Investigate the use of game theory in negotiation. What are some of the ways it might be used? How is it a more effective method for producing a good outcome for a negotiator than more traditional methods?
In our case, we have to imagine a negotiation situation. It is just to imagine two parts meeting for the first time where both sides can win potential gains. The point is that none of these parts knows anything about the other, but they both have to discuss and to make decision on the belief (or nit) of the opposite part behavior. We want to know how those parties deal with that situation and how they can analyze and/or anticipate the opposite reaction.
[...] According to what was said before, we have to focus on that aspect of negotiation because it leads a part involved in a negotiation process to formulating an effective strategy, trying to predict the outcome of strategic situation and to selecting or designing the best game for negotiators to be playing. But referring to what is written in the specialized press on the topic and according to the said and beliefs of consultants (John Stuckey & David White for McKinsey Sydney) and business leaders: for the firms that want to get their hands on a sliver of the airwaves, their best bet is to go out first and hire themselves a good game theorist.” The Economist, July p “Game Theory, long an intellectual pastime, came into its own as a business tool.” Forbes, July p “Game theory is hot.” The Wall Street Journal February 1995, p. [...]
[...] The situation is: The players: two prisoners The strategies: the both had the same scheme of action. Prisoner one: confess or don't confess Prisoner two: confess or don't confess The payoffs and information: the prisoners decide at the same moment without knowing what the other does The payoff consequence is measured by the number of years in jail. Thus, game theory can be classified in two branches. The first one is the non-cooperative strategy where both parts (players) work without taking into account what others are doing. The other one is the cooperative strategy. [...]
[...] Let's take the most popular example of a game to illustrate this notion of game theory: the prisoner dilemma. Before exposing it, let's briefly summarize what is vital in a game. It is important to define de key elements of the game. Those elements are: The players: Who is interacting? How many players are involved? Does nature/chance play a role? The strategies: What are their options? The set of all the actions that can be performed by the players. The payoffs: What are the players' incentives? [...]
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