Sunday, 28 January 2007
Economics for Negotiation and Conflict Resolution (Diplomacy), as well as for Conflict (War).
In a negotiation, often times in terms of "the end goal", there is one right way that is gainful for all parties concerned. Win-win negotiations is a way to get closest to this right way -- and the time spent in those attempts (e.g., BATNA: http://en.wikipedia.org/wiki/BATNA) is a way to identify that optimized decision for both parties.
Having said that, since the perfect "right" way is a theoretical/hypothetical point that often cannot be stated or reached; it just boils down to applying it as a simple fact that: one party is more right than the other. However, current management courses around the world teach how to win the argument or having it your way by using several techniques (behavioral, psychological). In essence, to put it the harsh way, they help you win the argument and have it your way even in a "Desert Survival game", where your winning may result in the death of the entire team (yourself included).
Even in win-win negotiations, the consideration is not given whether the item in discussion is sensitive enough that the other party will not negotiate on the table (avoidance). For example, even in rationally evaluated cases your BATNA may tell you that you should negotiate, and theirs may say it is not worth it for them. However, often times it is an immeasurable/intangible emotional/religious/personal factor that causes avoidance. But the net result is that with avoidance win-win strategy loses -- because win-win relies heavily on information about the other party (in comparison to your own) and participation/effort. In this manner, management-centric courses may try to treat the symptom and not the disease.
The case I make w.r.t negotiation and/or conflict resolution is the "economics" of it. Once you can employ economics of it to find the most economical outcome, you become more towards being "right' (i.e., closer to the perfect "right" way). Also, using economics you can do diplomacy (i.e., all forms of negotiations and conflict resolution efforts) as well as war (i.e., conflict itself). A special branch of economics (aka., Game Theory and its derivatives) deals with competitive games (conflict), and have since then been extended to collaborative games (multiple person scenarios where everyone wins). The complexity quickly increases with the increase in these number of players, factors and end goals; and in being able to find the "one right" economic outcome. Hence, consultants are hired by top companies like Cisco to do their negotiations and negotiated contracts -- as well as to study their partners and competitors. Once you've done these studies, you are in a better position to negotiate. This organizational team that is rich in this information can then be tied with the corporate strategy team creating great strategies that are economically aligned and "successful in the market". Win-lose or win-win then become a short-term goal vs. long-term goal strategy. Smaller organizations and individuals, however, can't afford these consulting services (nor can sometimes understand what they do!). Also, there are not enough "market data resources" and "tools" available to construct your own models for these things -- both within the company as well as for dealing with the external competitive/partner landscape. This situation is unlike how such data/tools are available for marketing and product strategy.
With my interest piqued in such aspects, I am looking forward to this course being offered at SCU by a great economic professor:
If not, may be someone could recommend a Stanford course I could take on "social and behavioral economics" and "game theory" that ties well into the constructs/applications of "utility theory" and "social welfare function".
In the end, I'd would love the world to have ended up with developing a simple market solution that makes multi-party collaborative games scalable to thousands or millions of users; with costs lowered such that anyone can afford them (say, like a cell-phone) -- without needing a "personal Wharton/Stanford/MIT consultant" for each individual and/or small company that can't afford it today. With such a thing, the world can become a more unified place, with several social evils of injustice, poverty, poor leadership and war being marginalized (if not entirely eliminated) to corners where the tool is not available.
May be a problem for Google to solve?
- Kaleem Aziz.
Having said that, since the perfect "right" way is a theoretical/hypothetical point that often cannot be stated or reached; it just boils down to applying it as a simple fact that: one party is more right than the other. However, current management courses around the world teach how to win the argument or having it your way by using several techniques (behavioral, psychological). In essence, to put it the harsh way, they help you win the argument and have it your way even in a "Desert Survival game", where your winning may result in the death of the entire team (yourself included).
The case I make w.r.t negotiation and/or conflict resolution is the "economics" of it. Once you can employ economics of it to find the most economical outcome, you become more towards being "right' (i.e., closer to the perfect "right" way). Also, using economics you can do diplomacy (i.e., all forms of negotiations and conflict resolution efforts) as well as war (i.e., conflict itself). A special branch of economics (aka., Game Theory and its derivatives) deals with competitive games (conflict), and have since then been extended to collaborative games (multiple person scenarios where everyone wins). The complexity quickly increases with the increase in these number of players, factors and end goals; and in being able to find the "one right" economic outcome. Hence, consultants are hired by top companies like Cisco to do their negotiations and negotiated contracts -- as well as to study their partners and competitors. Once you've done these studies, you are in a better position to negotiate. This organizational team that is rich in this information can then be tied with the corporate strategy team creating great strategies that are economically aligned and "successful in the market". Win-lose or win-win then become a short-term goal vs. long-term goal strategy. Smaller organizations and individuals, however, can't afford these consulting services (nor can sometimes understand what they do!). Also, there are not enough "market data resources" and "tools" available to construct your own models for these things -- both within the company as well as for dealing with the external competitive/partner landscape. This situation is unlike how such data/tools are available for marketing and product strategy.
With my interest piqued in such aspects, I am looking forward to this course being offered at SCU by a great economic professor:
- ECON 430 - Negotiation, Business Strategy, and Game Theory
- General techniques for analyzing business conflict and cooperation problems. Emphasis on the negotiation process from analytical and behavioral perspectives. The manager as mediator and arbitrator. Use of game theory to conduct strategic analysis internal and external to the firm. Applications to agenda construction, voting procedures, labor negotiation, agency contracting, pricing policy, timing of new product introduction.
If not, may be someone could recommend a Stanford course I could take on "social and behavioral economics" and "game theory" that ties well into the constructs/applications of "utility theory" and "social welfare function".
In the end, I'd would love the world to have ended up with developing a simple market solution that makes multi-party collaborative games scalable to thousands or millions of users; with costs lowered such that anyone can afford them (say, like a cell-phone) -- without needing a "personal Wharton/Stanford/MIT consultant" for each individual and/or small company that can't afford it today. With such a thing, the world can become a more unified place, with several social evils of injustice, poverty, poor leadership and war being marginalized (if not entirely eliminated) to corners where the tool is not available.
May be a problem for Google to solve?
- Kaleem Aziz.
