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| − | Adam's card game is a simple illustration of buying power and how fast balance can shift. The game starts with a Harvard professor Adam and 26 of is MBA students. Adam has a stack of 52 cards, keeps the 26 black cards to himself and distributes the red cards to each of the 26 students. The dean is feeling generous and has \$2600,- of price money. He offers anyone - Adam or a student - to come collect \$100,- fee for bringing in a pair of cards, one black and one red. The students are to negotiate with Adam on an individual basis and can't get together. | + | Adam's Card Game |
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| − | The game illustrates a 'free form negotiation' between Adam and his students. Now to understand how this works out imagine the following situations:
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| − | 1) ''Balanced supply of required assets''
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| − | If Adam would offer you \$20,- for a red card, would you take it? From a first intuitive response Adam seems to hold all the cards, he has a 'monopoly' of black cards and you cannot get around him. But if you think about this more, if Adam has negotiated with all students and you are last, you will have the 'monopoly' of the last red card. At this point you could turn down Adam's offer and counter with \$90,-. As you wait, you are likely to get \$50,- for your card. And if each student realizes this, you can just as well negotiate this result upfront. The game really comes down to 26 seperate bilateral negotiations
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| − | 2) ''Limitted supply of one of the required assets''
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| − | Adam's colleague Barry repeats the game in another school. As he starts in front of the class it turns out that he is missing 3 cards, so there's only 23 cards left. What is the effect of this on the game? There is now a 'shortage' of black cards: how does this effect Barry's negotiation's position? If you would get the same offer for \$20,- would you take it? In the previous version of the game, you could count on Adam coming back after negotiating with 25 of the other students and with that your position was on par. But in this case, Barry is done after 23 negotiations and could not get back to you. 23 'lucky' students get \$20,- and 3 end up with nothing. So, if Barry offers you \$20,-, take it, you could end up with nothing. Indeed, he could get away with a 90/10 split. For Barry 90% of \$2300,- is much better than 50% of \$2600.
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| − | Moral of the story so far ''When demand is bigger than supply, limitting suppy can give you additional advantage''
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| − | See also: [[Added Value|Added Value]]
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| − | Part of [[Co-opetition|Co-opetition]]
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| | [[Category:mbi]] | | [[Category:mbi]] |
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| | [[Category:Co-optition]] | | [[Category:Co-optition]] |
