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+5 POINTS
+5 POINTS
NEGOTIATOR A
NEGOTIATOR B
WIN:WIN
+10 POINTS
-10 POINTS
NEGOTIATOR A
NEGOTIATOR B
WIN:LOSE ZERO SUM
-5 POINTS
-5 POINTS
NEGOTIATOR A
NEGOTIATOR B
LOSE:LOSE
SRM – NO LONGER A ZERO-SUM GAME
In this articlewe look at howgame theory can enlighten the SRMdebate. We visit economic theory to help shed some light onwhat mutuality reallymeans.
How should each negotiator act to maximise their gain? A rational game-player would choose to play the red card, because while they could lose 5 points, they could stand to win 10 points. However, if both parties play red, they will both lose out. ‘Zero sum game’ refers to the win / lose strategic eco- nomic decision making described in game theory, as described in the book Theory of Games and Econom- ic Behaviour, by John von Neumann and Oskar Morgenstern, published in 1944.
The issue of mutuality in supplier relationships has been a constant source of debate amongst those working on SRM. For some it is an aspiration to help develop relationships to deliver more mutual value, for others it is a distraction and seen as ‘going soft’. Imagine the scenario: two negotiators (A & B) are each given a blue card and a red card, and commence a game in which A. If both play the blue card, both win 5 points (win-win) B. If one plays a red card and the other a blue card, the negotiator with the red card wins 10 points, and the negotiator with the blue card loses 10 points (win-lose or zero-sum) C. If both play the red card, both negotiators lose 5 points (lose-lose)
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