1. Tacit Negotiations and Social
Dilemmas
Presenters:
Ahmed Ibrahim
Faten Attia
Nourhane Abdel Rahman
Ossama Abdel Razek

2. By end of this presentation, we will
be able to learn
• Tacit Negotiations
• Difference Between Tacit and Explicit
Negotiations
• Social Dilemma
• Rational Analysis
• Tragedy of The Common
• Escalation of Commitment

3. Tacit Negotiations

4. Tacit Negotiations
Originally, The word Tacit comes from
Latin word (Tacitus) which means
“Silent”
In other words: it means “indirect”

5. Kyoto Protocol 1997

6. Difference between
Explicit & Tacit negotiations

7. John Nash, American
Mathematician who won
Noble Award For
Economic Sciences in
1994
In Early 50s, Nash made the distinction
between Cooperative & Non-Cooperative
Negotiations

8. Cooperative Vs Noncooperative
• Contract is explicit • Contract is tacit
• Mutual understanding • People often do not know what
others will do
• People negotiate via proposals • People negotiate through their
and counterproposals and can behaviors and actions rather
use words to justify their offers than promises
• People usually come to the • People are often pulled into
table voluntarily negotiations without wanting to
be involved

9. Example of Tacit Negotiation:
US Policy Vs The Egyptian Revolution
US Policy was blessing Mubarak system as he and his
regime had been paving the way to American
interests in the region over 30 years

10. Demonstrations Swept everywhere
in Egypt on 25 of January 2011
th

11. On Jan 27th, Clinton stated : “Egyptian Government
seeks ways to implement political and social reform.
and we will support the government to reach its goal”

12. The US Government Waited to See How and Where
things are going to be settled

13. By early February,
Obama Started asking
Mubarak to Leave
instead of US usual
support

14. After Mubarak Stepping
down, Obama stated:
“Egyptian People have
made it clear, they need
clean fair elections,
Revised Constitution and
real democracy. US will
still be friend and partner
to Egypt”

15. As a conclusion to this type of
negotiations:
> Negotiation was Interdependent (will do
this action when other party does a certain
action)
> Outcomes are determined by actions

16. In Alain Plantey’s book : International
Negotiation in the twenty-first century about
“Silence” in Tacit Negotiations

18. The Prisoner’s Dilemma

19. 2 Person Dilemma
Thelma
Do not Confess Confess
(Remains Silent)
Do not Confess A B
(Remains Silent) Thelma: 1 Year Thelma: 0 Year
Louise: 1 Year Louise: 15 Years
Louise C D
Thelma:15 Thelma:10 Years
Louise: 0 Louise: 10 Years
Confess

20. example of “Prisoner’s Dilemma”
• The two companies have 2 choices:
a. "cooperate" (each one not advertise its products)
b. "defect" (each one advertises its products)
• Best Choice for Company 1 or Company 2 is to: DEFECT! 

21. Another Example of Prisoner’s
Dilemma
• Consider two competing athletes: Alice and Bob. Both Alice and Bob have to
individually decide if they are going to take drugs or not.
• Alice thinking:
"If Bob doesn't take any drugs," she thinks, "then it will be in my best interest to
take them. They will give me a performance edge against Bob. I have a better
chance of winning.
"Similarly, if Bob takes drugs, it's also in my interest to agree to take them. At least
that way Bob won't have an advantage over me.
"So even though I have no control over what Bob chooses to do, taking drugs
gives me the better outcome, regardless of his action."
• This DILEMMA will force each to take “drugs” as it is after all an “individual
choice”, no trust of the other’s behavior

22. Rational Analysis

23. Case 1: One Shot Decision
• Dominance • Equilibrium
Detection: Outcome:
Negotiator seizes mutual defection No
opportunity no matter Player improves his/her
what’s the other party’s outcome by making
decision : different choice (both know
to confess that this decision
“confession” is the best or
dominant strategy.
Important rule in this case: no communication between the 2 parties.
Conclusion: it is a single choice and living with the consequences

24. Case 2: Repeated Interaction
over a fixed number of trials
• The iterated prisoners' dilemma thus to permit the influence of one party
on another and give them a mechanism to coordinate their actions.
• If two players play prisoners' dilemma more than once in succession and
they remember previous actions of their opponent and change their
strategy accordingly, the game is called iterated prisoners' dilemma using
the Backward Induction Technique where Negotiator decides what to do
in a repeated game situation by looking backward from the last stage of
the game
• Conclusion: defection remains the dominant strategy even in repeated
trial case

25. Case for “Iterated prisoner’s
dilemma”
• 2 political candidates doing their campaigning.
• Terms limits in their state dictate that they can run and hold office for a maximum of 5
years.
• Elections are held every year.
• Start analysis from Election number 5:
For sure: each candidate will campaign as it is the last chance (same as case 1: one
shot case)
So why cooperating in Election number 4 by not campaigning? if Election number 5 is
doomed to be “noncooperative”?
It leads to “PARETO INFERIOR”: optimal outcomes are those of minimally effective
cooperation

26. Case 3: Repeated Interaction for an
Infinite or Indefinite amount of time
• We can’t apply the backward induction as there
is no “endpoint”.
• Forward Thinking logic: parties reason that they
might influence others behavior with their own
behavior by time.
• If “cooperate”, parties signal that choice in early
trials. But not taking it a general strategy as it
might lead to exploitation. 

27. Tit for Tat
Tit for Tat: An English Saying means “equivalent retaliation”
Tit-For-Tat Strategy: Start by cooperating.
Then do whatever your partner did on the previous iteration.
Most of Tit-for-tat can do is to earn as much as its opponents
“For every action, there’s an equal and opposing reaction”

28. Case 1: Tit for Tat
Iran vs. UK

29. • Gordon Brown, the PM of UK:
• As response to Iran’s action:

30. Why Tit for Tat is Effective?
• Not Envious: It never aims to beat its opponent rather than
maximizing its own gain in the long run.
• Nice: tit for tat always begins the interaction by cooperating.
• Tough: tit for tat can be provoked. It will defect if the opponent
invites competition.
• Forgiving: as it reciprocates defection, it also reciprocates
cooperation.
• Simple: people can quickly figure out what to expect from a player
who follows it.
• Stable: negotiators who use this technique often induce their
opponents cooperate.
Tit for tat strategy is not the only stable one, solid defection is a
stable strategy as well. (once someone has defected it is
difficult to renew cooperation)

31. How to Recover from Defection?
• Make Situational Attributions: see other side’s behavior
as a response to our own actions.
• One Step at a time: trust is not rebuilt in a day. GRIT
strategy calls for parties in conflict to offer small
concessions.
• Getting even and Catching up: getting even to rebuild
trust. It generates future cooperation.
• Make your Decision at the same time: to understand that
making decisions at the same time cannot influence the
behavior of others.

32. Superrationality
• People, when taking a decision tend to
believe that others will do the same (they
are as rational as them)

33. Social Dilemma vs. Prisoner’s Dilemma
• Involves several people • Two persons are involved
• Competitiveness is high • Competitiveness is lower than social dilemma
• Cost is concentrated upon one person
• Cost of defection is spread out among the group
• Riskier than Prisoner’s Dilemma (difficult to • The minimal payoff can be anticipated in advance
anticipate people’s behavior)
• Anonymity is impossible!
• Provides anonymity (people can hide among the
group)
• People can directly shape and modify the behavior
• People have “less control over the situation”. of the other person. (choosing defection: punishes
(OPEC example) the other, while choosing cooperation rewards the
other)
• Defection leads to better personal outcomes
• Universal defection leads to poorer outcomes for
everyone than the universal cooperation. If no limits
are placed on the pursuit of personal goals, the
entire society may suffer

34. Different Types of Social Dilemma
• Volunteer Dilemma: it is a situation in which at least one person in a group
must sacrifice his or her own interests to better the group. Benefits: this
volunteering action strengthens group ties.
• Ultimatum Dilemma: one person makes a final offer – an ultimatum- to
another person. If the other person accepts the offer, then the first player
receives the demand that he/she made. And the other player agrees to
accept what was offered to him/her. If the offer is refused, then no
settlement is reached and negotiators receive their respective reservation
points. “take it, or leave it” offer. It introduces the concept of “ Subgame
Perfect Equilibrium”: to offer to the other the minimum knowing that /she
would accept even if the game had additional periods or repeated again. “to
win even 1 cent is better than nothing”.
That is the game theory but not always realized in reality, people tend to
reject this offer if they don’t know the size of the pie. The acceptance rates
are driven by how much information the responder has about the size of the
total pie, comparing their outcomes to others.

35. Tragedy of the commons
• Tragedy of the commons is a dilemma arising from the
situation in which multiple individuals, acting independently
and rationally consulting their own self-interest, will
ultimately deplete a shared limited resource , even when it is
clear that it is not in anyone's long-term interest for this to
happen

36. Tragedy of the commons
• What if many people share the same
resource? And all of them misused it?
• Example: environment pollution and
desertification
• Reasons that drive people to do so:
1. Maximize their own gain
2. Thinking that their action alone won’t have a
measurable impact on others.
Results: if everyone thinks the same, the collective
outcome will be disastrous.

37. Forms of Social Dilemma
• There are 2 forms of social dilemmas:
1. Resource Conservation Dilemma (collective traps): people
collect or harvest resources from a common pool. The defection
choice occurs when people consume too much. Overconsumption
leads to disasters.
Keyword: they “take”
2. Public Goods Dilemmas (Collective fences): people contribute
or give resources to a common pool or community. Example:
Donations, taxes, voting. The defection choice is to not contribute.
Those who do not contribute are called “defectors” or “free riders”.
Example: Positive voters Vs Couchists
Keyword: they “contribute”

38. Negative Competitive Advertising
• It is also called “attack ad”
• Concentrates on comparing the company’s products
with the competitors, showing the advantages of its
own, and the negative side of the others’ products.
• Results:
1. if in business and marketing world: it keeps the price
low and quality high due to competitiveness in the
market.
2. But can also lead to the resentment of the consumer
toward certain companies.
3. As for the producers: they can run each other OUT of
the business 

39. Example of Negative competitive
advertising
• One of the earliest and most famous television attack ads, known as
Daisy Girl, was used by Lyndon Johnson against Barry Goldwater in
the 1964 presidential election. The ad opened with a young girl
innocently picking petals from a daisy, while a man's voice (which
may have had somewhat of a 'southwestern' accent similar to
Goldwater's) performed a countdown to zero. It then zoomed in to
an extreme close up to her eye, then cut to an image of a nuclear
explosion. The ad was shocking and disturbing, but also very
effective. It convinced many that Goldwater's more aggressive
approach to fighting the Cold War could result in a nuclear conflict.
• Let’s watch it together
http://www.youtube.com/watch?v=63h_v6uf0Ao

40. Explicit Comparative Advertising
• Comparative advertising, as a special form of advertising, is a sales
promotion device that compares the products or services of one undertaking
with those of another, or with those of other competitors. All comparative
advertising is designed to highlight the advantages of the goods or services
offered by the advertiser as compared to those of a competitor. In order to
achieve this objective, the message of the advertisement must necessarily
underline the differences between the goods or services compared by
describing their main characteristics.
• It enables consumers to make well-founded and more informed decisions
relating to the choice between competing products/services by
demonstrating the merits of various comparable products. Based on this
information, consumers may make informed and therefore efficient choices.
• Example: Coke vs. Pepsi ad
http://www.youtube.com/watch?v=EMo6o0BtFG8

41. How to build Cooperation in
Social Dilemma?
Structural Psychological
Strategies Strategies

42. Structural Strategies
• Align Incentives
• Monitor Behavior
• Regulation
• Privatization
• Tradable Permits

43. Psychological Strategies
• Psychological Contracts
• Superordinate Goals
• Communication
Perception
• Personalize Others
• Social Sanctions
• Focus on benefits of Cooperation

44. The 3 V Study
VERBAL
7%
VISUAL
VOCAL
VISUAL VOCAL
38%
55% VERBAL
How we Convey message not what we say

45. How to encourage Cooperation
in social Dilemma
• Keep your strategy simple: the simpler your strategy,
the easier it is for your competitors to predict your
behavior. Trying to minimize uncertainty for your
competitors , thus reduce the competitive behavior.
• Signal via actions: actions and not just words
• Do not be the first to defect: difficult to recover from
escalating loops of defection
• Focus on your own payoffs, not your payoffs relative
to others: focus on your profits rather than beating the
others.
• Be sensitive to egocentric bias: consider the fact that
your competitors will see you less favorably than you
perceive yourself. Just as you see yourself more ethical
and more cooperative than others.

46. Escalation of commitment
• the escalation of commitment refers to the
unfortunate tendency of negotiators to persist
with a losing course of action, even in the face of
clear evidence that their behaviors are not
working and the negotiation situation is quickly
deteriorating

47. Escalation of commitment
1. personal escalation dilemmas: involves only one person and the
dilemma concerns whether to continue with what appears to be a losing
course of action or to cut one’s losses.
Example: investing money in a car that is already deteriorating.
2. interpersonal escalation dilemmas: involves two or more people, often
in a competitive relationship such as negotiation.
Example: Union Strikes, wars.
Generally speaking:
People fall into escalation traps because initially the situation does not
appear to be a losing enterprise.
Example: Egyptian Revolution Jan 25, 2011 in Mubarak’s Perspective in
the first days of its start.

48. Escalation of Commitment
Commit to End to
Current satisfying
Continue Course result
Reexamine
Negative Course of
Outcome Action to
Occurs Continue
Withdraw
DisContinue and check
BATNAs

49. Avoid the escalation of commitment
in negotiation
• set limits: a negotiator should have a clearly defined BATNA. Not to
accept an offer worse than his/her BATNA.
• avoid decision myopia: a negotiator should get several perspectives on
the situation. honest and critical assessment.
• recognize sunk costs: recognize “money” commitment previously spent
that cannot be recovered.
• diversify responsibility and authority: in some cases, it is necessary to
remove or replace the original negotiators from deliberations precisely
because they are biased.
• Redefine the situation : helps not to look to the situation as “the same
old problem” but a new one, thus helping to change the decision criteria.

50. 4 main questions in this presentation
1. Discuss 2 of the 5 factors of Tit for Tat strategy’s
effectiveness.
2. Discuss 2 differences between social and Prisoner’s
Dilemma.
3. How to encourage cooperation in social Dilemma?
Discuss 2 of the 5 principles.
4. Discuss 2 solutions of how to avoid escalation of
commitment.

51. Thank You!