The Mixed-Motive Exchange

Mixed Motive Exchange

We humans are social, but also individual. We often need help to succeed or excel. For example, early man was a poor match for a mastodon or prehistoric bison. He could hunt or gather smaller, less nutritious food alone. But he needed to hunt in a group if he were to take such dangerous high value prey.

“Good for me” vs. “good for us”: The Mixed Motive

The ancient hunter was motivated to act as a selfish individual. He wanted as much of the mastodon meat as he could get, to fuel his survival in harsh conditions.  In tension with his selfish motives was his motive to act for the benefit of the collective, however. The hunter needed to promote the survival of all clan members, because each contributed to his survival.  But acting altruistically (by, for example, sharing food) disadvantaged him in the short term.

Negotiation theorists, economists, and game-theory mathematicians call situations like this, which create incentives to compete and reasons to cooperate, “mixed motive exchanges.” In discussing foreign relations, Professor Fred Iklé pointed out that every negotiation is in some sense driven by mixed motives, saying: “without common interest there would be nothing to negotiate for, without conflict there would be nothing to negotiate about.”

For negotiators, the ‘mixed motive exchange’ refers to the tension between maximizing individual returns and increasing joint outcomes. To be most selfishly effective, negotiators must cooperate to promote the greatest joint economic outcome (resulting in more resources to be divided), then compete, to claim as much of those resources as possible for themselves. The tension between competitive conduct and cooperative behavior has been conceptualized as a difference between “value claiming” and “value creating.”

Trust and Interdependence

The ancient hunter could share food because he expected his clan to treat him similarly.  He trusted them, because of prior experience with them and others like them, because of shared interests, and because of the benefits to them of behaving in accord with the trust.

Trust is a function of interdependence ­– that is, it increases as the strength of the parties’ need for one another’s help to succeed increases. Since the hunter and his clan depend on one another to survive, they can usually trust one another. Interdependence strongly impacts negotiating behavior. “The negotiation process is an important part of developing and maintaining …interdependent … relationships.”

Cooperative negotiators focus on relationships and on attending to others’ needs as well as their own. They forgo immediate personal gratification in exchange for long term benefit, and share information freely. By doing so, they build trust in their negotiating partners, and increase interdependence.

Selfish competitive strategies, contrastingly, focus on the present deal and create short-benefit to the individual, but ignore potential long-term benefits to the both the individual and the group. Competitive negotiators typically withhold information or deceive their negotiating partners.

Research demonstrates that competitive negotiators realize more profitable individual outcomes.  And while cooperative negotiators reach more favorable joint outcomes, they are unable to claim value when they negotiate with a competitive counterpart. Instead the competitive negotiator claims the vast majority of the value, even that created solely by the cooperative negotiator. So the competitive negotiator enriches himself at the expense of others, out of proportion to his contribution.

Not surprisingly, this behavior can damage relationship and decrease trust, while giving one party an unfair advantage. This is at the heart of the so-called ‘negotiator’s dilemma’: ‘The first competitive act drives out cooperation.’   If Alice takes advantage of Bob, Bob will reciprocate, resulting in a tit-for-tat cycle that prevents the cooperation necessary to maximize the results of even competitive negotiation.  

Distrust and The Prisoner’s Dilemma

The importance of trust in maximizing outcomes is shown the “Prisoner’s Dilemma,” a classic of mathematical game theory. Assume: two individuals (Allison and Brett) are suspected of a major jewel heist. The authorities only have enough evidence to convict on only the minor charge of possessing burglars’ tools.

If neither talks, both will draw a light two year sentence on the minor charge. If Allison turns state’s evidence and Brett is loyal to her, Allison will go free and Brett will draw a harsh twenty-year sentence. If Brett turns state’s evidence and Allison is loyal to him, Brett will go free and Allison will draw a harsh twenty year sentence. If each betrays the other, both will draw a moderate eight year sentence, like this:


          BRETT            Trust Betray
Trust (2, 2) (20, 0)
Betray (0, 20) (8, 8)


If the prisoners are not allowed to communicate, and are relative strangers with no reason to trust and no potential to affect each other outside this scenario, each prisoner is likely to defect no matter what the other one chooses to do.  In that situation Brett and Allison will both draw a moderate sentence of eight years on the major charge, while cooperation could have led to a light two year sentence on the minor charge.  Their inability to trust cost each of them six years’ imprisonment. This demonstrates the truth of Hardin’s observation that distrust leads to forgone opportunities is true.

Given the stakes, why couldn’t Allison and Brett trust one another? Allison might trust Brett because they need one another to achieve the jointly-ideal result. Because of our culture’s strong reciprocity norm, she expects him to help her in return for her help.  But Brett does not know what Allison will do, and does not need Allison to achieve success.  His best selfish option is betrayal.  If Allison is loyal, he goes free.  If not, he avoids a maximum sentence. In game theory terms, betrayal is a dominant solution: It is the best reply no matter what the other person does.

The prisoner’s dilemma is a variation of the negotiator’s dilemma. Instead of competition driving out cooperation, the expectation of competition drives it out.

Game theorists say that we make decisions using simulation heuristics.  That is, we predict what our counterpart will do in order to make our choices. Often, we use what is called a “Stackleburg heuristic.” We assume that our opponent will do what is in his or her individual best interest (betrayal, in the prisoner’s dilemma), and respond accordingly. Generally, this leads to mutual competition.

Breaking the Pattern

The negative assumptions we often make about our negotiating partners and the cyclical, vengeful nature of our response to competition may seem to doom any mixed-motive negotiation with a single competitive exchange to a fully competitive conclusion, destructive of trust and relationships. But it is possible to break these counterproductive patterns.

First, although cooperation in the face of competition will lead to loss, the endless cycle of ‘tit-for-tat’: cooperate, compete, compete, compete, compete, etc. — is not the only effective response. A modified, strategy is called ‘nice tit-for-tat.’  In this method:

  1. Always start cooperatively;
  2. Retaliate if your counterpart competes;
  3. If your counterpart thereafter cooperates, forgive and do the same;
  4. Be clear about your strategy – emphasize the relative benefits of cooperation;
  5. Do not feel that your concessions must exactly mirror your counterpart’s – do what makes sense in context.

This flexible, clear, but self-protective approach leaves open the possibility of recovery from betrayal and restoration of trust and interdependence.

There are other methods of recovering from competitive reciprocity.  Although classic Prisoner’s Dilemma exercises are simultaneous-choice no-communication games, real-life negotiations are not.  They involve interaction and communication.

One useful method is the mixed communication, a retaliating competitive response combined with a cooperative alternative, like this: ‘Bob if you keep this up, we’re going to take this to trial and win. But we’d rather work it out.  Realistically, what will it take to make this deal?” The competing element reminds the other person about the consequences of not settling, while the cooperating element opens the door to restoring the relationship.

Another technique is not to respond to the provocation, instead refocusing the discussion: ‘Threats won’t get this done, George. Let’s talk about the timetable.’ Much of the time the other person will refocus on the merits.

Meet your Counterpart

The more experience you have of your counterpart, the more likely you are to succeed cooperatively. For example, a Stanford University study found that speaking face to face with your counterpart about unrelated topics before negotiation builds rapport, resulting in greater likelihood cooperation during the session. You may also learn something during the non-negotiation meeting that will help you succeed during the negotiation.

Restore Interdependence

A final strategy to break the cycle of competition is to make a unilateral concession to restart the process; but this runs the risk of reinforcing competitive behavior. It may be appropriate if it comes from the initiator of the competitive cycle.  Remember, interdependence flows from the joint need of the parties for one another’s help to succeed.

If our interdependent partner competes, we remove them from the success equation. If they make efforts to return, and demonstrate commitment by an altruistic one-sided benefit that disadvantages them, (like the food-sharing hunter) we are more likely to believe that they can once again be part of our success.  Beyond one sided concessions, better ideas for doing things or access to important connections or resources can also serve as contributions to success justifying interdependence.

Finding a Balance

Even though the dominant solution to the Prisoner’s Dilemma is mutual betrayal, that isn’t what always happens; sometimes knowledge of the person, rapport or trust changes the expectation of betrayal; sometimes culture simply changes what is “the right thing to do.” Participants have to do their own calculus of the risk – making the right choice might end up with the highest available joint return as the preferred solution,

In the same way, each mixed-motive exchange requires its own calculus of how much value-claiming is appropriate, and how much value-creation is justified.  Unlike a one-time Prisoner’s Dilemma game however, real exchanges present the opportunity for communication, ongoing interaction, and beneficial interdependent relationships.  Once those relationships are formed, however, our negotiation behavior will determine how much trust we are accorded.