Tuesday, October 8, 2013

Shhh! Don't Tell 'Em You Want Compromise

With the uproar over the partial government shutdown and the debt ceiling stalemate, there seems to exist a sentiment that federal politicians are somehow not following the wishes of the electorate. Of course the electorate in not a monolith, but the feeling from news programs is that the deviation is not just unrepresentative but completely detached from any of their wishes. Interviews show the public wanting negotiation and compromise to get back to a more stable environment.

Maybe the general public's frustration was all too predictable. Further, maybe the general public unwittingly contributed to the rancor. How?

Politicians know that the American people are likely to demand compromise in the face of prolonged arguments:  You want eight popsicles; we want twelve popsicles; make it ten and get back to business.

So if you are expected to compromise at the end, then the rational decision is to adopt the most radical position initially. Where do you think the eight and twelve came from?

At the extreme, imagine a company that has a history of difficult salary negotiations. In response, the company implements a policy whereby the applicant and the manager split the difference to determine the salary. How much are you going to ask for? How much will your boss ask for? Now we're talking extreme amounts of popsicles.

In a counterfactual universe, the public values not compromising and sticking with one's initial demand. This seems counterintuitive to a public that wants less fighting. But to what outcome would this lead? If you have to stick with your first demand or very close to it AND you know the other guy does as well, then your initial demand will have to be very close to what you believe the fair outcome would be. If your demand is too far from your opponent's then you risk violating what the public values. Since you both understand this, your fight will be over 9.1 and 9.4 popsicles. Boring...just like you like your politicians.

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