Tit-For-Tat : A Negotiator's Guide to the Debt Crisis

It’s hard to avoid news of the debt crisis. In fact, I find it almost impossible to follow any longer – I’m just not sure that I can watch any more political posturing without throwing the remote at the television. To save myself the migraine of getting back on the debt soapbox, I’ll refer back to a previous post on the national debt. However, for good or evil, the battle over the debt crisis has been an interesting illumination on negotiations and how they work (or, more accurately, how negotiations break down and shouldn’t be done).

Negotiations happen every day, from the mundane moments of debating a toy purchase with a child or vacation planning with a spouse to the “larger” debates of negotiating salary or wrangling debt. One of the more famous books on negotiation is Robert Fisher’s Getting to Yes, which discusses the concept of BATNA: Best Alternative To a Negotiated Agreement. The idea is that before going into a negotiation, you have to know your best alternative in order to negotiate effectively. If you’re buying a used car, know what other car you’re interested in if this deal falls through. Then you know how high you are willing to bid before walking away.

Establishing co-operative behavior is also fundamental to negotiating, and has become a key issue in the debt stalemate. Psychologists recommend a strategy called Tit-for-Tat as the most effective in dealing with other parties (as proven by Robert Axelrod). The theory here is that you start out cooperating with the other person, and then respond to the other person’s actions tit-for-tat. If they cooperate in return, continue to work with them. If they “punish” you by attacking/betraying you, punish them back, but only once. Then continue to follow your opponent’s lead, preserving the working relationship and optimizing both parties’ outcomes. In other words: 

1. Never be the first to defect
2. Retaliate only after your partner has defected
3. Be prepared to forgive after carrying out just one act of retaliation
4. Adopt this strategy only if the probability of meeting the same player again exceeds 2/3

Our politicians are stuck in a state of non-cooperation, and part of the problem is that on the rare moments where one party appears willing to cooperate and compromise on an issue, the other party “punishes” them by calling their plan partisan/idiotic rather than reaching out “tit-for-tat” with their own concessions. We then create a “punish” cycle where no one is willing to cooperate for fear of being burned.

Below is a chart adopted by one of my Columbia professors, analyzing approaches to negotiation. Clearly our politicians are set in "competing" mode, with strong concern for their own party's outcome and little concern about their opponent's party or solving the issue at hand.

For risk of sounding a bit too harsh, I do get that this is a hard topic, and that no answer will appeal to everyone. But hello, that is your job as a politician.  That is why we have been negotiating since the dawn of man. Figure out what's really important, give up what isn't, and meet the other party somewhere in between. Or, as a friend of mine posted on facebook yesterday, "Congress and Mr. President: Put on your big boy/girl pants and fix this problem, now!"

Yo Ho and a Bottle of Rum (Cookies)

I tried a new cookie recipe last night and it was a big hit both with our dinner guests and among my work colleagues (who got to enjoy the leftovers). I'll go the humble route here and give credit to the recipe rather than my superior stir-clockwise-with-wooden-spoon skills, and thus thought I'd pass the recipe along. The original name is Cappuccino Royales, but that sounded kind of lame to me, so I'm dubbing them Pirate Chocolate Chip Cookies because somehow I can see Captain Jack Sparrow drinking a lot of rum and coffee.

Call them what you want, the recipe is as follows:

Wait! First, a warning! The full batch makes a LOT. Like 5-6 dozen. I cut it in half, but choose your own adventure here...
Ingredients:

• 2 cups butter, melted
• 1/4 cup instant coffee (if you buy a strong roast, use the 1/4C. I bought Best Yet brand, aka cheap NY grocery store brand of oblivion, so I used extra to bump up the flavor)
• 2 teaspoons vanilla
• 2 teaspoons rum (or you can use extract or brandy... I used the real thing and doubled it ;-))
• 3 cups granulated sugar
• 3 eggs, beaten
• 2 teaspoons baking soda
• 1 teaspoon baking powder
• 3 cups milk chocolate chips
• 5 1/2 cups flour 

Directions:

1. Preheat oven to 350.
2. Mix instant coffee, vanilla and rum with the melted butter while it is still warm and allow coffee crystals to dissolve.
3. Add sugar, eggs, soda and powder, mixing well.
4. Stir in chocolate chips.
5. Add flour gradually.
6. Form dough into small balls (they spread out quite a bit while baking - I started with ~1-1.5 inch diameter balls and they baked into 3 inch cookies), rolling in granulated sugar if desired. (Rolling in sugar helps keep them from sticking to the sheet and gives the finished cookies a sort of granular look. But its optional!)
7. Place onto cookie sheet and flatten slightly (if you rolled in sugar, you don't need grease. Otherwise, grease the cookie sheet)
8. Bake 9-11 minutes and allow to cool for a couple minutes before moving to a cooling rack. (I baked for 9, which gives a very soft, chewy cookie. I forgot one batch was in the oven and they went for ~11 mins, yielding a crunchy cookie. Again, choose your own adventure here - fudgy vs crunch, one of the Great Debates)

And voila, you are done! The dough took me about 15 minutes to put together, so in less than 30 minutes you can have warm homemade cookies coming out of the oven... yo ho!

The Ideal Dollar

 Frugality is one of the most beautiful and joyful words in the English language, and yet one that we are culturally cut off from understanding and enjoying.  The consumption society has made us feel that happiness lies in having things, and has failed to teach us the happiness of not having things.

      - Elise Boulding

  The Wall Street Journal noted a study last fall pegging the ideal salary as $75,000. Make less and you are increasingly anxious about covering expenses. Make more and you’re apparently still increasingly anxious about… something. The article spawned a flurry of comments, arguing that $75K won’t buy in Manhattan what it buys in North Dakota (true), with one poster arguing that $500K is the absolute minimum income for a decent life in Manhattan (seriously?).

The point behind the study, at least to my view, is less about bickering over geographic buying power. It is more the underlying point that once necessities are covered, more money essentially makes people less happy. But why?  One perhaps obvious solution is that higher salaries usually demand longer hours for employees, leaving less time for families, days at the beach, puttering in the basement with LGB model trains. The more subtle moral is that of relativity. Rich people do not consider themselves rich, because they look at those richer than themselves and feel they have not yet “made” it. A miserable employee is one who earned a solid bonus - but then learned that his neighbor received twice as much.

With more income in American society also comes a self-imposed (and often subconscious) burden to live up to the “expectations” of that income bracket. Your neighbors have pools so you need a pool. Your friends enjoy lavish vacations, so you feel you must do the same. Voluntary expenses become necessary, and pile up continuously until you can’t imagine living at a lower income than you currently make. And in that moment you are trapped, mentally handcuffed to your job and current income level.

But if the rich don’t feel rich, who is rich? Obama defines it as $250K, but the issue again is not the amount of money itself, but our tendency to view people making more than whatever we make as “those rich people.” A separate class of mysterious people we envision hording money (or swimming in gold, like Scrooge McDuck) and having elite foie gras and cracker parties in manicured, private lawns.  Yes, there are some truly very wealthy people out there – but there are also truly wealthy generous people as well. Money is simply a necessary function of buying goods; it is no more an indicator or moral capital (or dissolution) than hair color or shoe size. With money comes a great responsibility to use it wisely, but the wealthy should no more be seen as evil hoarders than the financially struggling should be seen as unproductive squander-ers. Politicians love to bait us against one another, but we cannot let money define battle lines of the next War Between the States: “us” against “them.”

What responsibility does money bring at any income level (not just for "those rich" types)? Perhaps John Wesley says it best: Make all you can. Save all you can. Give all you can.

Rolling Cinnamon

After writing recent posts on the national debt, the meaning of life, and internal psychological sabotage, I was debating what to add to the blog today and decided a little lightness was in order. Heck, economic data isn’t looking very good, I’ve been (rather unsuccessfully) trying to study for Columbia midterms, and with the start of summer we just might all need a little baking love. (This is “Scones and Swaptions,” after all). So today is dedicated to the cinnamon roll.

The thought of baking cinnamon rolls immediately scares off approximately 82% of potential chefs. Add the word “yeast” to the ingredient list and another 5% bail. But really, they’re not so hard to make. Below is a solid, straightforward recipe that claims to mimic Cinnabun (I don’t know about that, but they are tasty).

Cinnamon Rolls of Deliciousness

Ingredients:
DOUGH
1 (1/4 ounce) package dry yeast
1 cup warm milk (105-115 degrees. Don’t boil it!)
1/2 cup white sugar
1/3 cup softened margarine (or butter, I don't think it matters)
1 teaspoon salt
2 eggs
4 cups flour
FILLING
1 cup packed brown sugar
2 1/2 tablespoons cinnamon
1/3 cup margarine, softened
ICING
8 tablespoons margarine
1 1/2 cups powdered sugar
1/4 cup cream cheese
1/2 teaspoon vanilla
1/8 teaspoon salt


Directions:
1. Dissolve yeast in warm milk. (If you’re tempted to eyeball the milk temperature, resist! Yeast needs a precise temperature range to activate without dying… and yes, apparently yeast can “die,” the result being brick-like dough that doesn’t rise).

2. Add sugar, margarine salt, eggs, and flour, mix well. (I usually add the sugar/margarine/salt/eggs with half the flour to the milk/yeast mix using a hand mixer, then hand stir in the remaining flour to avoid over-mixing… or having your handmixer start smoking, which also happened to me once while making cinnamon bread. Oops.)

3. Knead the dough into a large ball, using your hands dusted lightly with flour. (I usually do this for a few minutes (or less if you were using a stand mixer to mix everything), until dough seems sort of elastic and is soft, not sticky).

4. Put in a bowl, cover and let rise in a warm place about 1 hour or until the dough has doubled in size. (A good trick for this is putting the covered bowl in the oven, and adding a pan of boiling water to a separate oven shelf. This keeps the temperature nice and toasty for rising)

5. Roll the dough out on a lightly floured surface, until it is approx 21 inches long by 16 inches wide, approximately 1/4 thick. Preheat oven to 400 degrees.

6. To make filling, combine the brown sugar and cinnamon in a bowl. Spread the softened margarine over the surface of the dough, then sprinkle the brown sugar and cinnamon evenly over the surface. (I usually just melt the margarine for easier spreading. You can also add raisins or nuts here if you like)

7. Starting with the long edge, roll the dough down to the bottom edge. Cut the dough into 1 3/4 inch slices, and place in a lightly greased 9x13 baking pan. (A 12-inch piece of [clean!] dental floss does the slicing trick nicely. Put the floss under the dough roll, coss the floss ends over the top and pull to get a clean slice without squashing anything with a knife).

8. Bake for 10 minutes or until light golden brown. While the rolls are baking combine the icing ingredients and beat well with an electric mixer until fluffy.  When the rolls are done (and still warm), spread generously with icing.

Viola! That wasn’t as bad as you feared, right? The main annoyance here is waiting around for an hour while the dough rises… but warm, delicious cinnamon rolls are worth it in the end!

Decisions, Decisions

Do you swear to tell the truth, the whole truth and nothing but the truth so help you God?

Our society takes truth seriously (or at least we used to). We have sworn testimony, Hippocratic oaths, military service swearing-in (not to be confused with swearing like a sailor). Most people would consider themselves honest, but how truthful are we being to ourselves? 

Behaviorists would answer: Not very.

One of my classes this semester focuses on Leadership & Organizational change, taught by Sheena Iyengar (author of The Art of Choosing). One of our recent lectures focused on the traps of decision making, pushing us to understand the subtle biases that cloud our judgment, even while we are certain of our internal impartiality and honesty. A few of the interesting ones:

1    1. Anchoring/Framing

How a question is phrased changes how we respond to it, because the mind gives disproportionate weight to the first information it receives. Initial impressions “anchor” the mind in a specific place and then alter our perception of what follows.

Example: Amos Tversky performed a study where cancer patients/doctors were asked one of two questions:

A.      Which would you prefer? Surgery where 90% of patients survive surgery and 34% survived for at least 5 years afterwards, or radiation where all patients survived treatment but only 22% were still alive 5 years later

B.      Which would you prefer? Surgery where 10% of patients die during surgery and 66% died within five years, or radiation where 0% died in treatment and 78% died within five years

The information in both scenarios is identical, only the framing of the question changed. Yet those who received question A chose radiation 25% of the time, and those who received question B chose radiation 42% of the time.

Solution: Try rephrasing questions. As Iyengar notes in her book, Roberto Goizueta, Coca-Cola’s CEO in the 1980s, worried that his staff was becoming complacent and unwilling to take big risks because they saw themselves as market leaders of the soda market, with 45% market share. He called in his staff and told them that Coca-Cola only held 2% of the entire liquid market (not just soda). By rephrasing the question, staff were more willing to take risks to grow Coke’s share (and Coke’s stock went from $4.3B in 1981 to $152B in 1997)

      2. Availability

We tend to make snap decisions, and then bias ourselves by cherry-picking from available information to confirm our initial impression (and unconsciously ignoring dissonant information).

Example: Studies have shown that interviewers tend to make a decision about a candidate in the first 60 seconds (plus or minus 30 seconds) of an interview, then their brains spend the rest of the time hearing what they “want” to hear to confirm their decision one way or another. Of course, interviewers honestly believed they waited to make a fair decision until the end of the interview… but if you took clips of interviews and removed the audio, impartial observers could predict by the interviewer’s body language within the first few minutes whether or not the candidate would be hired.

Solution: Try to remove emotion/perception by making evaluations more quantitative. For job interviews, ask candidates how they would respond in business scenarios (business simulation/case interviews are 3 times more likely to predict job performance than “tell me about yourself” interviews). For more general decisions, try pro/con lists weighted by importance.

3. Variety of Choice

We think that more choices make us happier. In fact, our brains behave differently – we are more likely to believe we made the right choice when we had fewer options to choose from.

Example: A group of engineers were given hypothetical project scenarios from their bosses. Managers either gave the engineers 1 choice, 2-3 choices, or 6-8 choices. Instinct tells us the engineers would be happiest with 6-8 choices, right? Nope. In fact, they perceived managers who gave them 6-8 choices as “weak and indecisive.” Managers who gave one choice were thought “overly authoritative” (not surprising – we don’t like total dictators), but managers who gave 2-3 choices were preferred overall – and described as “decisive, impactful.”

Another example is in job searching. MBA candidates who did the most research and went on the most interviews were rewarded with higher salaries than counterparts who went on fewer interviews. But in the long run, those who went on fewer interviews were more likely to feel that they had made the right decision choosing the job they did. They were happier choosing from fewer options.

Solution: Be aware that your brain likes comfortable, safe situations – like choosing between only a couple options. If you are a manager (or parent!) this means giving your charges 2-3 things to pick from. If you are making your own decisions, focus on a handful of options that really interest you - but don't pander to your biases by not researching other possibilities... after all, the job candidates who did more research ended up with higher paying/more prestigious jobs.

Raised to a New Life

Death seems to be rampant this week. It is Holy Week, a time Christians remember and mourn Jesus’ death on the cross. It is also Passover, a time Jews recall their rescue from slavery in Eqypt- a freedom won only after Pharaoh watched every Egyptian firstborn die. More recently agonizing, a friend of mine lost her baby this week. 8 months pregnant, then a lost life. As if she needed more emotional and physical pain, she had to endure the full induced labor experience to deliver the baby, knowing that at its completion she and her husband would only be mourning a lost little girl. Even the weather seems to join in mourning with days of cold, steady drizzle.

In some ways there doesn’t seem to be much to say in this post. I have no solution for present grief; it is not a fictional story line that I can somehow resolve with the right character climax/catharsis. And yet somehow both Christians and Jews are able to look back on a time of death and celebrate rather than mourn. But how?

Part of the story is knowing the ending; to understand that death on Good Friday is followed by new life on Easter Sunday. To remember that death for the Egyptians meant deliverance and freedom for the Jews to a new Promised Land. But even the knowledge of renewed life later cannot (and should not) erase our grief for lost time on Earth. Rather it mutes the extent of our grief, allowing us to shed tears and memories over the graves of loved ones, without becoming lost to raging, inconsolable hopelessness.

For there is hope. Hope that in the short term that we will leave the world a better place behind us through our service and love for others. Hope that our grief will make us more thoughtful towards life, more understanding towards our fellow man. And underneath everything, a foundational belief in the long term that one day death itself will pass away, that evil will lose its grip on the Earth, and that the world will awake to the full glory it was originally intended to have. (See Revelations 21:1-5)

With knowledge of final victory, we mourn for now. But we mourn with perspective, which makes all the difference.

Dostoyevsky, The Brothers Karamazov:

"I believe like a child that suffering will be healed and made up for, that all the humiliating absurdity of human contradictions will vanish like a pitiful mirage, like the despicable fabrication of the impotent and infinitely small Euclidean mind of man, that in the world's finale, at the moment of eternal harmony, something so precious will come to pass that it will suffice for all hearts, for the comforting of all resentments, for the atonement of all the crimes of humanity, for all the blood that they've shed; that it will make it not only possible to forgive but to justify all that has happened."

The Roman Gardener

Our church small group is progressing through a study of Romans, and verse 6:21, “What benefit did you reap at that time from the things you are now ashamed of?,” got me thinking. Paul refers to Christians’ lives before and after believing the gospel, and their new perspective that rendered so many prior goals meaningless. This verse reminded me in a different direction – what do we spent time on now that we will regret looking back on our lives?

I’m not saying we should all go out, quit our jobs, and live our lives sipping margaritas in Tahiti (though given the persistent cold rain in NYC this month, that isn’t sounding so bad). Working diligently and honestly brings a sense of purpose in our lives. But when does the desire for personal gain take over the desire to work honorably? When does pride drive us to worry incessantly about being promoted or finding that key stepping-stone job that will land us the true dream down the road? If life were frozen as it is now, à la Groundhog Day, would you be happy with it? What would you change or keep the same? 

Schools and business struggle to teach ethics effectively for a reason: we humans are terribly short-sighted. We seek short-term gain. Possible long-term consequences seem fuzzy at best – certainly not worth giving up the gain now, our short-term minds whisper. Our politicians do the same, avoiding long-term questions like the national debt (blogged more in-depth here) until a true fiscal crisis threatens to crush us.

So what is the solution? How do we develop the self-awareness to recognize areas where we invest time and emotions in goals that we would look back on 20 years from now and see as empty? The answer to the question posed in Romans springs from another book; 1 Thessalonians 5:21 commands: Test everything. Hold on to the good.

It is our job then to be gardeners of our own souls; trimming back unwanted growth and nurturing the blooms that we want to flourish.