TheTwoDollarGame
Prof. Mary Rowe,MIT
The Two Dollar Game is the openinggame in Negotiation and Conflict
Management.
Itwasdevelopedinordertoillustratesomebasictoolsofnegotiation theory,inthe simplestpossiblegame.
Majortopicsinclude:
• The nature ofcompetition—“distributive”or“win-lose”bargaining—inwhich thegainofonepersonisthelossofanother.Thiskindofbargainingiscontrasted withcollaborative(alsoknownas“integrative” or “win-win”)bargainingin whichbothpartieswin.
Inreallifeitcanbe difficulttoillustratepurewin-losebargaining,becausetrue win-losesituationsandpurewin-winsituationsarerelativelyrare.(Most negotiations are actually “mixedmotive”bargaining,includingbothdistributive
andintegrativeelements.Pure win-lose bargaining is rare inpartbecauseintangible elementslike“relationship”enterintomostnegotiations.Purewin-winisrare because resources are scarce).
The Two Dollar game thereforeillustratesallthreestrategies in negotiations. The gameinitiallyappearstobepurewin-lose.Butbecauseofsecretinstructions,and thenatureofrepeatnegotiationswiththe same person, the game will become a mixed motive game, or even integrative,inthelasttworounds,ifplayerstrade moneyforintangiblebenefits.
•Theconceptofa “bargainingrange”whichcanbenegative,ifthereisnoroom forsettlement—orpositive,ifthereisroomforsettlement.Italsointroducesthe idea of a Resistance Point or a “ReservationPoint” (RP—thepointatwhicha personwilleitherstopbargaining,ormove their RP to achieve a settlement.
TheideaoftheRPalsointroducestheideaofafallbackpositionorBATNA—the Best Alternative To a NegotiatedAgreement,sincethisbest alternative usually defineswheretheRPwillbe.Anditintroducestheideaofa“target”—theamount thatapersonwishestogetintheprocessofbargaining.
•Majorstrategiesthatpeopleadoptinnegotiations:Competition,Collaboration, Avoidance,Compromise,Accommodation,andRevenge.Thesestrategiesare thesameasthoseweteachinthenegotiation theory model, and the first five are alsointheThomasKilmanQuestionnaire.
•Howa playermightbeableto“diagnose”his or her ownnaturalstrategiesin negotiation(strengthsinstrategicplayandalsostrategicweaknesses).Peoplewho instinctivelylovethegame(andmanystudentsdolovethisgame)usuallyhave strong Competitive skills. Some players easily Compromise---infacttheywilldo thiseveniftheyaretoldnotto.Thosewhoinstinctivelyhatethegamemayhave high Avoidance or Accommodation scoresin the Thomas Kilman Questionnaire. People who “escape” the game and break the rulesinordertocreatesidedealsoften haveCollaborativeskills.Andpeoplewhoarevengefulonthethirdroundbeginto understandtheRevengestrategy.
One can also possibly learn something about thenaturalstrategiesoftheother playerbyobservinghowtheyplaythisgame. The game is, thus, a quick diagnostic, inconjunctionwith theThomasKilmanQuestionnaire,forneophytestolearntheir naturalskillsandvulnerabilities.
•Anunderstandingofwhy“splittingthedifference”isnottheonlywaytodivide whatisonthetable,andwhyitmayormaynotbethebestway,inreallife.
•The importanceofintangibles (such as relationship, trust,friendlyfeelings)as well astangibles (in this case money) as sourcesofvalueinanegotiation.
•Thehugeimportance,inreallife,ofrepeated interactions with the same person—inbuildingorlosingagoodrelationship.(Wedonotusuallybargain justoncewiththesameperson.Weofteninteract with the same person more than once. This means that even asimplegameofdividingtwodollars,inwhatis supposedtobeawin-losegame,isnotin fact purely competitive. Because of the effectofsuccessiveinteractions,positiveandnegativefeelingsbecomepartofthe intangibles that are won orlostintheinteraction.)
• The fact that one’sstrategyisnotthesameasone’sstyleanddemeanor.(One canbeverycompetitiveandverycharming,orcollaborativeandaggressive,or competitive and aggressive, etc.)
•The importanceofethicsinnegotiations---howcomfortableamIwithmaking upastory,andhowdoIfeelaboutanegotiationspartnerwholiesorthreatens?
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Here is how it works.Theclassisdividedintopairs.EverypairhasaGeneral
Instruction,todivide$2betweenthetwoplayersinthepair.Theyareinstructed thatthegameispurewin-lose—nosidedealsorsubterfugesareallowed.
Althoughtheplayersdonotknowthisatthebeginning,theywillplaythegame threetimes.Thefirstandsecondtimetheychangepartners.Butthethirdtimethey aresuddenlytoldtheywillplayagainwiththesamepartner.
Playersnaturallyfirstthink,“Thisiseasy,wewilljustdividethetwodollarsin half.
ButeachalsohasaSecretInstruction. TheSecretInstructionstilteachplayer towardcompetition,accommodation,orcompromise. The Secret Instructions deal withintangibles(myreputation)andtangibles(theamountofmoneythattheplayer mustwin).SomeSecretInstructionsalsodealwithstyleanddemeanor.(In addition,somestudents,althoughbreakingtherules,willcomeupwith collaborativesidedeals).
Debriefingthegameafterthefirstround:Insomepairsthereisanegative bargainingrangebecausetheplayershaveeachbeentoldtogetmorethan$1.In somepairsthereisapositivebargainingrangebecausethe“targets”adduptoless than$2.Thissituationillustratestheidea of bargaining ranges, reservationpoints
(theirBATNAs)andtargets,andthereactionsofthestudentswillalsohelpthem diagnosetheirnaturalstrategies,asspelledoutabove.
After the second round:Thesecondrounddealswithintangibles. Here the Secret Instructions deal with style, and intangiblevaluessuchasone’sreputationor distrustoftheOther.Thisroundalsointroducestheideaofcommontactics associated with common strategies.Forexampleoneinstructionrequiresthe playertospeakalmostnotat all—a very competitive tactic.
After the third round:Thethirdround isarepriseofbothtangibleandintangible factorsinnegotiation.Italsoservestoshowtheimportance of a previous interactionwiththesameperson.Insomepairsaplayerwilldealkindlywithan OtherwhodealtkindlyinRoundTwo.In some pairs there will be an impulse towardsrevenge.
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The Two Dollar Game thus efficientlyintroduces some major elements of negotiationtheory.Itisdebriefedinajournal written by each player (later read and commenteduponbytheprofessor).Theplayerisinstructedtonoticewhatcanbe learnedaboutoneself,andalsoaboutothers.
Playersareregularlysurprisedtofindthatsomepeoplelovethegame(orhateit), asdistinguishedfromtheirownreactions, andareregularlysurprisedthatthatare several available negotiationstrategies.(Mostneophytesarefamiliarwithonlyone ortwostrategies).Peopleareregularlysurprisedattheimportanceofaprevious negotiation.
Manystudentsaresurprisedattheamountofemotionengenderedbyanobviously simplisticgame.Thislastisanimportantpointbecauseofthereal-lifeimportance ofemotionsinnegotiation.
The game is easily debriefed a second time,lateron,intermsofSourcesofPower, asetoftheoreticalideasintroducedinthefollowingclass.Forexample,rewards, sanctions,forceandthethreatofforce,relationship,BATNA,moralauthority,and commitmentpowercanallplayaroleintheTwoDollarGame.Studentsalso regularlyandinstinctively“invent”legitimateauthority,expertiseandinformation powertobolstertheirstories.