Pemberton’s
Dilemma
Introduction:
This exercise creates a situation in which
you and the others will be making
separate decisions about how to manage
your firm. The outcomes (profits and
losses) are determined not only by what
you do, but also by a number of other
factors such as the goals and motives that
you and the other party have and the
communication that takes place between
you and them.
Procedure:
• Divide your groups into two management
teams (Country Market & Corner Store)
• Prepare sheets of paper for each
management team: one ½ crosswise
(tally sheet) and two ¼ sheets (decision
cards)
• Represent your store in discussions with
the other store about the decision to
operate (or not) during Sundays
Procedure:
• There will be 12 one-minute rounds where
stores will simultaneously decide whether
they will open or not
• You execute your decision by revealing to
the other team the appropriate card
(“open” or “closed”) at the same time that
the other team is revealing their card to
you.
Procedure:
• Each round represents one Sunday; every
4th Sunday is part of a long weekend
• A two-minute confidential planning
session separates each Sunday
• The two teams may, if they so desire,
negotiate with each other for 3 minutes
IMMEDIATELY FOLLOWING WEEKS 4 AND
8 ONLY.
Relevant Information:
• Commercial activity in Pemberton has
been prohibited during Sundays
• Sunday shopping has been permitted in
the metropolitan center just 30 minutes
away
• Both Country Market and Corner Store
have been consistently losing potential
profit as Sunday shopping becomes more
popular
Relevant Information:
• If both stores remain closed on a Sunday,
each will have the usual $20,000 weekly
profit
• If only one store opens on a Sunday, it will
earn a $40,000 profit for that week while
the other store will incur a $40,000 loss
• If both stores decide to open on a Sunday,
each will incur a $20,000 loss for that week
Building Your Team Strategy
• After reading the instructions/relevant
information, answer 2 questions with your
team:
1.What are your objectives for this game?
(what for)
2.What are the moves that you will make to
meet these objectives? (how)
Pay-off Chart:
Close
Open
Corner Store
Country Market
Close
Open
CS: +$20,000
CS: -$40,000
CM: +$20,000
CM: +$40,000
CS: +$40,000
CS: -$20,000
CM: -$40,000
CM: -$20,000
Sample Tally Sheet:
Round
(Sunday)
Decision
CS
CM
Profit/Loss
CS
CM
1
2
3
Open
Close
Open
Close
Open
Open
+$40,000 -$40,000
-$40,000 +$40,000
-$20,000 -$20,000
4
Close
Close
+$20,000 +$20,000
Debrief:
Review the outcomes from summary
table- what do we see?
a/Both high and positive scores-usually a
strong cooperative pair
b/Both moderate scores-often a group that
learned to cooperate
c/ Both low scores-usually a competitive pair
d/ Groups with large difference between
scores-one group took advantage of the
other
Dilemma Characteristics:
• Individual choices reflected in joint outcomes
• Interdependence affects outcomes: Payoff to
self is the only reward (lack of concern for the other)
• Mutual Adjustment: Influence on negotiating
partner- change over time
• Value Claiming and Value Creating: which is
the more prominent goal
• Lack of Direct communication, ability to
make binding agreements, trust
Can the Dilemma be avoided?
• Lengthen the shadow of the future (repeated
rounds)
• Use Sophisticated Strategies
• Use knowledge of the other- probability of
the other’s move
• OR
Can the Dilemma be avoided?
•
Interdependent: When the parties depend on each other to achieve their
own preferred outcome they are interdependent; they are characterized
by interlocking goals.
•
Recognize that negotiation is a process that transforms over time, and
mutual adjustment is one of the key causes of the changes that occur
during a negotiation- Revenge
•
Realize successful coordination of interdependence has the potential to
lead to synergy, which is the notion that “the whole is greater than the
sum of its parts.” In effect we can increase the size of the pie.
•
Manage conflict whether it is inter-group, intra-group, interpersonal, or
intrapersonal
Overview
• Viewed as a fixed pie situation: we lose-they gain
• Non verbal communication:
• Choices based on previous moves
• Gestures
• Emotion around losses – betrayal, revenge
• Loss of focus on strategy and goals
• Intra-group challenges
• Agreeing on goal strategies
• Backing representatives
Negotiators Dilemma:
Competitive Cooperative
Negotiator A
Negotiator B
Cooperative
Competitive
Both +
A B ++
A ++
B --
Both -
Negotiator’s Dilemma
• How to cooperate and create value at the
table without being taken advantage of or
becoming hostage to the relationship
• How to compete or claim value at the table
without damaging the relationship or
blocking the negotiation
• How to maximize value while minimizing risk
The End

The End
Prisoner Dilemma
Two men suspected of committing a crime are
arrested by the police and placed in separate cells.
Each is told that he may either confess to the crime or
remain silent. Each is told that if he confesses and his
partner does not, the one who confesses turns state's
evidence against the other and goes free while the
other will go the jail for a long time (e.g., 10 years); if
both confess, they both go to jail for a moderate term
(e.g. 5 years); but, if neither confesses, then the
police will have them found guilty of a lesser charge - carrying concealed weapons - - and sent to jail for 1
PrisonerDilemma:
Confess Silent
Prisoner 1
Prisoner 2
Silent
Confess
P1-1 Year
P1 - 10 years
P2- 1 Year
P2- Free
P1- Free
P2 – 10 Years
P2: - 5 Years
P1: - 5 Years