How can the game theory affect the way of negotiating?

Résumé du document

The theory of the games is a very huge theory. In fact, this theory is enclosing very different sectors as economics, rationality and mathematics with probabilities. Let's explain a little bit what this theory is, which are the main authors and what is its future evolution. In a second part, we will try to see how these theories can be used in negotiation.

The first author in the game theory is Zermelo (1912). This mathematician introduces the modeling of how a game can finish. It is said like that: "Playing chase, the white player can win, the black player can win or both can be sure to make a draw." This theory is completely basic and logic for us today.

Extraits

[...] How can the game theory affect the way of negotiating? The theory of the games is a very huge theory. In fact, this theory is enclosing very different sectors as economics, rationality and mathematics with probabilities. Let's explain a little bit what this theory is, which are the main authors and what is its future evolution. In a second part, we will try to see how these theories can be used in negotiation. the game theory The first author in the game theory is Zermelo (1912). [...]

[...] Now what if I tell company B I am going to accept the cartel and I am not applying it ? I have now $ billion profits, and I am killing my competitor until he discovers the cheat. Thus, I am making huge profits. Let's go a little bit more far: I am telling my competitor B I am going to accept the cartel, he too. I decide not to respect what I said in the objective to raise my profit to billion. [...]

[...] This shows us that if the players are non cooperative, the optimal solution is not reached. In fact, the best solution here is not to speak for both of the prisoners. That's making 4 years jail in total. The Nash equilibrium would give 10 years! Some people have tried to experience to repeat for the same two players the game and see what happens. This is a dynamic model: The best strategy for those authors is to cooperate at the beginning and then react in function of the strategy chosen by the other one. [...]

[...] Asymmetry of the information could be well explored thanks to the game theory. In fact, if you know that your competitors who with you are negotiating thinks you are honest, then you can adjust your strategy if you are not honest. He has got bad information and could suffer from it: you are not going to respect what you said (accepting the cartel) and you are going to do huge profits whereas he is losing money! Bibliograhie “Economics”, Stiglitz B. [...]

[...] The game theory could be one of these methods. How could be the Nash equilibrium or the prisoner dilemma a good help in negotiating? I am going to explain a certain number of example in which game theory can be used. Let's speak a little bit about huge companies in a situation of oligopoly. It means that we are in a market with a limited number of companies. Let's take a clear example: in his book, “Economics”, Joseph Stiglitz takes this example: Let's say we are company selling clothes. [...]