[fc-discuss] Financial Cryptography Update: Negotiation and the rule of three favours

iang@iang.org iang@iang.org
Thu, 2 Feb 2006 20:13:59 +0000 (GMT)

 Financial Cryptography Update: Negotiation and the rule of three favours 

                           February 02, 2006




Over on Guy's blog I noticed his "The Art of Schmoozing" which
concludes with these two crossovers to our local work on favour

#8 Give favors. One of my great pleasures in life is helping other
people; I believe there's a big Karmic scoreboard in the sky. God is
keeping track of the good that you do, and She is particularly pleased
when you give favors without the expectation of return from the
recipient. The scoreboard always pays back. You can also guess that I
strongly believe in returning favors for people who have helped you.

#9 Ask for the return of favors. Good schmoozers give favors. Good
schmoozers also return favors. However, great schmoozers ask for the
return of favors. You may find this puzzling: Isn't it better to keep
someone indebted to you? The answer is no, and this is because keeping
someone indebted to you puts undue pressure on your relationship. Any
decent person feels guility and indebted. By asking for, and receiving,
a return favor, you clear the decks, relieve the pressure, and set up
for a whole new round of give and take. After a few rounds of give and
take, you're best friends, and you have mastered the art of schmoozing.

These two points are actually related in game theory.  It works like
this:  negotiation is split into two separate sides (by what is called
the prisoner's dilemma, but please save that for another day).	These
sides are known as _win/win_ and _win/lose_, and they are like yin and

Most people can figure out what that means just from the titles - when
in a win/win we are looking for how we benefit from each other and both
come out ahead in the long run.  When in win/lose, I try to win at your

Our problem is focussed then on knowing whether we are in win/win or in
win/lose.  If we are in win/lose, then we definately should walk away
from any deal.	Schmoozing, in Guy's terms, is pointless in win/lose,
because this just gets you deeper into a potential loss.  One day, if
not today, when you might win.

So how do we determine which we are in?  It's not as easy as one would
think.	The answer is definately not in words; and in my experience, if
someone attempts to impress you with statements like "let's search for
the win/win," it's as good a signal that they may be thinking win/lose
as win/win.  Be careful not to be lulled in by such mere words, as they
are stock in trade for the win/loser.

One way to determine is what I think of as the rule of three favours. 
In this tactic, you offer three unrelated favours to your
counter-schmoozer (Guy's #8), and you also put yourself in the position
of desiring the return of those favours (see Guy's #9).

But don't desire it too aggresively - the essence here is to see
whether the person will accept the favours, and naturally return same
when given the opportunity.

Why does this work?  It works because win/win and win/lose are very
very deep-seated human patterns of behaviour.  People are generally
either one way or the other.  Most people naturally fall into win/lose,
probably from childhood battles and the general darwinian environment
of the kindergarten.  As we grow older and mature some, a lucky few of
us discover the higher plain of win/win, and we work hard to develop
that attitude.

So if you offer three nice juicy favours to a normal, natural win/lose
schoolyard bully, it will be beyond their ability and their
understanding to avoid abusing the offering.  Which means they will
take the favours and not return them.  Even if a natural win/loser
understands the theory of win/win, he has a choice - either practice
win/win at some short term practical and emotional cost, or go with his
gut instincts.	Either way, he reveals to you whether he is ready for
some serious business.

And thus you differentiate your partner.  We need to try three times,
as one test can be accidental, either way.  Two can be a pattern, but
three is consensus.

A final tip - don't forget to uncorrelate the favours, so don't mark
them all with a pressed flower!

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