PROTOCOL FOR NEGOTIATIONS

1
PROTOCOL FOR NEGOTIATIONS

• Each pair of negotiators will bargain separately,
  and all pairs will bargain simultaneously.
• There will be a maximum of 20 minutes of
  negotiation. Start with 10 minutes of discussion
  of what you think might happen. (You may bluff
  about this to improve your position.) Then I
  will announce that the 10 minutes of actual
  negotiations will begin.
• Write down the offers and counteroffers on your
  negotiation record.
• During the negotiations, you may talk with the
  other side or with anybody in the room. You may
  bluff and try to be misleading. You may refuse to
  say anything to the other side. You may ask
  people from other groups for advice.
• After I call the class back to order, I'll ask
  you to come up and write your sequence of offers
  and counter-offers on the board.

2
Indeterminacy

• There is no general solution to bargaining
  problems. The outcome depends heavily on
  variables specific to the situation, such as the
  players information, their exact outside
  opportunities, and their risk aversion.

• The first graph is for splitting a pie.
  Players simultaneously
• propose shares, and if they add up to more than
  1, both get
• payoffs of zero.
• The second graph is a more general game, with a
  threat point
• at T, and it is not a zero-sum game, because
  the sum of
• can vary.
• Both games have a continuum of Nash equilibria
  the entire 1-1
• line, and all points between D and E.