1 Lecture 1: Negotiating Strategy Professor Keith Chen
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Lecture 1:Negotiating Strategy
Professor Keith Chen
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A note on formal analysis in this course:
We will avoid most formal notation and proofs.
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Economics
SociologyPsychology
Negotiations & Social-Science
Rules
Preferences Outcomes
Game-theoretic optimality a relationship between human factors
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Strength of this Approach:
• Use as a guide:– a Normative Science
• How should you negotiate?
– a Predictive Science.
• Limits of this Approach:– Assuming we know the rules can mislead.– If we recognize biases and irrationalities,
tells us little about how to take account of them, for that we need behavioral econ.
Rules
Preferences Outcomes
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Introduction
• Myself:– Game Theorist and Behavioral Economist
• Research on Negotiations: Two Examples– The game theory of Integrative Bargaining– The Evolutionary and Psychological basis of
cooperation (collusion), and reference point effects by looking at monkeys.
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Research: Integrative Bargaining
• I study how why and how agendas form.
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Research on Monkeys
Cotton-top Tamarins: cooperative breeder
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barrier
actor
receiver
tray
tool
food
Experimental Setup:
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Training & Solo Conditions
w. barrier
Condition 1 Condition 2
Condition 3 & 4 Condition 5
no barrier
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Intentionality?
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First GameA Simple Reciprocation Game
Experiment 1 tests for: (i) Contingent cooperation (ii) Recognition of reputationSetup: trained vs untrained actors
S1S2 S1S2
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SH: 100% Altruist JG: 100% Defector
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0.1
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1 2 3 4
Session
Fre
qu
en
cy o
f P
ulls
Pulls for Alt.
Pulls for Def.
13Tufted Capuchin: an extractive forager
Subjects:
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Capuchin Purchasing: Gambles
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MovieCapuchin Purchasing Behavior
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Experiment 2Experiment Two
E1 shows 1 and E2 shows 2, then both give 1 or 2 (w. prob. ½).
1399911Sessions till stable:
78%70%70%70%68%Percent of trials E1 chosen:
5: NN4: MD3: JM2: HG1: FLSubject (name):
Second Question:Do capuchins care about gains and losses?
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Course Description
• Grades– Class participation 1/2 grade
• Assign days when you lead discussion of readings
– Final Exam 1/2 grade• Short essay questions
• Study groups / Case preparation• Office Hours – 55 Hillhouse Rm. 204
– Thursday mornings, 10:00 to 11:30 or by appointment.
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Syllabus
• All course materials on the course site
• Expectations– Read articles and chapters for next class– Ask questions, but think when and whom– My question and nametag policy– Other class policies:
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Next Time
• Introduction to Alternating offers Bargaining
• Readings: – Introduction to Issues in Bargaining,
required• Raiffa, pages 7-25
– Optional: Introduction to bargaining and notation in game theory
• Osborne & Rubinstein, Chapter 1.