Games with lousy outcomes

1
Games with lousy outcomes

• Chicken
• James Dean
• Negotiations
• Prisoners Dilemma
• Ratting out ones confederates
• Price Wars
• Nuclear weapons and conventional invasions

2
The Cold War Nuclear Deterrence
Conventional
1,-1
U.S.
Start Land War
Nuclear
-100,-100
Soviets
No War
0,0
payoff for USSR, payoff for US
3
Dr. Strangelove
U.S.
Nuclear
Start Land War
-100,-100
Soviets
No War
0,0
payoff for USSR, payoff for US
4
If the games outcome is lousy

• Change the rules

5
The eight-fold path to credibility

• Establish a reputation
• Write contracts
• Cut off communication
• Burn bridges behind you
• Leave the outcome to chance
• Move in small steps
• Develop credibility through teamwork
• Employ mandated negotiating agents

6
Reputation

• Hostage Crises
• Tax amnesty
• Mayflower Furniture 127 years without a sale
• Game of Chicken

7
Contracts

• Agree to penalties if you dont follow through
• Complications
• Nick Russo 25,000 to the charity of your
  choice if you catch me eating in a restaurant.
• Renegotiation
• http//www.stickk.com/

8
Cutting Off Communication

• Death and Cecil Rhodes

9
Burning Bridges

• Cortez burned his own ships upon arrival in
  Cempoalla, Mexico

10
Leaving the Outcome Beyond Your Control

• Dr. Strangelove

11
Moving in Steps

• Honor among thieves
• Event 1 A single million dollar transaction
• Event 2 A thousand transactions of 1000

12
Teamwork

• Peer Pressure Weight Watchers, AA
• Romans Falling Behind was a capital offense for
  soldiers

13
Mandated Negotiating Agents

• A labor leader may have to deliver the gains he
  promised or lose his job