1. Anticipating Your Rival’s Response
International Negotiations
2009 Fall Semester
Professor Jasper Kim
Anticipating Your Rival’s Response
EWHA Graduate School of International Studies
Development and Cooperation
082SIS90
Ju Young Lee
International Negotiations

2. International Negotiations
Introduction
“Should he refuse to play Lucy’s game?”
Two possible outcomes
Letting Charlie kick
Seeing Charlie fall
Lucy’s preference is for the latter
Charlie should have been able to predict her action.
Remarriage : a triumph of hope over experience
International Negotiations

3. Two Kinds of Strategic interaction
The essence of a game of strategy : interdependence of the players’ decisions.
Sequential
The players make alternating moves.
Simultaneous
The players act at the same time, in ignorance of the others’ current actions.
International Negotiations

4. The First Rule of Strategy
“Look Ahead and Reason Back”
Visual aid
A “tree diagram” of the choices
International Negotiations

5. Decision Trees and Game Trees
: describes one’s option at each junction, looks like a tree with its successively emerging branches
Ex) How to get to the main library?
International Negotiations

6. International Negotiations
Decision Tree (Con.)
Ex) How to get to the main libarary?
International Negotiations

7. International Negotiations
Decision Tree (Con.)
Hill
Left
Hellen Hall
Left
Right
Stairs
Hill
Dorm.
Left
Right
Hellen Hall
Left
Right
ECC
Stairs
Hill
Trough ECC
Left
Elevator
Right
Stairs
Right
Winding road
Left
Ewha Front Gate
Right
Take a cap and go winding road
International Negotiations

8. Decision Trees and Game Trees
: two or more players
Ex) What if a new book store enters ECC book market?
Accommodate
+$100,000 to Lee’s
KyoBo
Enter
Lee’s
book
store
Fight Price War
-$200,000 to Lee’s
Keep out
$0 to Lee’s
International Negotiations

9. International Negotiations
More Complex Trees
Chess, tic-tac-toe
In many games, each path ends after a finite number of steps.
Win or lose or draw –> End
Substantial profit or bankruptcy –> End
Successful treaty or mutual destruction –> End
For any game with a finite number of sequential moves, there exists some best strategy.
See ahead and determine a guaranteed winning strategy by working back .
International Negotiations

10. More Complex Trees Examples
“Will this path after four or five moves lead to a generally good position or a bad one?”
A computer chess program
Explicit logic from backward reasoning
Rules of thumb for valuing intermediate positions based on experience
International Negotiations

11. International Negotiations
Bargaining
An illustration of how backward reasoning enables us to predict the outcome of games with alternating moves.
50:50 split : backward reasoning solution
REMEMBER!
1) Rules of the game :Who gets to make an offer to whom
2) What happens if the parties fail to reach and agreement
International Negotiations

12. International Negotiations
Bargaining (Con.)
Time is money
Take +
Do not take
Take +
+25
Take
Do not take
Do not take
International Negotiations

13. International Negotiations
Bargaining (Con.)
Take +
Take
1/3 :1/3
Do not take
Take
1/6:1/6
Do not take
Do not take
Take +
Take
1/4 :1/4
Do not take
Take
실제로 시뮬레이션 게임
1/8:1/8
Do not take
Take
1/16:1/16
Do not take
Do not take
“Split-the–Difference” Solution!!
International Negotiations

14. International Negotiations
War and Peace
Libya – Sudan
: Two antagonistic neighbors
Egypt
: “My enemy’s enemy is my friend.”
Israel
: A real threat for Egypt.
Israel
Libya
Egypt
Sudan
“How Many People Are Playing?”
International Negotiations

15. International Negotiations
War and Peace
The Good
30%
The Bad
80%
The Wierd
100%
International Negotiations

16. International Negotiations
Games the Korean Play
Korean Election Campaign of 2002
Old & Stable way
2002
Presidential
Election
New & Risky way
Lee
Noh
Noh has a chance
Lee wins
A sufficiently large core of voters were satisfied with Lee’s performance to ensure that,
if the if the two fought similarly oriented campaigns, the effects of the two would cancel and Lee would win.
2002. May
2002. December
Lee vs Noh = 40% : 20%
Lee vs Noh = 47% : ?
* Earlier moves should be observable to those who choose later.
*Strategies must be irreversible
International Negotiations

17. Lessons From This Chapter
Look Ahead and Reason Back.
Use visual aid like a “tree diagram” of the choices.
In many games, each path ends after a finite number of steps.
Therefore, combine explicit logic from backward reasoning and rules of thumb for valuing intermediate positions based on experience.
International Negotiations

18. Lessons From This Chapter
Time is money.
Take “Split-the–Difference” Solution.
The number of people playing the game does matter!
Earlier moves should be observable to those who choose later.
Strategies must be irreversible.
International Negotiations

19. International Negotiations
Discussion
In tic-tac-toe game and Charlie’s story, what kinds of factors hinder us from anticipating?
Now we know the rules in bargaining. However, we cannot simply solve the labor strikes in reality. Discuss the existing complex and subtle features in payment negotiation.
Simulation Games
International Negotiations