Triangle Route (SF - H - NY) $2,818
Triangle Rule (SF - H - NY) = $2,818
Savings of pie is 1,000
Round trips (SF - H) + (SF - NY) = $3818
Pie => save $1,000
ULTIMATUM #1
NY ultimatum to Houston -> HST pays $1332 value
-> Should HST says Yes to 1K, 1.1K, 1.2k, 1.3k???
-> HST <=$1331
Ability to make an ultimatum gives you power
iNSTEAD OF PIE DIVIDED 50/50, NY GETS 99.9% OF THE PIE
-NY shouldn’t be so greedy
-NY → 99.9% of pie
-only cost HST $1 and to cost NY $999
ULTIMATUM #2
What NY should do? Offer H $333 keep $667
-big enough incentive
YES: pay $999 NO: pay $1,332
Version 2:
Experiment offers 2 subjects a $100 if the 2 agree on how to divide it up
One side makes a proposal and the other side say yes/no?
I.e. 90/10 split
Receiver says yes then she gets $10
While proposer gets $90
If they say no they both get 0
Most people reject offers to small
Game as proposer
2nd smallest be you’d be willing to accept as the receiver.
To put yourself in power of a negotiation is to put yourself in yourself in the place of making ultimatum
- Use with discretions
- No lopsided ultimatums
- Ultimatums are crutches in which people overuse
- Otherside will reject your ultimatum though it hurts them
- If it’s a real ultimatum you can’t back out.
When someone uses an ultimatum the best strategy is to push back and demonstrate that the ultimatum isn’t real or to recast it.
Avoid ultimatums with Salaries
- If you don’t give me 65K I won’t come to work for you
- If you offer me 65K, I promise to come work for you
Firms shouldn’t make ultimatums
- 40s - 50s Lemuel Boulware a VP @ GE
- Few people believe 1st offer is your limit
Instransigent: completely unwilling to change, very stubborn
Discretion: speaking to avoid causing offense or revealing private info.
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