How not to negotiate—the real Game Of Thrones
It’s not as much Game of Thrones, as it is Game Theory of Thrones.
Game theory is the model of how people act based on their perception of how others are likely to behave in reaction. When we are on either side of an interview table, or negotiating a deal, or even on a date–we are in fact playing games. We are unable to clearly gauge the true intentions of the other person, and both are trying to course-correct our actions based on our guesses about each other.
Game of Thrones, incidentally, is a grand show with mindless gore and sex revolving around the politics of power that decides who sits on the “Iron Throne”. And the last season was, in fact, a highly entertaining game theory lesson on negotiation strategies.
Invading queen Daenerys Targaryen comes to know that a vast army of mythical zombies is marching from the north to destroy all of mankind. However, she is occupied with the war of her lifetime to displace the evil incumbent of the Iron Throne in the south, Cersei Lannister.
Daenerys realizes that for everyone to survive, they have to keep aside their infighting and join forces. So, despite having a tactical advantage over Cersei, Daenerys offers a truce.
This is where game theory takes over. Daenerys knows beforehand about the zombies. Cersei observes that Daenerys is offering a truce despite her tactical advantage—so she is serious about the zombie threat. It is now Cersei’s turn to decide between two strategies—to cooperate, or to reject the deal.
But then once Cersei decides, Daenerys has to make a final choice—to actually start heading north to fight the zombies, or to stay put and continue fighting Cersei.
Daenerys has the arguably tougher decision to make. She is not sure if Cersei is honest about accepting (or rejecting) the truce, or tricking her. Either way, Daenerys will be forced to attach a probability to Cersei genuinely saying yes, and the remaining probability for her effectively rejecting the deal.
Game theory tells us that the best way to solve such games is to go bottom-up. So imagine if Cersei has already taken her decision and Daenerys is now required to play the last “sub-game”. Would she travel north, or stay back and fight Cersei?
Suppose Cersei decided to cooperate. Then Daenerys would get a high payoff in travelling north (best case scenario for her). But if Cersei rejected the deal, and Daenerys still decided to travel north, she has to live with a smaller payoff (she loses her best shot at reclaiming the throne).
So Daenerys’ expected benefit of travelling north is the product of the perceived probability of Cersei honouring the truce and the subsequent high payoff, plus the probability of Cersei violating the truce, times the lower payoff.
What would Daenerys get if she instead decided to stay put? The calculation is simpler; regardless of what Cersei decides in the previous period, Daenerys is convinced that the status quo will ensure certain annihilation for mankind. In other words, a much, much lower payoff.
Equating the two gives a cut-off probability of Cersei cooperating, at which Daenerys will be indifferent between leaving and staying. So if Daenerys believes that the probability of Cersei honouring her truce exceeds this cut-off level, her most rational strategy would be to head north to fight the zombies.
It wouldn’t matter if Cersei ultimately honoured the deal or not. Daenerys is forced to take this decision based on the extent of her belief of Cersei’s compliance. Mathematically, the lower Daenerys’ payoff is for staying put (i.e., the more desperate she is about the zombies), the lower will be the cut-off probability that she sets for Cersei.
Now, consider Cersei’s decision-making process. She knows how Daenerys will have to play the ultimate stage of this game. She isn’t as worried about the White Walkers. For her, the jackpot scenario will be for Daenerys to leave on this wild-goose chase, while she rejects the deal, and continues ruling in peace.
But for that to happen, Cersei knows that Daenerys needs to be convinced that the probability of her cooperating is just about high enough. So Cersei’s best strategy would be to lie as meticulously as possible about cooperating, and later renege, as is ultimately hinted in the show towards the end.
There are a few important lessons for negotiations here. First, playing hero or being the first mover need not always work in one’s favour. In this case, altruism has eventually left Daenerys at the mercy of Cersei’s whims.
Second, never assume that others will have the same payoffs as you from a deal. Cersei wouldn’t be thinking of defaulting if she were as bothered about the zombie apocalypse as Daenerys was. And Daenerys’ fatal mistake has been to not make any provision for this.
Third, be realistic about how credible your threat to the other person is in case of non-compliance. Cersei knows that Daenerys will have no way to punish her while she is engaged with the White Walkers. In fact, there is no guarantee she will make it alive. Hence, the “game" already gives Cersei a pretty strong incentive to default.
And finally, to unearth all of this while in negotiations, hire some economists!
Aurodeep Nandi is Deputy Head of Economics at a foreign mission, based in New Delhi
Comments are welcome at firstname.lastname@example.org
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