472NOT05.txt				September 8, 1996

GAME THEORY: viewed bargaining as strategic interaction between rational
actors who seek to make static choices. Single plays of a Prisoner Dilemma
and Chicken game emphasize static choice. Classical game theory treats
matrices as fixed, then asks what is the best course of action in a zero
sum mode, where what one actor wins another loses. Schelling broke with
classical game theory and treated threats, promises, commitments as matrix
modifications. Schelling applied quasi-game theory style to wide variety
of mixed-motive variable-sum situations. There are both cooperative and
"conflictive" aspects in a bargaining situation. When one player gains,
another may also.

BARGAINING: action intended to alter likelihoods of certain events over
which another actor exercises some control. Bargaining is an
"indeterminate" decision process--one in which it is virtually impossible
to calculate what an individual should do in a given bargaining set. Why?
Likelihoods, values, and possible outcomes all may vary during the
interaction. Because bargaining situations are indeterminate, they allow
for action to resolve the situation in one's own favor. Each actor seeks
to resolve a conflict of interests in its favor by using some combination
of search, persuasion, and strategy. Actors are bounded by cognitive
limitations, such as ability to handle only about 7 pieces of information. 

SEARCH: Discover or invent new alternative that is jointly consistent with
opponent and self. Is there another way to resolve the conflict? Although
businesses see large numbers of candidates for job vacancies, they
generally only consider a small number of options for policy decisions.
Search reveals negative information about unacceptable options. Search is
less revealing of your values than is strategy, which displays positive
information about preferred options. Search is an excellent prelude to
persuasion.

PERSUASION: Change appraisal of values opponent assigns to outcomes. Alter
adversary's view of likelihoods and/or values for events so that adversary
prefers and chooses an option favorable to me. Sellers emphasize
consequences of purchasing that are important to customer but are not
under control of seller. "Unexpected costs may follow. Anticipated
benefits may not." Persuasion works on events under opponent's control.
Costs and benefits whose likelihoods are affected by the seller's words
flow directly from event in question. Persuasion yields less information
about an actor's values than strategic action. Events relevant to
persuasion are NOT under the actor's control. If no control, no
equivalence between value and probability. 

"I very much may want to attend a picnic, still assert that it is going to
rain, and seek to persuade you that it must be canceled." BUT "If I
control the weather, then it appears that I do not want the picnic to take
place."

EXAMPLE ACROSS SEARCH, PERSUASION, STRATEGY

Two people can't decide between two restaurants.

Search:  How about a third eating place?

Persuasion: If you eat here, you'll enjoy it!

Strategy: Victory goes to the person who announces intention and breaks
communication. Surer one is that an offer would have beneficial
consequences for a persuader, the more information will be discounted.
Discounting helps defend against persuasion.

EXAMPLE OF PERSUASION 

Seller: "Get into this car at midnight, and at 2:00 AM you 	can be in
Flint. 

Customer: "And what I am going to do in Flint at midnight?

ANALYSIS: Customer arranged to miss the point so as to foreclose
possibility of being persuaded by that particular reasoning,

Strategy as manipulation of predictability of one's own actions so that an
adversary's chooses in one's favor. How can I modify consequences of my
own options so that the opponent chooses in my favor? Strategy makes my
behavior predictable to leave the other side with a simple choice that
comes out in my favor. In strategy, connection between values and
likelihood cemented by strategist's will, commitment, and action. In
strategy, one can translate propositions about likelihood into those
regarding values and vice versa. When control is present, "If I desire to
do X, I stand to gain from it;" and vice versa, "If I stand to gain from
X, then I may be expected to do it."

If a bargaining situation is characterized by less than perfect
familiarity with the values of an adversary, variable sumness, possible
change in the opponent's evaluation of outcomes, then search and
persuasion can be useful preludes to strategy.