So thank you all for joining, for being issued in this material, for participating today and away we go. That's interesting. It didn't quite do what I hoped it's going to do. My home setup. So I have a light beam so you can actually see me and every now and then you'll see a little halo on my glasses. I've got another laptop set up so I can see your images on the screen and the questions that you have. So thank you for that. I've got a microphone, so in theory, I actually sound a little bit better. I've got a standing desk made out of cardboard. So it's all good. [inaudible] me a green screen which allows me to have this background from the British Columbia. Now, one of the things you will do if you go through the course is you're going to see a lot of negotiations where I've had Yale School of Drama students recreating negotiations done by my MBA students. This was done a few years ago and now I can tell you that these folks are actually getting to be well-known. So we have Leland Fowler, Juliana Canfield, Elizabeth Stahlmann. Leland was in Measure for Measure, and he's also now been in City on a Hill that you can see on SHOWTIME. Elizabeth Stahlmann was in Grounded and she is on Law & Order: Special Victims. Juliana Canfield was in He Brought Her Heart Back in a Box and This House Will Not Stand, and also in Succession. We have Jonathan Higginbotham and Sydney lemon. Jonathan was in John Quincy Adams playing Andrew Jackson. Well, Sydney Lemon ended up being in one of the Marvel movies. She is a Dior model. She played the Burger Queen in a Bud Light commercial and she's also in Succession. So when you see these folks, you will be able to say you saw them here first. Some of you know that I had been an entrepreneur in various parts of my life. I started [inaudible] with one of my students and you'll hear some stories about that as you go through the course. More recently, I started a company to make overnight oats. Some of my colleagues joke that the reason I did that was literally so I could call myself a cereal entrepreneur, which is probably one of the world's worst puns. But the reason I'm telling you this story today, not just for the purpose of self-promotion, is that there's a negotiation story that's connected to. I decided to try and do some things myself, which can oftentimes be a mistake. But in this case, I filed for the trademark, Maker Oats. What I forgot about is that as soon as you file a trademark application, it is public that instant. As a result, there was a gentleman in China, Edward [inaudible] , who bought the URL makeroats.com. Basically, he was watching what happened on the trademark site and seeing that that name was trademarked but the URL wasn't taken, he went and registered it. So I wrote to him, I said, "I see that you've registered the trademark, makeroats.com via application for the trademark Maker Oats. I take it this was done with the purpose of reselling it. My understanding is that under ICANN domain rules, this was [inaudible] in bad faith. So that said, dispute resolution takes time and has costs. At the right price, I'd be willing to buy this from you. However, it's not necessary to my plans. I registered the domain name maker-oats.com, which is easier to read and most people come to websites via Google rather than typing in the URL." So the first thing I'm doing is helping him appreciate that my BATNA, my alternative, isn't really all that bad. I didn't give him a price or anything, I just said I'm interested in buying it. Later that day he writes back to me and says, "Sorry, we did not know and expect that our domain is related to your trademark. Sorry, if it makes you feel bad." This is really a coincidence here. Not right. "I also found the dispute process takes very time and cost wasting. " I'm not trying to make fun of him here, this is just literally what he wrote. "We propose that with USD $2,500, we can transfer the domain to you. Kindly let me have your confirmation ASAP." So he certainly interested in making this happen. I wrote back to him and I said, "I appreciate your concern. Well, I feel bad that you have the domain. I feel even worse paying you 2,500. I'd rather spend $1,300 and proceed with the ICANN dispute process. As I'm the legal owner of the trademark, my lawyer assures me that I'll prevail. While the process takes time, I had maker-oats.com to employ in the meantime. As I wrote before, most people come to websites by search engines rather than typing in the URL. So the makeroats name, which is hard to read, is not so valuable. Based on your $2,500 asking price, if I proceed with the ICANN process, I'll save money and you'll end up with nothing. Thus I suggest you accept $500. If you truly feel bad, this should more than cover your costs. If you don't feel bad, then I am prepared to employ the dispute process." So what I'm doing now is telling him that as a BATNA or the alternative, the $2,500 is just ridiculous. There's no reason for me to spend anything more than $1,300. [inaudible]. He writes back right away and he says, "Thank you for your quick response. Sorry that $500 is too low for me. Considering the dispute cost and time, I suggest that we meet up at $1,100. I'm leaving for my vacation from 9/1, so you can please confirm me ASAP. Now, what should I do at this juncture? Now, I'll look at chat to see what people think. Offer 800, offer 500, 700, don't pay him a dime. Yeah, I like that strategy, meet in the middle, compromise. Well, those of you who have at least made it to the first week, will realize, thank you for saying that; what is the pie? So that's time to bring out the pie guns. Here's how I see things. Avoiding the Icann dispute process will save me $1300. That's what's available to share between you and me, in other words, that's the pie. Your proposal of 1100, I'd end up only $200 ahead and you'd end up 1100 ahead. That doesn't sound fair to me. It'd be like my offering you $200 and keeping the $900 savings for myself. I'm willing to split the savings evenly with you, 650/650. But that's as far as I will go. That is, I'll pay you 650. That'll leave you 650 ahead of where you'd end up if I pursue the dispute process and I'll end up 650 ahead. Okay, he writes back, thank you for your reply. Let's meet up at 900. That is my final price. I think if you cannot accept this price, we have no choice. Kindly understand my original price was 2500. I'm leaving very soon, let's seal the deal. Have a good weekend. What should I do at this juncture? So I'm going to do a poll. See if I can make this work. What should I do? Launch the poll. Here we go. See what people are saying. Not that many people are going for it. Take a little sip here for one sec. [inaudible]. Dishonesty is making [inaudible] Helen, I need you to mute everyone then I will unmute myself again. Participants or attendees? Just panelists. Sue him. Sue him, thank you. All right, let's end the poll and show you what you got. So essentially, I see this, that five percent are prepared to say yes, 30 percent want me to walk away, the whole firm, and walk away and go to Icann, 11 percent. One issue in question is where did he come up with that 900 number? My view on that is essentially, I was at 650. He was 1100 and so you average the 650 and 1100, you get to 1750 over two, 875, he rounds up. This idea of meeting halfway is not a principled argument. What I did is I gave him a reason why we should do 650, which is we could save 1300 and I was prepared to split it. He's not coming up with any reasons here. He's just trying to think about I'll go here, you go there and to those of you who saw the first video, it's like The Office scene, 5, 4, 3, 2, 1, shake my hand, do this deal. So what did I do? In the end, I actually did nothing. I didn't even respond to his email and he writes back, we decided to accept your offer of 650. Let me know the escrow account. Now, does Edward care at all about fairness? Do we have thumbs up or thumbs down on this one? Thumbs down, exactly. This guy does not care for the slightest about fairness. So why does he accept my offer? I'd say there's two reasons. One, 650 is better than zero. But the other is, if he believes that I care about fairness, then he's going to be in a position where he says, "You know, this guy really could walk away." So a lot of the course I'm emphasizing the role of fairness and even if you're negotiating with somebody who doesn't care about fairness, so long as they are convinced you care about fairness, then you can hold firm and have that principle, and once you walk away from it and you say something like 750, 775, then it says you actually have given up on your principle. I don't want you to be doing that because I have no idea where you will end up. I didn't do this thing perfectly. One, I could have done a little bit more homework. One of the things I want to emphasize in negotiations is really getting as much background information as you can and one of the things that I could have done is check his prior experiences at Icann. It looks like the last three cases that he went to Icann with, he lost all of them and normally, you lose, if you look at the bottom line here, the respondent did not reply to the complainants contentions. So basically, this guy knows so much he's going to lose, he doesn't even bother trying to win when he goes there, and I could have pointed out to him that his history at Icann was O for three. It could be O for four, and that I knew that and it wasn't going to be very hard to win. The other part, if you like, with the other moral of the story, is that you can buy Maker Oats at Amazon. You could buy it at your supermarket, if you live in Florida on Publix or in California or Whole Foods Southwest. There are people selling it for $23. Do not buy it from those folks. It should be 9.99 and it's a great organic, no added sugar product. Here it is, so it's a little promotion there, but it's one of those great things to stock during this time that we are stocking things. If you want to buy lots of it, you can email us and we can find ways of sending you cases. The next quick story is something that took place with my wife, Helen, who is here helping in terms of the slides. We were in New York City when New York City was still working and it was around Thanksgiving. We ended up passing the Stuart Weitzman store where these pairs of shoes [inaudible] she was interested in buying, they fit perfectly, but they were also pricey. So actually, time for another quick poll. Let's see if I can figure how to do this. Yeah, let's see. Launch the poll. So here you are at Stuart Weitzman. How many of you would feel comfortable asking for a discount? It's running 60-40 in favor of doing that. Let me just show you all. There we go. Well, what we ended up seeing was the following. We said to the salesperson, "Look, Black Friday is coming up in three days and you expect these shoes are going to go on discount then." Her response was, "Yes, they will. But perhaps by Friday, your size will no longer be available, or on Friday, it might get sold out. So I can give you 30 percent preferred customer discount if you buy them right now." We said, "Yeah, sign me up." So we ended up buying them. The reason I'm sharing this story with you is that to the 40 percent who are uncomfortable in terms of doing this negotiation, saving $120 in one minute is the equivalent of $7,200 an hour or 12,000 pre-tax. Other is that instead of just asking, I'd say, "Look, can you make these shoes less expensive?" Asking with the reason seems to make a whole lot more effective. Here, the reason is I could wait three days. I'm not saying I won't buy them, I might buy them, I might not. This person now has to worry that she's not going to get a commission or the sale isn't going to happen. It turns out I asked her after we're all done, "How is it that you ended up having this 30 percent discount you could give me?" She said that she was a new salesperson at the store. The established salespeople had a mailing list of their preferred customers to whom they could send the discounts, but she didn't and so she was allowed to give out discounts cards to establish a new base. Now, we're her fan and her loyal customer. So how to had a different salesperson who might not have worked, in which case, I would have had to decide to buy them that day or on Friday. Again, I want to encourage you to think about not just finding opportunities to ask but finding the reason why it makes sense for them to give you this discount. Now, most of this course is not about buying shoes, it's about more important aspects of negotiation. But it's usually when I ask my students the same question, they were like you, 60-40 as remarkable. Some of the things they were prepared to do are not to ask for discount. In particular, some of them talked about hiding the shoes so they could find them on Wednesday somewhere in the store, others talked about buying them and then coming back on Friday and returning them, getting a credit, and then buying them. Those, to my view, is just insane compared to simply asking, is there something that's possible to save me some money? Oftentimes, by the way, if you give them join a mailing list, they'll just give you 10 percent at that time. You've done the hiding before. Thank you for being honest about that. So I appreciate [inaudible] , always better to give a reason. I'm a game theorist and what I like to do is demonstrate things by playing some games. The game we're about to play is going to illustrate I think one of the most important principles [inaudible] Helen, I think we need to do the media again, not sure what's happened there. [inaudible]? Yeah. Great. So here's the way the game works. I picked a number between one and 100 and your job is to guess the number. If you get it right on the first time, it's worth $100, then 80, then 60, then 40, then 20, and then zero. My view in life is that games like this, you only count if they are real. So yes, I have here five 20s or $100. Now, my question to you, and I'll see what we have from the chat, is, what is your chance of success in this game of making any money? So I'm seeing one in 100, and that's [inaudible]. The reason I'm really right is because I think you actually went right little fast there. It's five and 100, and that's because you have five guesses. So in order to increase the chance of success, I could help you out a little because five and 100 isn't all that sporting. So what could I do to make it more interesting for you? What would you like? [inaudible] ask higher or lower. Yes. Who is that? Just I see you, I hear you. Rashon from London. Hi Rashon from London. So I like that spirit. So in fact, yes, I'll tell if you're high or low. So Rashon, what is your first guess? Fifty. Fifty. Fifty is too high, but you can continue. Twenty five. Twenty five is too low but you're getting closer. Thirty-five. Thirty five. Getting closer still, but it's too low. I'll go for 45. We're sticking with Rashon, if you don't mind. Thirty eight. Thirty eight. That's interesting. Thirty eight is too low, but Subra has going for 42 here. So you know what, I'm going to help Rashon out here and say, not only is 38 too low, 42 is too low. Now, it wasn't perfect, but it wasn't bad. Just, you can see my hand on the clicker here. So Rashon, what just happened? Those are your predictions of what I would guess. Correct. Because I've just tried to maximize my chances by calling half each time. Correct. You didn't quite. You half the 35, was not quite 37, but it's a tricky math problem. Then you started changing your strategy a little bit in that last one, but we came pretty close. Yeah, definitely. So what's going on here is I like you but I like me more. What I did is I hid the number in a way to make it hard for you to find, that that strategy of the 50, 25, 37 is the ideal strategy if the number were picked at random, because you're homing in as fast as possible, you're getting the most information you could possibly get, except for the fact that the number wasn't picked at random. I pick the number so as to keep it hidden from you. Now, Rashon, I'm going to help you out here in the following way. I'm going to allow you to phone a friend. By that I mean, I am going to tell you, we have the survey, you can all see? Yeah. So people are giving you their answers right now in terms of what they think the right choice is. Great. Just to be clear, you have complete free will so you are not required to follow what it is they're saying, but we have the wisdom of the crowd here. I can also tell you, I've never done like this before. I sometimes just pick one person. So I don't always give them the advantage of having the wisdom right now of so far, we have 500 people who have given their input. I think I will call it pretty quickly here. Let's just be clear. By the way, since every number has been picked, some of you are going to be right. So good thing I'm only playing with one person. Here we go. We have in the poll, here are the results. So you can all see it now. So your last guess? Well, I've been done week one, so I will trust my fellow students and go with 49. Forty nine. So are you going to have to send me your e-mail so that I can Venmo you this? Thanks everyone. Congrats. Good job. Actually not. Oh, no. Exactly. Basically, that whole speech was designed to get you to say 49. No shame in loosing to my Yale professor so that okay. There you go. So thank you for allowing me to keep the big lesson. Lesson is to be allocentric rather than egocentric. Ego is self, allo is other. So what you want to do is understand what the other side's objectives are. You should understand that my objective was, I told you I wasn't trying to help you, and so that whole speech was designed to get you. Now, let's turn to a negotiation example. I had the privilege of working with David Stern who passed away earlier this year. He was the commissioner of the National Basketball Association and was involved in leading the negotiations between the players and union. [inaudible] David had this great challenge, which is not only did we have to negotiate with the players, he had to get the 30 owners to get on the same page and that was incredibly difficult because each of the owners was a billionaire people like Paul Allen, who also passed recently, Mark Cuban. So these are people with high intellect, high egos and what he would do is if he thought that A was the right strategy, but a lot of people were in favor of B. He would make the argument for B so well, so convincingly, so effectively. Then I was convinced watching him that he had just gotten the wrong sheet and then afterwards he said, well, here though is why we have to do A and I think there were two parts of that presentation that made it especially effective. First off, if you were a B supporter, there really wasn't anything left for you to say. All of your arguments had been made and had been made incredibly elegantly. The second and I think possibly even more important, is that in negotiation and in life, we can't always get what we want, but we can always be understood. A lot of times people are continuing the negotiation, there arguing because they think they're not getting their way because if they only explained it better, you would be persuaded and so the way of convincing somebody you understand their argument is to make their argument and that's how I'm going to try and teach this course, which is I'm going to give you some problems like Baltimore, Wine bottle, the Sun and Planet-Gazette case, whereby you're going to be uncomfortable with the answer. I want to show you some of the weaknesses of the pie approach and believed in spite of that, you are still going to like it. It's also to the extent you've seen Chris Voss's book Never Split the Difference. This is what he talks about in the concept of getting the other side to say, "That's right" How do you get them to say, "That's right?" You make their argument for them using your words rather than them. It's a little bit of the mirroring and the repeating back bit. So what I thought I'd do is show you how to do this in the context of the Zincit case, which is the first case that you end up doing in week 3, which I realize not all of you have yet gotten to. So in some ways I'm going to flip the cards a little bit on half the case, but not the whole case. So in this Hasan is selling his patent to a company called Zincit and there are various ways of compensating him. He can get 25 million up front with no bonus, 20 up front with a 50 million bonus and it turns out that the profit to Hasan from A is five million to Zincit the buyers five million under B, it's nine and 8.5, six and nine under C and if you want to know what the pie is in those cases, what you do is simply add up those two numbers. Now if you look at that and you are the buyer, it's clear that you like option E because you get 16 and option a and that's way better than the 5, 8.5, 9 11.5 and if you look at Hasan's perspective, B is the best because nine beats 5, 6, 6 and 4. So now the question is, how is Hasan should you start this negotiation and what David Stern would do is I'm going to make the other side's arguments for them. So in particular he'd say, look in your position as Zincit, I know that I would start off with E and I'd start off with E for two arguments. One E has the biggest pie, it's 20 and the other reason, of course I start with it is that I like it the most its 16. I don't think I'd really expect to get because it's just so wildly unfair. But if I anchor that way and I start you that way, I might soften you up and end up with D. Now, I also appreciate that you know I would want to have B because B is the best thing for me. But you would come back and say to me the thing about B, it's unfair because I'm getting nine and you're only getting 8.5 and so that's why you don't like B. But from my perspective, you know what? I agree with you, 100 percent. I hate that fact about B. I don't like the fact that I'm getting more than you because I'm getting 9, 8.5 and I think that's terrible. I'm getting a half more than you and I am not going to try and defend that. However, for the same reason that I can't defend getting a half more than you. The solution is not to go to D where you get 11.5 and I get six and you're getting 5.5 more than me. That you can see that B and D has the next highest pie, 17.5 for each and so therefore, if we're going to reject E, we're going to be choosing between B and D and in the end of the day for the same things I don't want the solution to the problem of B being unfair isn't to go and jump to D, which is even more unfair. I think if you were to make those arguments, there really is no counter to that and so the good news is that if you do that, you could wrap up some negotiation, two minutes you wouldn't have to spend a lot of time editing and away you go. So never spot the difference. I like that is a little comment there. The notion here is instead of trying defend the fact that you should get more the other side in B, argue against it. It's a weakness of your case, but the solution isn't do something that's even worse. Now, another aspect of the Zincit case is that one way to approach this is to end up with a large bonus and so I'm going to play you an audio, you're not going to be able to see that people negotiating because they were my students and they are real people and I have to keep their identities of guilty hidden. I want you to tell me what do you think goes wrong here? [inaudible] So basically he says I'm not going to give you a salary, but I'm going to give you this really big bonus and she says that's a hard no. So yes, the video was hidden to protect the people doing it. Home is a place where you can see the questions of Q&A. [inaudible] see that panel if I could, there we go. So I'm curious what people, let me just see some responses. Should have offered an alternative. He's losing the negotiation with the beginning non argument. Not a reason why first except the concept. Yes, I love that [inaudible]. lets see if we can unmute him for a moment. Can you hear me? We can. So what should he have done differently? Yeah. In this case, I would appreciate the offer of the big bonus. We tried to negotiate a bonus, and they go back and defend the idea that I need the upfront payment because I already made a big part of the job, and I have an alternative offer. Exactly. So now, why do you think the person started off with a zero upfront followed by the large bonus? What led them to do that? Because they were offended. No, that's the receiver. Why did the person who made the offer do it that way? Of course, they want to minimize their risk. So the big bonus means zero payment upfront. Okay [inaudible] we're agreeing that it should be- Yeah. But they have, probably, the strategy to go to a different point, so they start to negotiate it, and then [inaudible] at a different point. [inaudible] accepted D or E. Let me make the question different. We're all agreeing on what the strategy is. [inaudible] to look [inaudible] onto the big bonus. The question is why did this person start with the low upfront followed by the big bonus? Yeah, I'm going to play it again, so you can all hear it. I'm going to pay you no salary. I'm sorry, I find this a little bit insulting since we've been working- Seven million dollars- We've been working off of this figure so far and I tell you, you're not hearing us right now [inaudible] I'm throwing out, just salary. I think that's a hard no, Mr. [inaudible]. Okay, [inaudible]. So why did this person start off that way? Any sense? Defend this too correctly because they said, "No salary." Correct. That's- So the point is, "Yeah. So I don't pay you a salary. I give you only the profit share." Correct. How else could they have started this? With a same story. [inaudible] I'm not seeing this interestingly in the comments here. Yeah, it's in the chat rather than- I'm looking in the chat. No, I'm just not seeing alternatives that I was expecting. So my view is he could have started off with a high bonus followed by a comment later about the low salary. You see, once he says no salary, she doesn't hear another word that he says. Yes. Because she's totally offended by that. The reason he starts off with a low salary is that's the thing he cares about. He is being egocentric. So he's talking about the part of the deal he likes, not the part of the deal that she likes. If instead, he had said, "How would you feel about a $70 million bonus?" She'd say, "Wow, $70 million bonus, that's amazing. Yeah, I love that." "Yeah, okay. Great. I'm happy to do that for you. But look, if I'm going to give you that big bonus, something's got to give, and in particular, what's going to give is I have to give you a lower upfront number." So just like that example of the numbers guessing game or the David Stern making the site's argument, here, when you're trying to sell your negotiation position, you want to phrase it in the way that the other side hears what they like to hear first, and so that they're actually listening to you. I'm not sure it's really good cop, bad cop. It's essentially, "I don't want you to shut down before I've given you the whole offer." A lot of people in the course just had a super hard time with the wine bottle problem. [inaudible] unmute [inaudible]. One view is, "Maybe I should make an easier problem." The other view is, "No, I should keep it hard, and we should just make sure that you're really going to get there." So here is the wine bottle problem. Andrea and Beth are thinking about sharing a bottle of wine. The value to Andrea is $110. The way that split is she buys a half a bottle at 90, and she values the full bottle at 110. So that means a second half is only worth 20 to her. Now, Beth values the full bottle at 80 and a half-bottle at 50. So at this point when I present it this way, it's incredibly clear what should happen. Since Andrea values the second half at 20, and Beth values a half a bottle at 50, Andrea should sell this half of the bottle to Beth for somewhere between 20 and 50. If we split the surplus here, it should be $35. If Beth pays $35 for half-bottle, she's up 15, and Andrea's up 15 because she sold something for 35 that was worth 20 to her. So that's the example of splitting the pie. Now, that isn't exactly the way that I normally teach this. So here's how it is that I would teach this, and I have taught this in the course, that the BATNA's what happens if they don't reach a deal? Well, they have to either buy a whole bottle or nothing. Andrea values a whole bottle at 110, Beth values it at 80. So essentially, [inaudible] you could do it [inaudible]. Andrea will buy the bottle and end up 10 ahead. Beth will not buy the bottle, and she'll end up zero ahead. So the combined value for the two of them without a deal is 10 plus zero, which adds up to 10. Now, if they do do a deal, how much value can they create? Well, Andrea values half a bottle at 90, Beth values a half a bottle at 50, so the combined value is 140. The cost of the bottle's 100, so if they cooperate, they get 40. Where a lot of people went astray is that they calculated the 40, but what we're talking about negotiation is why the deal is worth more than no deal, and no deal's worth 10? So therefore- Some people are harassing some people. So how do I keep people off if they're harassing? Sorry, one sec. So therefore, the pie is 30, and if we split the pie, each person ends up being up 15. I think you go to Participants and you can remove participants. So let's try. Do you want to just make an announcement that you're- No, I just think we just do it. So in particular, what we should also realize is that when Andrea is thinking about how much she would pay for half-bottle, even though she values a half-bottle at 90, she's not really prepared to pay 90 for half-bottle. Because she can buy a full bottle and become 10 ahead. Therefore, the most she'd actually pay for half-bottle is 80. Because essentially, unless she pays something less than 80, she ends up less than 10 ahead, buying a whole bottle for 100, which she values at 110, leads her 10 ahead, so there'd be no reason to buy a half-bottle at 90. So the most Andrea would pay for half-bottle is 80. We have a pie of 30. So if we split the pie of 30, and both people end up 15 ahead, then it turns out that Andrea should be 15 ahead from 80, which means she pays 65, and Beth, she'd be 15 ahead from 50, which means she pays 35. So let me give you now a new version of the problem. A new version in which we're keeping best value the same at 80, and Andrea values a full bottle at 160. Now, if she values a full bottle at 160, and she values the first half, I'm going to keep it the same as 90. My question to you is what is the pie? I'm going to open up a poll on that. Let's see what people think. You have the remove button on. You see that? In the poll, I realize it's still a little early, but I think we actually have a pretty good collection here. Show the results. So what's interesting here is that some people think the pie is 140 because together, they value the bottle at 160 plus 80 minus 100. That's 240 minus 100. But that's what they get if they worked together, that's not how much more they get by working together compared to no deal. So 140 is too high. In fact, what happens if they have no deal? Well, Andrea will still buy the bottle for 100, which leaves her 60 ahead. Beth, if she buys the bottle, would end up behind, so she would not buy the bottle. So therefore, if they don't do a deal, Andrea can still be 60 ahead. How much better is it the case for them to do a deal compared to no deal? Well, if they do a deal and Andrea gets half and Beth gets half, that's 90 plus 50, which is 140, minus the cost of the bottle, which is a 100. So they'd be 40 ahead. Compare that to know deal which is 60 ahead. So it looks like the pie is minus 20, and five percent if you went there. But actually, in this case, it'd be better to do no deal at all. So sadly, just three percent, which means we've got to do a little bit more work here, because essentially, if they do no deal, they can be 60 ahead, because Andrea just buys the bottle. She buys it at 160 and it only costs a 100. It turns out the second half of the bottle is worth 70 to her, it's only worth 50 to Beth. So transferring something that's worth 70 to 50 is actually destroying value. So it's not the case that you should always do a deal. In order for there to be a deal, the pie has to be positive. [inaudible] able to vote, it seems like attendees can vote [inaudible]. Well, I don't know the answer to that. The good news is that you'll have more chances to practice with this if it's still a little bit complicated for you. But again, the second half to Beth is worth 70, the first is only worth 50. Sorry. It's worth 70 to Andrea, it's only worth 50 to Beth. So it doesn't make any sense for her to sell half the bottle. One of the key concepts in negotiation is this notion of B.A.T.N.A, which stands for Best Alternative to a Negotiated Agreement. In particular, people get confused about what B.A.T.N.A means, because they think it's just this alternative I have, but they forget about the notion of best. So imagine you're looking at a job and it turns out that widget company has offered you $60,000 and you're saying, well, should I work for somebody else, and this other company has offered you a job. That job, let's say is 70,000. That other job, you may not like as much. You say, "Well, if I don't take that, is my B.A.T.N.A going to widget Company and getting 60?" The answer is, that is not necessarily your B.A.T.N.A if it turns out, then you can negotiate with widget company and get them up from 60 to 65,000 or 68,000. So people forget about this idea that the alternative is not necessarily what somebody offered you, but what it is that you think you could get to if you ended up reaching a deal with them. Reservation price is not the price at which you start having reservations. It is the price where it is so high that it ends up being not worth it for you to proceed anymore. So let's do an example of that. We have two houses. The first house lists for 600,000 and is worth 550 to you, and you offer 500. So in this case, what is your reservation price? Let's just see what the folks are saying here. I'm looking at the chat. 550. Yes. You all got it. It's not supposed to be hard. What is your B.A.T.N.A here? Well, I haven't really told you your B.A.T.N.A. It could be living with your mom, it could be continue to look. We don't quite know yet. So to help you out, I'm going to go and give you a more clear B.A.T.N.A. There's another house you don't like quite as much. It's only worth 500,000, but the seller is more desperate, and as a result, you could buy this house for 475,000. So let's try a poll and see what people think the new reservation price is for this house. So your first house was worth 550,000 to you. You have this ability to buy a second house. It's only worth 500, but you can buy it for 475. So far, nobody is saying 600. That's pretty good. A few people are saying 575. It's interesting. I don't know why reservation price would go up for the first house. It isn't worth any more to you than it used to be. We seem to have a little bit of a tie here. [inaudible] There are so many more people in [inaudible]. Great. So I'm going to show you the poll. It looks like we're split almost evenly between 525, 500, and 475. So here's the thing, when you buy the house for 475 it's worth 500 to you, you end up being 25 ahead and so that's great. Therefore, you have to be at least 25 ahead when you buy this house that's worth 550 to you. Which means, there's no reason for you to ever offer more than 525. Here is a way of thinking about this, say you have an uncle and that uncle was willing to buy this second house for you and give it to you for free but you can't flip it, you actually have to live there. If that were the case, what does that change your reservation price for your original house? Now, how much would you be willing to pay? Zero isn't quite right, but yes, 50 is the right answer. Thank you very much, Leo Siebert and all. Because essentially your favorite house is $50,000 more valuable than your second favorite house, and you'd be willing to pay $50,000 more. So if you could get the second house for free, you pay 50. If you get the second house for 475, you'd be willing to pay 525. Let's try and apply some of the tools from this course to some real-world negotiation problems. In Europe, we have a group of car makers: Ford, BMW, VW, Daimler, Kia, Hyundai, who are building electric charging stations all throughout the country. The question is, how should these car makers split the costs between them? To make things a little simpler, let's just reduce the problem to two, Ford and VW, with two billion between them. So how is it that they should split it? I think I have a poll on this, let's see. Yeah, I do, there's a launch. A lot of people think that we should do it proportional. The question is, proportional to number of cars sold, proportional to dollars, profits, stock price, and other. Let's see for one sec. Batna is, yes Jaime, very similar to opportunity cost, you're right about that. I'm going to share the results with you all. So people think perhaps the number of cars, revenue a little last, maybe the total profits, not so much stock price, and 20 percent of you said something else. It's certainly the case that we can't ask Ford and VW to pay the same amount. Because the fact is, that Ford just has such a smaller presence in Europe than VW, that that if they had to pay the same amount, they would walk away from this deal. So folks often are out there advocating in favor of proportionality, but those of you who've made more progress in this course know that I hate proportionality. They don't think it's really the right answer. Even if you did proportionality, there's a question of, should you make it proportional to how [inaudible] engine cars or how many battery cars. But Hashim, you are my man here. That is exactly right. Because in fact, what we really should be thinking about is, what is the pie? Let's go back, you had the runway problem. Where airline A needs a runway of length one and B needs a runway of length two, they can work together and share the same runway. So if they do that, the cost, if they don't work together are one plus two, if they do work together are two, so the pie is one. A needs B just as much as B needs A. They split the pie of one, a half, a half, which means A pays one minus a half and B pays two minus a half or one and a half. So in particular, if we thought about VW and Ford, what we should ask is, what would happen if VW goes alone? I am just making numbers up here, I don't really claim to know this. But if VW goes alone, let's say the cost of two billion. If Ford goes alone, they wouldn't build as big a network, so their costs would be one billion, hence the savings from working together would be a billion. In which case, Ford would pay half a billion and VW would pay one and a half billion. My point and Hashim, is just totally on it. With this, is that you're tempted to do things like, let's make it proportional to something. One view is you can see from our poll that people have radically different views of what's the right proportional, in terms of which cars, electric, gasoline, which measure proportional. So every company is going to have their preferred view of what's fair and what's not fair. But in particular, the reason they're coming together is not necessarily to sell cars, but to save money on building this electric charging platform. What they can do by coming together is avoid duplication. So that's what they're negotiating over and that is not connected to their market size. I thought I'd give you one more recent example of a negotiation, and I've changed the number slightly to make them easier to do. So there's Obe and Alexis, who are two of my daughters roommates, and it turns out that as a result of the corona crisis, they are able to get a rent reduction and their rent reduction is $900. The question is, how should that $900 be split between Obe and Alexis? Let's do a poll. Actually before I do that, I need another poll. Do you like doing these polls? All right, I think the answer here is obvious, I can just share that one. So people are liking the polls, so I'll stick with it, so I will do this poll. Here we go, let's stop sharing this one, let's get to the rent reduction poll. Launching it. So one view is, we have a $900 rent split between them. So we give each of them 450, you'll note that Alexis's rent is 50% more than Obe's. So therefore, we could do it in the three to two ratio, something in between 400-500 and none of the above. Are there any more questions on the Q&A part out of curiosity? Let's just scroll down there. Just the last one is the [inaudible]. Great. I wish that I could show you these polls as they are actually happening live. It's interesting to see. So I'm going to end the poll now because we have about 500. Share the results. So folks think majority go with equal, proportional comes in next, and then none of the above. There's a few of you on the stop something in-between. Now one of the lectures you'll see in the course is this notion of the Principle of the Divided Cloth. What that says is think about how much each side could claim. Well, Obe's rent is 800 and the rent reduction is 900, then there's no way Obe could ever ask more than $800 reduction in her rent. So therefore according to the Principle of the Divided Cloth, Obe is conceding $100 to Alexis. Now Alexis is asking for 1,200 and therefore since it's only 900 to go around, she's conceding nothing, and therefore Alexis is asking for the whole 900 with no concession, Obe is asking for 800 and conceding 100 to Alexis. Therefore this 800 in dispute, you split that 400, 400, so Obe saves 400 and Alexis saves 400 plus the 100 that she was conceded. Exactly, Andrew, this is the same as the creditor question in the first week, the cloth rule. What's interesting to me is of course that what I haven't yet got you all doing is saying, "Oh, wait a second, the principles in this course, I can apply them." It's not just that I'm out there coming up with new ways of making stuff up. But that you can see instead. Andrea has asked why not 450, 450? The reason is again, that Obe doesn't have a claim to the 900, she only has a claim to 800 of the 900. That means that Alexis should be getting a little bit more than what Obe does. So the Principle of Divided Cloth says that Obe saves 400, Alexis saves five, so Obe pays 400 and Alexis pays 700. Now let's be clear that I don't expect people would have come up with this on their own. If you're going to end up with this result, you better explain to them the Principle of the Divided Cloth, so they understand why it's fair and why your approach here doesn't depend on which side you're on. If the rent reduction were 500, for example, then nobody would make any concession to the other, and so therefore it would be 250, 250. Why by the way is this like the pie? The answer is that if we don't reach an agreement about how much to split, Alexis knows that she's going to get $100 in any case because there's no way that Obe is going to walk away with anything better than free rent. So therefore the reason they're having this discussion is to figure out how to divide up 900 compared to dividing up 100. So Alexis doesn't need an agreement to get $100, she could just write Obe a check for 800. Obe would be happy as a clam and Alexis gets 100. Whereas Obe can't write a check to Alexis and satisfy Alexis. So therefore, the point of this negotiation is to figure out how to divide up the other 800, not to divide up the whole 900. Yeah, if Obe moved out, there would be an issue, but Obe would then be homeless right now, and so she's not going to get a better deal than this. Let me turn to the question of deadlines here. So we have a negotiation which will end Friday at 5:00, and everybody knows this. But Abe as it turns out has a deadline Wednesday at 5:00. The question is whether Abe should reveal this or not to be. Oops. Wrong poll. Are you ready for that? So let's see what people are saying. A lot of no's. Do we have somebody who's one of our participants who is willing to share their view on this? Let's see. Hi. Hannah, thank you. Yeah, I think that Abe should not reveal the deadline because if they reveal that the deadline is sooner than the other deadline, it means that whoever has the Friday deadline will know that when it comes to Wednesday at three o'clock, Abe is going to be really crunched and Abe is gong to just settle for anything that they can get. Great. Now, do we have a participant on the other side who wants to make the other argument? Want to raise your hand here or let's see. But it depends on what happens if they don't come to an agreement. They both get zero. Okay. Nadia, let's see if we can. I think Abe should definitely reveal the Wednesday deadline to the other side so both they have two days before the Friday deadline to actually find a solution and negotiation. Okay. So what is Bea's actual deadline? It's Friday. No, it's not Friday. Abe's deadline is Wednesday. So what's Bea's deadline? Well, we don't know that, do we? Also, Wednesday. It's Wednesday as well. It's Wednesday. If Abe can't do this deal by Wednesday, then Bea can't do this deal by Wednesday. Yeah. The only thing that's going on is that Bea doesn't know that Bea's deadline is Wednesday. So what's going to happen if Abe doesn't reveal it is Abe's gong to get nervous, and after you start making concessions around Wednesday, and Bea will have no idea. So people think that revealing a deadline puts them in a weak position, but actually what you're doing is revealing the other side that they have a problem. [inaudible] Let's do the mute again if we can. Muting all. Great. This goes back to the first case we did in terms of the guessing game. People are so egocentric in terms of thinking about the deadline being my problem, as opposed to being allocentric and recognizing that the other person has the exact same problem that I do in terms of when it is that we can close this deal. So let's go back to our first problem, where you got Alice and Bob and they have nine to split up, and Alice can get one on his own and Bob can get two on his own as well. It turns out that Alice has a five-minute deadline and Bob does not have a deadline. Actually both sides know this. So here's my question. Who do you think will get more of the pie? Alice or Bob? I hope you've seen the first video in this course. So you appreciate that if there weren't a deadline issue, we think it would be split equally, three and three. In the poll, I'm going to show you the results. What we can see is that very few people think that having this deadline is going to help Alice, and I agree with that. The majority of you think equal. But a large fraction think that Alice having a five-minute deadline is going to hurt Alice relative to Bob. Now, my view here is that there is no difference between the statement, "Alice has a five-minute deadline" and "Bob has a five-minute deadline." Because what does it really mean? They each have a five-minute deadline because if they don't do a deal in five minutes, there is no deal. However, it turns out that if you look at the research that's done on this, and there's a professor at UC Berkeley named Don Moore. I love his URL, learnmoore.org. You can't beat that as a website, and you'll get the slides, I'll post them in Week 9. What he shows is that in that case that I just gave you where Alice has a five-minute deadline and both sides know this, Alices are so worried about this that they end up making concessions. So I think, by mistake, it turns out that the Alices of this world end up getting less. But that doesn't mean they should get less, it just means that's what actually happens. But now, that you have this material and you understand this better, you should say, if you were the Alice, "Hey, Bob. Look, I have this five-minute deadline which means you have this five-minute deadline, and therefore, we're going to be in the same position and neither of us is stronger, neither of us is weaker. We don't have a lot of time to screw around so let's just make this deal happen." I want to end on what I think is the biggest point of negotiation. Something that I didn't emphasize as much in the course as I'd like to have, but I might emphasize with you now, which I think the way you do negotiation is to start by setting ground rules. So that is, before we talk about money, before we talked about issues, what I'd like to do is say, this is theory of this pie learned in this course called Coursera [inaudible] it's amazing, and that eventually, what I want us to do is not go out there and argue proportional, not do this 5, 4, 3, 2, 1, shake my hand, but actually, agree that we're going to go and make a bigger pie as we can, and that we're going to split it. If we can't agree on that, then we're going to have a difficult negotiation. But I think, people jump into trying to do a negotiation way too quickly instead of thinking about and talking the other side in terms of how they can negotiate. Now, if you do it, you have to make sure two things happen. One is there is not enough just to state the ground rules, you have to make sure the other side agrees with you and actually accepts them. Then even if they agree, that doesn't mean they're going to live by them. So you want to make sure they actually act according to the way that they said they'd act. The reason why I think you shouldn't give up on a principle is that if you do that, I have no idea where you're going to end up. You're going to end up on some proportional, whether it's proportional to miles, cars, revenue, profits, I have no idea, or who yells the loudest, or who intimidates, 5, 4, 3, 2, 1, shake my hand. So once you have that principle, stick to it. Just like in the URL case 650, it's like, here's the pie, I'm prepared to split it, I'm not prepared to do anything differently. Fairness is so important because it's in our DNA. If you look at Capuchin monkeys, they're programmed to cooperate. If there are two monkeys, they're both being rewarded with the cucumbers, not a problem. But if one of them gets rewarded with cucumbers and the other with grapes, the one getting cucumbers says, "Forget this, I'm out here. I'm not willing to do any work." If you do an ultimatum game and you offer people 80/20 splits. The person getting the 20, even though 20 is better than zero, will often turn you down because they think it's unfair. So to the extent that you want to make deals happen, if you can frame it as this is a fair result, then the other side is going to be a whole lot more likely to accept it. Because I'm a Yale professor, I get to go back in time and talk about history of fairness. The just from Aristotle, is a species of the proportionate, the unjust is what violates the proportion, for the proportion is intermediate and the just is proportional. So there is this long history of people thinking that the proportional division is what's fair. I don't agree with that. At NYU, there's a professor named Richard Epstein, and he talks about a world in which what we do is we're able to go from this small circle by working together to create this big circle. What he says is the implicit normative limit on the use of political power, is it should preserve the relative entitlements among members of the group. So what he's saying is this group E which has the most to begin with, should also get the biggest share of what we create by working together. Now, you might agree with it, you might disagree with it, but my view is that you should at least have a discussion because what do I think of the outside ring? How should that be divided up? So what folk say? Equally. Exactly. So you can say, well, I'm wrong, that equally isn't the only answer, maybe it's not the right answer, but what's so striking to me is that there's such a presumption that proportion was what's fair, that there wasn't even view as a need to defend it. Of course, I think that's one of the problems in our society is that these rich getting richer isn't right because everybody is needed in order to create that outer ring and expand the pie. So what did we learn? First, ask, but ask with a reason. Second, figure out the other side's perspective and demonstrate it by making their arguments. When you want to sell an idea, the way you do it is you start with their perspective, lead with what they want to hear. Figure out what your BATNA is and never take something less than that. Understand what the other side's BATNA is. Measure everything as a gain over BATNA because essentially, just that's right back to the Alice and Bob, the one and two, I don't care about the one and two, I care about doing better than the one and two, that's why we're having this negotiation. So the pie is what we get by working together compared to what we have gotten with no deal which is everyone ending up with their BATNA. People come into negotiation with strong feelings about proportional, the ionity example is one of those [inaudible] and help persuade the [inaudible] and that they don't have to stick with proportionality. In pie-land, everything is symmetric, so you can turn arguments around to defend your position. My deadline is your deadline. The pie doesn't have to be split evenly but if you don't do so, that often leads to hard feelings and no deal. People will walk away from unfair deals, it's in our DNA. If you decide to give up on principles, I don't know where you're going to end up, you're going to be in 5, 4, 3, 2, 1 take this deal, shake my hand land. I encourage you to start negotiations by setting up ground rules, use the pie to make things simple and fair, and the world doesn't know about the pie. This course is what's introducing it to the world, and so you're going to have to be so confident in it, so eloquent, so passionate, and so confident that you're going to be able to persuade and explain to people why the pie is the right approach. My last comment to you is to be yourself. That a lot of people think that when they negotiate, they had to become the TV negotiator, the caricature, the intimidation person. But actually, the fact you have empathy and problem-solving skills is what makes you a great negotiator, and so be yourself, everyone else is already taken. Now of course, you don't have to pretend to be a jerk, but if you are a jerk, even so, you might pretend to care. Why? Because essentially, being allocentric, understanding the other side's perspective, is what allows you to figure out what it is they want so you can give it to them, so you can get what it is that you want. Let me end with two parts of shameless self promotion. So you can again buy Maker Oats at Amazon, it's amazing. There's coffee banana, there's mulberry chia, and there's also the basic one, apple coconut. Don't pay more than 999, and to the extent you've had fun in the session today and in the course in general, please encourage your friends, people you're going to negotiate with, to learn about this course. I've posted it on social media. Remind them of the recording. The recording for today along with the slides will be up probably within a week because this time, I have correctly hit the record button. Let me end now with some Q&A. So let's see. Hi, Professor, this is Robert. Can I ask a question? Go for it. All right. So talking about the rent study that we just did, where one person has a deadline in Wednesday, and the other person has till Friday, should the one with Wednesday as the deadline review it or no? My question is, if the person reviews the deadline, isn't it practically possible that the other person can try and find an alternative and then try and squeeze the other person? They could, but I can squeeze you right back, in the sense of I can say, "Look, you think that I'm desperate to do this deal by Wednesday. But you know what? You're equally desperate to do this deal by Wednesday. Because if I don't do this deal by Wednesday, we end up with no deal, and therefore, you're going to get zero as well." So to the extent the two of us can create value, we need each other equally. So let's go back right to the Alice and Bob case, where if they work together, they can get nine. If they don't work together Alice will get one and Bob will get two. What is it they lose if Alice doesn't get the deal? Robert? They lose the pie, which is six. Six, okay? Who is more responsible for losing that six? Alice or Bob. Both of them. Great. So therefore, if Alice doesn't get the deal by Wednesday at 5:00, what happens to Bob's potential of six? That's gone as well. It's gone as well. Therefore, there's no sense in which Alice has a different deadline than Bob. They have an equal deadline. They're equally time-pressured. That's the assumption. But they don't have the ability to find a backup or an alternative. I've given you that. Alice's backup as one and Bob's backup as two. If you can come up with other backups, the answer would be different. But I'm not going to allow you to change the backups too. I'm holding the backups the same and just giving one side a deadline. Got it. Okay. The point here is my deadline is your deadline. Understood. Thank you. I saw a person who asked the question, if you could scroll up into the Q and A, who asked me about power in negotiation. Maybe you've gone too far. Let's see. Dominant party. Yeah. Okay. Somebody asked where these slides and recording will be, it'll be in week 9, is where you'll find it. What if the dominant party is not interested in sharing the pie? Okay. Well, one of the things I think is true about this course, that it's going to make many of you uncomfortable, there is no such thing as a dominant party in these negotiations. Muhammad, we can hit answer live for him, if you would. I think right there. What do you mean by dominant party? I think you're live now. I guess I'm answering live. Sorry, I didn't make you unmuted. I apologize. [inaudible] find him. Sure. I can't find him. He's a panelist or an attendee? He's a panelist. Okay. That's under M though. I'm not seeing it. My answer. Can ask a question on on behalf. Sure, go for it. There's a participant named Jason in here, I liked his question as well. Go for it. The question was, what is your advice to the mathematically impaired people where Math is not their strength, what other skills or other techniques do you suggest we can use to our advantage outside of mathematics? I think after you make it through the first two weeks of the course, there's very little math, relatively speaking. So that should make you a little bit happier. Okay. I try and use the math examples so that the answers are unambiguous in terms of what the pie is. Later in the course when you do the outsider case, I notice, you're going to be in situations where you're not being told what the pie is. You're going to have to figure it out. By the way, when you do that, I encourage you to try and set up ground rules with others as the start of your negotiation. Okay. But I'm trying to get this concept across of simply, why are we having the negotiation? People get confused when negotiating over the nine as opposed to over the six. That idea is so hard to get that I wanted to be unambiguous in terms of some very simple examples. Okay. If you'd like, go back to the VW Ford example. The initial impression you'd have is, well, what's fair is we should divide up the cost according to how many cars we're selling. I said no. What we really should think about is why we're doing this project together. Consensually, forget about the math, if we don't work together, we're going to duplicate stuff. So let's get rid of the duplication. How much savings are we creating? That's the place we have to negotiate over. Somebody else can go and calculate what those numbers are. What you want to do is get people to conceptually understand the framework and agree to that. Okay. That's the big point for you to be taking away, that people don't have a framework for what's fair. The reason they don't have a framework for what's fair is because they're not framing the negotiation in terms of the pie. Once you do that, because everything is symmetric, because we're both needed to make the pie, then the only thing that's fair is actually 50-50. A lot of people say, well, look, somebody's dominant, shouldn't the dominant party get more of the pie? Well, go right back to Alice and Bob, is Bob dominant relative to Alice? Because Bob can get two on his own, Alice can only get one. The answer is yeah, Bob is in a stronger [inaudible] better backup. You know what? Bob's going to get that extra amount from the BATNA. When it comes to the pie part, that's the extra six, Bob needs Alice just as much as Alice needs Bob. So therefore, there is no meaning to this notion of somebody being in a stronger position. That is crazy idea, that's hard to get your head around. Can I ask a related question. Go for it. Related to the COVID epidemic, actually. Manufacturing a product for a vendor, there are extraordinary costs. We have a guaranteed profit and they're asking to share the additional cost equally between us. So it's a $10 product and we're making a dollar on the product, they're asking to share the additional overages because of the COVID 50-50, and I'm having a really hard time determining what the pie is in this scenario. What is the alternative if you don't do this deal with them? We take the product to another buyer. What happens then? I'm contracted to create this product for this buyer. I could take this product to another buyer. Therefore, this buyer is also contracted to pay you without having to, I'm sorry. So you're the one who has higher costs, not them? Correct. I see. So you have a problem because effectively, you're required to give to this person in spite of the fact that your costs are now higher? Correct. Therefore, you want them to share in the burden that you are paying? Correct. Effectively, look, this is a force majeure case that nobody anticipated this in terms of the contract. Correct. So I would say, what's really happened is the pie has shrunk here, that effectively this is not as interesting a situation for you as it used to be. Are they able to sell this product at a higher price now? No. So they're not making any more money. It's just a worse situation for everyone. Correct. [inaudible] I would say if you went to somebody else, they wouldn't now be paying you more money because they're having trouble getting allocation of this good. They may or may not, but that would be the risk I'd have to take. I'd have to take the product away from that buyer and then go see if I can find another buyer for the product. But of course, you can still see what are the people willing to pay now. Yes. Without taking it away. Yes. So I would say that if it's the case that other people are willing to pay a lot more now, then you have a very good argument for this. If in fact other people are not willing to pay more, then you can say, ''Look, I've got this problem I'd like you to help me out. If you don't help me out on this, I'm going to remember that fact.'' Because essentially the shoe could be other way. But if in particular, they had the ability to sell it for two dollars more, they're not planning to share with you that extra profit they get and you say, ''Look, I don't know whether you are selling it for more or not, but there is other people willing to pay a lot more for it. This thing is now more valuable.'' If you don't sell it for more, what that means is you're getting extra credit with your buyers, and I'm not getting the points for that. So therefore, you should be rewarding me for some of the points you are getting. Because effectively, I'm not making any money now, I'm losing money, and you're actually either making more money or getting more credit. So effectively, we need to think about how to renegotiate this. I'm not happy splitting the class. I'd like to pass them all onto you but I'm prepared to do this. Not a guarantee, I'd also probably start with, ''Look, here's my problem. Here's what I've also learned in the market in terms of what other people are prepared to pay, but I am intending to obey this contract and live up to what I've promised.'' So it's not that I'm threatening if you don't do this, but I'm telling you here's why there's value being created and it has more value than we used to think. Thank you. I will take two more questions. Delly Yeah. Consider the case where you are, It's Chris right? Chris Yeah. Hi there. Consider the case where you are initiating negotiations with a large group and you're trying to build the pie, and they say we're not interested in trying to divide the pie and they say as an example, let's say we can decrease our costs if we agree to x, and they say we have no interest in decreasing our costs. We can increase our sales, if we do this, we have no interest increasing our sales. That's a pretty unusual partner because generally speaking, if he say, ''Look, if I increase the price to you, you don't care about that and say, "No, we don't want you increase the price'' Great. Well, if you don't like me increasing the price, you should like me decreasing the price. No. I'm talking about a greenfield project. There is no contractual relationship, we're trying to build something. We're trying to do this together, and if we have higher costs, then this project is going to require more money coming in from both of us. So they say this is not a cost issue, Chris. This is a geo-political decision we've made to invest in the country and build this project. Sure. We're not changing from the country, I assume you made the decision to where we're going to find different ways to lower the cost in that country by working together, and so whatever it is we're going to do this project in Belgium for whatever reason we want to do in Belgium, I don't know. But now if we find some opportunity to do it in Bruge rather than some other place, it can be lower-cost. Again, they have said cost is not an issue we want to be there geopolitically. We want to raise the flag. I got it. So we're going there, we are going to be there. Now the question is we've agreed to be there, how can we do it at a lower price? So if you, if you want to give us x dollars to do it and we can do it for less and keep all the savings, then we're happy to do it, and you obviously don't seem to want to do that, that's just ridiculous. At the end of the day, you're going to get what you want, which is the project in this country. Well, let's try and find out a way to do it that is more efficient. I think though let me add another aspect to your question. One of the things you'll hear in the course is a negotiation between myself and Coca-Cola over the cost of this plastic bottle. So you can say, well look, Coke and us working together could save eight million dollars. At the end of the day, is that a big number for Coca-Cola? No, it's a rounding error on a rounding error. So you say, well, I don't care. Well, the answer is, Coca-Cola may not care about the person who negotiating with eight million dollars is actually a reasonable number on that person's bottom line or in terms of when they think about it and getting a bonus when they talk about what they accomplished for the air, it's more than that person's salary, and so yeah, the whole company may not care, but that person is likely to care, and by the way, of course, if they say they don't care, guess what it means they should have no problem giving you the savings because if it's not important to them, why are they fighting so hard for it. Okay fair enough. Thank you. So Ivy had a question regarding power and I did think it's the last one. Let's go back. This one has more alternative options, but the one with less alternatives will not have such flexibility. How do you balance this? So is Ivy live, I don't know where Ivy is, is Ivy able to speak? I don't see [inaudible]. [inaudible] Well you can just search for Ivy, I think here's my view Ivy, there she is. Ivy we have a lot to talk. Ivy, you want to amplify what you said. Hello. Hi there. You're on. Can you hear me? We can. Great. So thank you for taking my question. So what I was saying is with regard to I think someone earlier asked the question about power. I mean, let's say hypothetically speaking the other party is a big fish and who has a lot of alternatives. Let's say in the case of Coca-Cola, and I'm a small fish that I don't have that many alternatives. So which means that in this negotiation that if there is no deal, so the person can easily go to maybe plan B, plan C, and then they will have a lot of alternatives to fall back onto. However, if I were small startups, and then I depends on this deal to see how precisely speaking, pay the bill for my next month, then in that way, I will be in a position of disadvantage. So let's say that if I'm, from my perspective in my negotiation, how can I turn that disadvantage into at least fairness. Yeah balance the conversation. So first off, Ivy, I think it's helpful to start the negotiation with principals. Look, your big, I'm small, and I reject this notion of proportional division. No, as I joke, Coca-Cola was 2,000 times the size of Honesty. Their sales are 40 billion ourselves, were 20 million, and so if you split an eight million dollar savings in the 2,000 to one ratio, then Honesty, we'd get $4,000 and Coca-Cola would get $7.996 million, and that's just so incredibly lopsided that even they wouldn't argue that that's fair. But think about the following, like what if Coca-Cola can do this deal with us, and save eight million, and if they don't do this deal with us, they can still do deal with other people, but that eight million dollars savings between us and them is gone. So you can think that we are small, but the fact is that they need us just as much as we need them to save that eight million. They've already saved lots of money on their own sales by having a huge bargaining power. But to make their bargaining power apply to what it is that we've done. They need our customers, and so it looks like it's unfair because they have all these other alternatives. But actually to do the deal to create eight million, they can't do it without us. Then you say, "Well, okay, fine, we're both needed for doing it." But for them, eight million isn't a lot of money, whereas for us it's life and death, it's being in business, it's a huge number. But here's a thing that means we care a lot about the money. They don't care a lot. So because they don't care, that means they should get more? I'd say no, because you don't care. It's easy for you to make sacrifices. So we could take seven, you could have one. So the notion that somehow you should get more when you don't like something as much strikes me as actually backward, and ultimately that's why I think it is fore and fore. This notion of proportionality being fair, you have to get people away from it, and often going to this extreme, like the 2,000 to one ratio shows that it makes no sense, and then it's also the case that the other side can't really argue that there is no pie. Because in some sense, if there's no pie, why are we having this discussion. If I could do it anywhere else, great but if you can do with anywhere else then why are you talking to me? Well, I hope this has been helpful to you. I thank you for the time we've run over a little bit. I appreciate that you've been very generous in terms of your participation. Let's see if I can stop sharing screen, and perhaps you'll find this at Amazon or else where again, I look forward to looking at some of your questions which I've saved. Have a great time in the course next Monday, not this Monday, a week from Monday, Delly and I will be doing a session on job negotiation that registration is full, but it will be recorded and also put online, probably in the two-week framework. So thank you-all for participating. Think positive, test negative, stay safe, and I appreciate your interest in some material. Thank you. Thank you stay safe. Thank you. Thank you. Thank you. Thank you professor Thank you-all.