Hi. Welcome to negotiation. I'm Barry Nalebuff. I'm an economics professor at Yale. My specialty is game theory, and I'll be bringing that toolbox to bear as we explore how you can be a better negotiator. I hardly need to tell you that negotiation is important. As Chester Karass writes, in life you don't get what you deserve. You get what you negotiate. You're negotiating in everything you do, so you might as well do it well. Many people come into negotiation with some, or even a lot of trepidation. They find it unpleasant. I think one reason is that it often feels like a game of intimidation or a test of wills. Take a look at this example from the office. >> You meet a lot of ladies driving an Xterra, because you pull up to a stop light and look over and there's an Xterra next to you. They're all driven by chicks, so there's your ice breaker. >> [SOUND] Scratch. >> That's a racing stripe. >> Bumper's sagging. >> Mm, I doubt that very much. >> This car is crap. I will buy it for next to nothing. >> How next to? >> Well, here are your options. You can sell it for parts. Drive it off a cliff. You can donate it to a person that you'd like to see die in a car crash, or you can sell it to me, and I'll use it as I would a wagon on my farm. And it will be towed by a donkey. I have to pick one of those? >> Yes. >> Can you go over those options again? >> Hey, you know what, you knock $1,500 off the price right now, and I will take it off your hands. It's gotta be now. Seal the deal. >> Well, I have- >> Let's do >> the blue book values. >> Let's do this thing. Three, two, one. >> Can I think about it? >> Five, four, three, two. >> Let me think about it. >> Now, now, now. Say it. Do it. Now. Do it now. Do it. Shake my hand. You will sell me this car. Shake my hand. >> Yeah. All right. >> My approach is quite different from Dwight's. I take a principled approach to negotiation. That means I'm not gonna teach you how to yell, scream, lie, or stonewall. No, five, four, three, two, one, shake my hand, do this deal, say yes now. No. Instead, I'm gonna present principles. These principles will allow you to make valid arguments that will persuade others. My first job is to persuade you. In my view, negotiation is all about the pie. I use the pie as a metaphor for what's at stake. The pie is the reason the negotiation is taking place. It's what the parties are trying to divide. The first question almost everyone asks is, how do you divide it? In particular, how do you get as big a slice as possible? Now that's a fine question, and I'll help you answer it, but it isn't where I start. My starting point is what is the pie? And as you'll soon see, figuring out the pie isn't always so simple, but once you do the negotiation becomes much simpler. You'll have a much better chance at figuring out how to make the pie bigger. [SOUND] And how you make a good argument to get the biggest possible slice? [SOUND] That's good. [SOUND] That's better. Part of my goal is to turn negotiation more into a math problem. I want the parties to engage in joint problem solving. This approach works for complicated real world situations, not just simple exercises. Indeed, the more complicated the problem, the more important it is to employ the pie framework. This won't be your standard course, or even your standard online course. We'll be doing lots of experiments, and we'll employ a combination of short lectures, animations, negotiation recreations, and several negotiation cases for you to try. We'll begin with a series of animations that introduce the theory behind negotiation. We'll start off simple with just two parties and one issue where everybody knows everything. But we'll build to negotiations with many issues and many parties and where there are plenty of unknowns. Enabling people to bluff and lie. Which will make it even harder to figure out the pie. After the animations, you'll do your first negotiation, the Zinket case. I don't recommend jumping ahead. You'll want to apply the principles we've covered to the case. So, let's begin.