Rules of the Game

1. Rules of the Game 1. Play the game in groups of four 2. Play a total of ten “rounds” 3. In each round, each player throws down either a “Y” or an “X” 4. You will each receive a different score for the round, depending on: • Which card you throw • What cards the other players throw

2. Payoff Schedule 4X’s: Each player loses $1 3X’s, 1Y: Each X wins $1, Y loses $3 2X’s, 2 Y’s: Each X wins $2, Each Y loses $2 1X, 3Y’s: X wins $3, each Y loses $1 4Y’s: Each player wins $1

3. Rules of the Game 5. You must play each of the ten rounds 6. Rounds 5, 8 and 10 are bonus rounds: • In round 5, your score is multiplied by 3 • In round 8, multiplied by 5 • In round 10, multiplied by 10 7. Just before each bonus round, you may talk 8. You may not talk before any other round

4. What does “winning” mean? • Highest individual score? • Highest group score? • Defeated members of own group by greatest margin? • Scores that approach equality? • Other?

5. Choosing “X” vs. “Y” “X”: Lowest Risk: Only 1 Loss Option Highest Payoff: 3 Win Options “Y”: Highest Risk: 3 Loss Options Only one way to joint gains

6. Issue: An inherent tension exists: • Between cooperating and competing • Between creating value and claiming value

7. The tension: • Competitive behavior often drives out cooperative • If everyone competes, everyone loses • And joint gains are possible through cooperative behavior • But competers can “win” at the expense of cooperators

8. What is an “X” in real life?What is a “Y” in real life?

9. When does the game begin? • Non-verbal cues are very valuable • Good communication is key to negotiating • Always ask: • What information am I receiving? • What am I sending?

10. Framing • Did anyone resist giving up points they’d “won”? • Anyone argue for counting from the beginning, not round five? • This is “loss aversion”

11. Impact of trust, reputation and relationships • Would Round 10 have been different if you knew you would play the game again? • A continuing relationship alters payoffs • It affects decisions whether to claim value, and your overall goals in the process

12. What is “winning” in your work?

13. Some lessons of the game: When communication is poor and people focus on individual scores: • Negotiating tactics vary widely • Misunderstanding / anger / defensive-retaliatory moves occur • Result: Escalating competitiveness and a low overall score

14. How to avoid this in litigation? • Try a “Y” approach on process issues • Avoid “unfair” or “big” X’s on substance • Ask / negotiate / warn over apparent “X”s • Retaliate if necessary -- but delay and limit response • Renegotiate process / allow them to reform

15. How to avoid this in dealmaking? • Begin with a “Y” strategy • Look for evidence they are using Y’s • Develop relationships and agreements • Ask / negotiate / warn over apparent “X”s • Retaliate if necessary -- but delay and limit response • Renegotiate process / allow them to reform

16. X’s in litigation deny information to the other side fail to make reciprocal moves—share info, etc arrive without authority, or claim lack of authy come to get free discovery, not to settle stonewall, renege, insult, etc. reinforce a client’s rigidity; play for yourself, rather than the needs of your client or the situation

17. Y’s in litigation admit risk in litigation and your interest in a deal provide information about the merits explain interests—what you really want volunteer a concession help solve the other side’s problem