Game Theory, Negotiation Strategy and Fairness feat. Barry Nalebuff

If you're going to succeed in negotiation, It's about arguing with a reason. And what game theory and logic does is allow you to frame the negotiation correctly and figure out the arguments for why you should get more.

Barry Nalebuff is a Milton Steinbach Professor at Yale SOM, where for thirty years he has taught negotiation, innovation, strategy, and game theory. He is the co-author of seven books and an online course.

His most recent book is “Split the Pie,” which is based on his negotiation course at Yale.

In this episode, Greg and Barry weigh different approaches to fairness, discuss making presumptions about rationality, and conflicting views of information in negotiations.

Episode Quotes:

Negotiation tactics:

What I argue is that when you figure out what the other side wants, you should give it to them. And most times when somebody asks for something, it's like, well, if they want it, I can't give it to them. But actually if I can give them what they want, guess what? I can get what I want.

2 parts to negotiations:

There's two parts of negotiation. There's the Spock and there's the Kirk. There's the logic and there's the emotion. And I'm a big fan of emotions. I understand that aspect. But I'd say there's a missing element of logic.

Sunk cost fallacy:

It's a question of okay, it's sunk. It’s sunk whether or not we do this deal. And so, I'm either going to lose that and get nothing for it. Or I'm going to lose and get nothing for it, but something else because of the pie. You have to train yourself to think about the fact that, why are we having this deal? It's not to recover the sunk costs, they’re sunk. It's to make this new thing happen.

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