes are very low, or the game is so complex that individual deploy behaviors from every-day life in which these values help a selfish individual to establish and maintain a reputation that is selfishly maximizing in the long run, or individuals simply haven't had enough time to learn how to behave selfishly. I think each of these arguments is incorrect.
First, does the fact that when the monetary stakes increase people behave more selfishly contradict the other-regarding preferences model? Not at all. A simple application of the economist's rational actor model shows that unless one cares infinitely about the non-monetary payoffs, when the when the monetary rewards to a selfish behavior increase and the non-monetary rewards for unselfish behavior are held constant, behavior will shift towards the selfish behavior. For instance, suppose a fraction f(p) of subjects are willing to sacrifice an amount of money p to behave honestly. Then, as p increases, we expect f to fall; i.e. the higher the cost of being honest, the lower the fraction of the subject pool who will act honestly.
Second, it is true, as Binmore stresses, that in many experimental games, subjects begin by playing unselfishly but when the game is repeated many times, they end up behaving selfishly. Binmore interprets this as "learning to play the game," so the original behavior is not altruistic, but simply mistaken. For instance, in the public goods game, subjects begin by contributing more than half their income to the public pool, but after ten rounds, they contribute almost nothing. Is this because they learned how to play? Not at all. It is because some players do not contribute, and contributors feel cheated and respond by not contributing themselves. We know that this is the correct explanation because if we restart the game with experienced subjects, the same people who contributed nothing at the end of the last series of tries, begin by contributing at their original level (Andreoni, Journal of Pubic Economics, 1988).
Binmore's final argument, that acts of altruism and kindness demonstrated in the laboratory are due to subjects' mistaking the one-shot anonymity of the laboratory for the repeated game, reputation-formation environment of everyday life, is equally without foundation. The most important indication of this is that in fact we experience many one-shot anonymous encounters in everyday life, and people are quite capable of telling the difference between such events and the recurrent ones we share with family, friends, and coworkers. The idea that anonymous one-shots are rare and we are unaccustomed to dealing with them is not plausible.
Binmore believes that repeated game theory's Folk Theorem is sufficient to explain human cooperation, and other-regarding preferences are just a small wrinkle in human behavior. This is bizarre coming from Binmore, who stresses throughout that people only learn to play simple games, whereas the Nash equilibria implemented by the Folk Theorem are horribly complex and depend on highly implausible constructs, such as individuals actually playing mixed strategies, signals been public, a mechanism existing to choose among the continuum of equilibria available, and some dynamical mechanism by which behavior is coordinated and stabilized. For groups of more than five or six agents, the Folk Theorem is a poor model of behavior indeed, and has no empirical support.
Binmore stresses that social institutions choose efficient equilibria from among the myriad Nash equilibria envisioned by the Folk Theorem, but there is no analytical model that supports this assertion. Indeed, as Aumann (1987) has shown, under many plausible conditions the natural equilibrium concept for game theory is the correlated equilibrium, which is highly amenable to instantiation through social institutions. However, it is a long distance from this plausible notion to the idea that human cooperation is based in the main on selfishness, and the other-regarding preferences and ethical proclivities of humans is just a little icing on the cake. My own view is that human society is predicated on our predisposition to behave ethically, and a society of selfish sociopaths, however patient and however enlightened to their own self-interest, would offers lives that are overarchingly nasty, brutish and short.
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Litigation and Settlement in a Game With Incomplete Information: An Experimental Study (Lecture Notes in Economics and Mathematical Systems)
Wolfgang Ryll
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ASIN: 3540613048 |
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The book investigates a two-person game of litigation and settlement with incomplete information on one side. The experimental design allows investigation of how subjects solve the bargaining problem. A prominence level analysis is applied to the data and suggests that subjects tend to choose "round" numbers. It is shown that there exists a correlation between machiavellianism and subjects' adjustment behaviour in the game. The learning behaviour is discussed extensively. Plaintiffs' acceptance limits polarize at the beginning of the second play. A model of learning direction theory applied to explain subjects's behaviour over the course of the game.
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Negotiation Analysis
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Mind and Heart of the Negotiator, The (3rd Edition)
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A much-needed study of the ins and outs of negotiation
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