2/ The first (and only!) time I bought a new vehicle, I called around to 15 or so dealerships to inquire about their inventory. Soon found out that all of them had the model I wanted IN SILVER lingering on their lots. I had uncovered some asymmetric information.
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3/ So I could then exploit that and create a POSITIVE SUM deal. Talk to a dealer. "Can you match
$X?" "Yes, but not a dollar further." Zero sum, right? "Tell you what - what if I take one of those silver ones off you hands?" him, brightening: "I'll knock Y off!"Show this thread -
4/ he said the NEGOTIATION is zero-sum which is incorrect, but which is a distinct claim from the TRANSACTION being zero sumhttps://twitter.com/VarangianSkull/status/1131199030564835334 …
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5/ zero-sum transaction: I have an apple, which both you and I value at $1. You have $1. We trade. Nothing was gained. >>
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6/ zero-sum negotiation: I have an apple that I value at $1 and you value at $2. You have $2. We will trade, and $1 of utility will be created by that trade. ...but who captures it? If I sell for $2, I do. If I sell for $1, you do. At $1.50 we split it.
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7/ This is a zero-sum situation in that there is $1 on the table, and we're both fighting for as large a share of that fixed pie as possible.
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8/ tangential: a problem I had with one farm hand is that he'd always try to grab 99 cents - if not $1.00 or $1.01 - out of that fixed pie. When game is iterated, Schelling point is 50/50. It builds trust which reduces transaction / negotiating costs WHICH CREATES MORE VALUE !
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9/ I'd argue that "negotiations" carried out with threat of force are actually negative sum, not zero sum. https://twitter.com/Storris/status/1131202774664925185 …
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End of conversation
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They assume everything is valued equally by everyone, which it is not. Buyer values good higher than seller. Absent coercion, a transaction takes place when all parties believe they benefit. With coercion, transactions may take place that leave some (or all) parties worse off.
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