Tag: negotiation

The Game in Game Theory

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Two children have a slice of ice cream cake to share between them. The longer they debate over what a “fair share” would constitute for each of them, the more the cake melts. It is, in fact, entirely possible that the cake will have melted by the time they reach a consensus.

Keep that image in mind while I talk about the most exciting part of preseason football: contract holdouts!

Rookie QB Brady Quinn made headlines by holding out for weeks after signing. Larry Johnson (KC Chefs) held out until last week before signing a 5-year, $43.2M extension. Asante Samuel (NE Patsies) just announced his return yesterday, though he’s still ducking efforts to wear the “franchise” tag. And Michael Strahan (NY Football Giants) is, as of this writing (Tuesday, August 28th, 9:00ish AM), still undecided. The man might very well hang up his cleats (sources say).

So what goes on during a contract holdout? What are the costs and benefits of avoiding training camp? Is the risk worth the reward? To find out, we turn to one of the classics of game theory, Thinking Strategically, by Avinash Dixit and Barry Nalebuff.

Reputation

For decades, the nation of Israel had a policy of never negotiating with terrorists. The government declared this to discourage hostage-taking: if capturing a civilian, or a politician, will never pay off, why bother? Israel did this to build a reputation of not being someone to screw with. The downside to having this sort of reputation, of course, is that it turns potential hostages into instant victims. There’s always a cost to talking tough.

No GM wants to cave if one of his players pouts and refuses to show up for training camp. To do so would immediately send a signal that this sort of behavior works and would open the floodgates next summer. It’s in every owner’s interest to stay firm.

Asante Samuel knows his game theoryAt the same time, however, the players aren’t chess pawns. There’s a world of difference between an Asante Samuel and a Randall Gay (2 tackles in 3 games last year). Coach Belichick may play it off like Samuel’s return is no big deal, but the defense he spent the entire offseason crafting in his Fortress of Solitude probably hinged more on a guy who caught 10 picks last season than a guy who sat for 12 games.

Samuel knew he was valuable to the Patriots. The question was: how valuable? That’s the kind of question that a holdout is meant to uncover – by watching the management’s change in behavior as the clock ticks and the options narrow.
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