Added Value
In Game Theory the added value of a player is as follows.The difference between the total size of the pie when you are participating in the game minus the size of the the pie when you are not in the game is your added value. It is hard to get more from a game than your added value. To calculate your added value ask: "If i enter this game, what do i add". Instead of focussing the minimum pay off you are willing to accept, focus on how much other players want to pay to have you in the game.
If you take the first two examples of Adam's Card Game:
- In the first version of the game without Adam's and his cards, there is no game. So his added value equals \$2600,-. Each student has an added value of \$100,- because without the student's card, one match less can be made and \$100,- is lost. Therefore the total sum of the added values in the game is \$5200,-
- In the second version of the game the total added value is smaller. Because there are only 23 cards, the pie to share is \$2300. This is Barry's added value. But the more supprising effect of the lost 3 cards is that the added value of each individual student now is zero. No single student has added value because 3 of them are going to end up with nothing. Therefore the total sum of the added values of the game is \$2300,-
There are a few common errors that people make estimating their added values: 1) Only looking at half of the equation
- In the first version of the game people focus on the fact that without Adam, they get nothing. They sell their card to quickly for a too low price. In this case you have to question yourself where your co-opetitor would stand without you. Adam's fallback option is not different than yours, therefore you are standing as strong
2) Mix up your own added value with the larger group of people / organisations in a similar negotiation position
- In the second version of the game, students may overestimate their value. It is true that the added value of the students as a 'group' is equal to the whole pie of \$2300,- the fact that they are not collaborating to negotiate together limits their value to \$0,-
See also: Adam's Card Game Part of: Co-opetition
