Background

• People often find themselves in bargaining situations.
• In a bargaining situation two or more individuals have an opportunity to cooperate - to work together in some way - to produce a valuable outcome.
  • They can work together to make a bigger "pie" that they can then split between themselves.
  • But splitting that pie can often lead to conflicts - each party will often want to receive the biggest slice possible of this bargaining pie, which in turn can lead to conflict.
  • So bargaining involves the potential both for cooperation and for conflict.
• Unmanaged conflict can lead to bargaining breakdowns or failures. Unmanaged conflict can thus make all parties worse off than if they had found a way to cooperate.
• It is therefore important to become quite good at identifying:
  • Bargaining situations
  • Common interests of parties - the outcome or bargaining surplus that they can produce if they cooperate
  • Conflicting or divergent interests - the incentives that parties will have to act in a manner to benefit themselves at the expense of the other parties
  • Potential strategies for reinforcing those common interests and reducing potential conflicts to increase the likelihood that parties will cooperate and have a bargaining surplus - i.e., make the pie bigger.

Assignment

While we find it easy to identify bargaining situations in business contexts, people are involved in bargaining situation in many other contexts. This writing assignment provides you with five contexts in which bargaining situations arise. You are to identify:

• At least 1 bargaining situation within that context
• The parties' common interests
• The parties' conflicting interests
• At least 1 bargaining solution to address the bargaining problem you identified
  • We encourage you to think of creative, outside the box solutions

Please answer the 5 following questions. You can copy and paste the questions into a Word document and answer A through D using the format outlined in Question 1 below.

1. Bargaining context: an AI innovator, with a valuable innovation but no capital and a potential investor with a lot of capital but no knowledge of AI
   1. Describe at least 1 bargaining situation: [Add your answer]
   2. Common interests of parties: [Add your answer]
   3. Potential conflicts between parties: [Add your answer]
   4. Bargaining solution(s): [Add your answer]
2. Bargaining context: three childhood friends in a 4 week European vacation
   1. Describe at least 1 bargaining situation:
   2. Common interests of parties
   3. Potential conflicts between parties
   4. Bargaining solution(s)
3. Bargaining context: three co-conspirators engaged in an ongoing insider trading scheme
   1. Describe at least 1 bargaining situation:
   2. Common interests of parties
   3. Potential conflicts between parties
   4. Bargaining solution(s)
4. Bargaining context: the 89 year old founder of a very successful telecommunications empire and his three adult children
   1. Describe at least 1 bargaining situation:
   2. Common interests of parties
   3. Potential conflicts between parties
   4. Bargaining solution(s)
5. Bargaining context: 50 owners of fishing boats operating in a North Atlantic fishery that is very valuable but is close to collapsing due to overfishing
   1. Describe at least 1 bargaining situation:
   2. Common interests of parties
   3. Potential conflicts between parties
   4. Bargaining solution(s)