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July 7, 2010

Game Theory and negotiations with Arab countries: The Blackmailer Paradox (Updated)

Topics: Middle East News and Perspectives, Political News and commentaries

BlackmailerParadox230x150.jpgRobert Aumann has a fascinating, intriguing, and informative piece over at aish.com that offers some insight on the political relationship between Israel and Arab countries and the game theory principles by which the Arabs negotiate. He explains how the Arabs present rigid and unreasonable opening positions at every negotiation, convey confidence and assurance in their demands, and make certain to make absolutely clear to Israel that they will never give up on any of these requirements.

It's called the Blackmailer Paradox. Here's a excerpt to pique your interest:

Reuben and Shimon are placed into a small room with a suitcase containing $100,000 of cash. The owner of the suitcase offers them the following: "I'll give you all the money in the suitcase, but only on the condition that you negotiate and reach an amicable agreement on its division. That's the only way I will give you the money. "

Reuben, who is a rational person, appreciates the golden opportunity presented to him and turns to Shimon with the obvious suggestion: "Come, you take half the amount, I'll take the other half, and each of us will go away with $50,000." To his surprise, Shimon, with a serious look on his face and a determined voice says: "Listen, I do not know what your intentions are with the money, but I'm not leaving this room with less than $90,000. Take it or leave it. I'm fully prepared to go home with nothing."

Reuben can not believe his ears. What happened to Shimon? he thinks to himself. Why should he get 90%, and I only 10%? He decides to try to talk to Shimon. "Come, be reasonable," he pleads. "We're both in this together, and we both want the money. Come let's share the amount equally and we'll both come out ahead."

But the reasoned explanation of his friend does not seem to register on Shimon. He listens attentively to Reuben's words, but then declares even more emphatically, "There is nothing to discuss. 90-10 or nothing, that's my final offer!" Reuben's face turns red with anger. He wants to smack Shimon across his face, but soon reconsiders. He realizes that Shimon is determined to leave with the majority of the money, and that the only way for him to leave the room with any money is to surrender to Shimon's blackmail. He straightens his clothes, pulls out a wad of bills from the suitcase in the amount of $10,000, shakes hands with Shimon and leaves the room looking forlorn.

Take the time to read it all. As Aumann goes on to explain, like all science, Game Theory does not presume to express an opinion on moral values, but rather seeks to analyze the strategic behaviors of rival parties in a common game. The State of Israel plays such a game with its enemies. Like every game, in the Arab-Israeli game there are particular interests that shape and frame the game and its rules. Unfortunately, Israel ignores the basic principles that arise in Game Theory. If the State of Israel succeeds in following these base principles, its political status and its security will improve significantly.

Israel would do well to heed the lessons from the "Blackmailer Paradox."

Update: Perfect example of the Blackmailer paradox - Palestinians Freak -- No Direct Talks!

Posted by Richard at July 7, 2010 9:23 PM



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