February 02, 2006

Negotiation and the rule of three favours

Over on Guy's blog I noticed his "The Art of Schmoozing" which concludes with these two crossovers to our local work on favour currencies:

#8 Give favors. One of my great pleasures in life is helping other people; I believe there's a big Karmic scoreboard in the sky. God is keeping track of the good that you do, and She is particularly pleased when you give favors without the expectation of return from the recipient. The scoreboard always pays back. You can also guess that I strongly believe in returning favors for people who have helped you.

#9 Ask for the return of favors. Good schmoozers give favors. Good schmoozers also return favors. However, great schmoozers ask for the return of favors. You may find this puzzling: Isn't it better to keep someone indebted to you? The answer is no, and this is because keeping someone indebted to you puts undue pressure on your relationship. Any decent person feels guility and indebted. By asking for, and receiving, a return favor, you clear the decks, relieve the pressure, and set up for a whole new round of give and take. After a few rounds of give and take, you're best friends, and you have mastered the art of schmoozing.

These two points are actually related in game theory. It works like this: negotiation is split into two separate sides (by what is called the prisoner's dilemma, but please save that for another day). These sides are known as win/win and win/lose, and they are like yin and yang.

Most people can figure out what that means just from the titles - when in a win/win we are looking for how we benefit from each other and both come out ahead in the long run. When in win/lose, I try to win at your expense.

Our problem is focussed then on knowing whether we are in win/win or in win/lose. If we are in win/lose, then we definately should walk away from any deal. Schmoozing, in Guy's terms, is pointless in win/lose, because this just gets you deeper into a potential loss. One day, if not today, when you might win.

So how do we determine which we are in? It's not as easy as one would think.

The answer is definately not in words; and in my experience, if someone attempts to impress you with statements like "let's search for the win/win," it's as good a signal that they may be thinking win/lose as win/win. Be careful not to be lulled in by such mere words, as they are stock in trade for the win/loser.

One way to determine is what I think of as the rule of three favours. In this tactic, you offer three unrelated favours to your counter-schmoozer (Guy's #8), and you also put yourself in the position of desiring the return of those favours (see Guy's #9).

But don't desire it too aggresively - the essence here is to see whether the person will accept the favours, and naturally return same when given the opportunity.

Why does this work? It works because win/win and win/lose are very very deep-seated human patterns of behaviour. People are generally either one way or the other. Most people naturally fall into win/lose, probably from childhood battles and the general darwinian environment of the kindergarten. As we grow older and mature some, a lucky few of us discover the higher plain of win/win, and we work hard to develop that attitude.

So if you offer three nice juicy favours to a normal, natural win/lose schoolyard bully, it will be beyond their ability and their understanding to avoid abusing the offering. Which means they will take the favours and not return them. Even if a natural win/loser understands the theory of win/win, he has a choice - either practice win/win at some short term practical and emotional cost, or go with his gut instincts. Either way, he reveals to you whether he is ready for some serious business.

And thus you differentiate your partner. We need to try three times, as one test can be accidental, either way. Two can be a pattern, but three is consensus.

A final tip - don't forget to uncorrelate the favours, so don't mark them all with a pressed flower!

Posted by iang at February 2, 2006 06:51 AM | TrackBack

Ah yes. This prompts a very pleasant memory of grad school.

Jon Elster discusses the strategic performance of favors in
his "Social Norms and Economic Theory" (1989).

It is plausible that norms of reciprocity do, on the whole, have good consequences. Even in this case, however, there are counterexamples, since these norms can become the object of strategic manipulation. An extreme example of such ambiguous altruism is found in Colin Turnbull's description of gift and sacrifice in this society
among the miserable Ik of Uganda:

These are not expressions of the foolish belief that altruism is both possible and desirable: they are weapons, sharp and aggressive, which can be put to divers uses. But the purpose for which the gift is designed can be thwarted by the non-acceptance of it, and much Icien ingenuity goes into thwarting the would-be thwarter. The object, of course, is to build up a whole series of obligations so that in times of crisis you have a number of debts you can recall, and with luck one of them may be repaid. To this end, in the circumstances of Ik life, considerable sacrifice would be justified, to the very limits of the minimal survival level. But a sacrifice that can be rejected is useless, and so you have the odd phenomenon of these otherwise singularly self-interested people going out of their way to 'help' each other. In point of fact they are helping themselves and their help may very well be resented in the extreme, but it is done in such a way that it cannot be refused, for it has already been given. Someone, quite unasked, may hoe another's field in his absence, or rebuild his stockade, or join in the building of a house that could easily be done by the man and his wife alone. At one time I have seen so many men thatching a roof that the whole roof was in serious danger of collapsing, and the protests of the owner were of no avail. The work done was a debt incurred. It was another good reason for being wary of one's neighbors. Lokeléa always made himself unpopular by accepting such help and bv paying for it on the spot with food (which the cunning old fox knew they could not resist), which immediately negated the debt.

It's hard to overstate Elster's clarity as a writer, or his rigor and cleverness as a thinker.

Posted by: Chris Walsh at February 2, 2006 04:05 PM

In a prior life, Anne once had to play the win/lose, win/win game when they sent her to advanced executive school (at the xerox executive training center near dullas airport that a lot of companies use). She played win/win until the last round and then played win/lose on the last round (nearly bringing some grown men to tears). Doesn't work as well in real life since there rarely is a "last" round.

Posted by: Anne & Lynn Wheeler at February 3, 2006 11:29 AM


Some would argue that is ok because it is just a game. But sometimes game play in games spills over to real life. OTOH, grown men need to be taught a hard lesson from time to time...

(I wanted to mention in the post but couldn't find the spot - I'm slowly working on my manual for negotiation ... I've given up trying to teach people directly, it seems a very hard thing to do.)

Posted by: Iang at February 3, 2006 11:36 AM
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