Cooperative Decision Making

1
Cooperative Decision Making
The Story of my Sneakers
A true happy story?

• By Miguel Fuentes

2
The soccer match

• After an incredible soccer match played at
  Melbourne Unis artificial soccer court by the
  MBS students I got two huge blisters in my
  toes... ouch

• After some days of painful walking I decided to
  buy a new pair of soccer sneakers.

• Place Nike Sports at CBD
• Price A 120... ouch again

3
The Outlets at Smith St.

• I must confess that I was very happy with my new
  sneakers and I was waiting for the day to use
  them.

• But... David, a classmate, told me that there
  were a lot of outlets at Smith Street where you
  could find sneakers for a good price... around 60
  bucks!!!... ouch

• Actions Return the Nike sneakers and go to Smith
  St.
• Results At the Adidas Outlet...one pair for 60
  and if you got a second one...50 off the
  cheapest one.
• I chose my sneakers for 60 bucks and I was ready
  to pay when....

4
The negotiation

• ... I noticed that another buyer was in the queue
  ready to pay a single pair of sneakers for 60
  bucks too... So, why not cooperate and save some
  money?...The calculations were quick, but here is
  all the theory behind it...
• WPTMiguel 120 (the price of the old ones)
• WPTBob 60 (Assumption)
• CostMiguel 60 (If I dont agree)
• CostBob 60 (If Bob doesnt agree)
• CostB-M 90 (If both agree 60 0.560)

5
The negotiation

• Value created by cooperartion ? 120 60 90
  90
• BATNAMiguel 120 60 60
• BATNABob 60 60 0
• Economic profit
• 90 - x - 60 x - 0 ? x 15 ½ TS
• PayoffMiguel ½ TS BATNAMiguel 75
• PayoffBob ½ TS BATNABob 15
• Final PriceMiguel WTPMiguel Payoff 120
  -75 45
• Final PriceBob WTPMiguel Payoff 60
  -15 45

6
Moral
There is always an opportunity to be better
off... Cooperation. Visit Smith Street and avoid
playing soccer without the proper shoes. But the
way, in the end I paid 40 and Bob paid 50
because he considered the 10 bucks off that I
offered him good enough... you could negotiate
the percentage of the surplus to split but, as
Joshua said, we dont cover that in this course.