Author: Hrvoje Zaric

When Fairness Beats Logic

Imagine you get €100 and must split it with someone else. But there’s a catch — if they reject your offer, neither of you gets anything.

For example, you offer €10 wanting to keep €90 to yourself, and they say no. Then you get nothing, they get nothing. Game over.

Welcome to the Ultimatum Game, a classic experiment in behavioral economics. And a powerful lens on real-world negotiation dynamics.

“But rejecting free money isn’t rational!” I hear you object. Yet the experiment consistently reveals that people don’t just care about the outcome — they care about fairness, respect, and how the offer is made.

In B2B negotiations, we see this more often than you’d think:

• One side anchors hard — and the other walks, even if the deal made economic sense.
• A retailer pushes for steep discounts, but the supplier rejects, incurring short-term financial loss, to avoid setting a harmful precedent for future negotiations
• A startup declines a lucrative acquisition—not due to price, but because of disrespectful treatment.

People don’t respond to logic alone. They respond to how they’re treated and whether their needs are acknowledged.

Key takeaways for B2B negotiators:

✅ Fairness is not a soft topic — it’s a strategic variable.

✅ Power plays can backfire when they are perceived as unjust.

✅ Both the deal structure and the delivery matter: clarity, timing, tone, and process shape how offers are received.

In short: Negotiation isn’t just math. It’s psychology.

Ignore perceived fairness, and you might win the numbers on paper — but lose the deal.

#Negotiation #GameTheory #B2B #Fairness #BehavioralEconomics #Leadership #CreatingSharedSuccess

Why trust is the silent partner in every high-stakes deal

Imagine two hunters. They can either each chase a rabbit (a guaranteed but small reward) or cooperate to hunt a stag (a much bigger win, but only if both fully commit).

That’s the Stag Hunt, a classic game theory model.

And it plays out all the time in B2B negotiations. In theory, both parties benefit most by pursuing the joint optimum. But in practice, fear of being left hanging leads one or both sides to settle for a lesser but safer option.

Here’s how it shows up:

• A supplier won’t invest in custom tooling because they’re unsure the buyer will commit long-term.
• A client wants innovation, but won’t share enough information to enable it.
• A strategic partnership fails to launch because neither side wants to go first.

These aren’t failures of logic — they’re failures of trust and coordination.

In high-stakes negotiations, the size of the prize often depends on how well you can manage uncertainty, build credibility, and signal commitment.

If you want the stag, you can’t just say it, you have to show it. You need to convince the other side you’re in it with them. Build transparency into your actions. Ensure commitment is visible across various levels of the organization. Embed structures into your agreements that reinforce mutual investment.

Trust isn’t built on promises. It’s built through risks taken together.

Follow this series as we explore other real-life games that shape negotiation behavior and how to play them wisely.

#Negotiation #GameTheory #Strategy #Trust #B2B #CreatingSharedSuccess

… and Why It’s Risky in Negotiations

Two cars. One road. Both speeding toward each other. Who swerves first…? Who “blinks”?

Welcome to the Game of Chicken — a game of escalation, brinkmanship, and bluffing.

Almost every negotiator can tell a tale about it:

• One side threatens to walk away unless their demands are met (”take it or leave it”).
• Both parties push harder, waiting for the other to yield.
• Stakes rise. Deadlines loom. Neither wants to be the one to “give in.”

And sometimes?… They crash.

Chicken is about who’s more committed to not giving in — or at least appears to be. But in B2B negotiations, playing Chicken is dangerous, both for the initiator and for the counterparty. You risk long-term relationships for short-term wins, possibly creating reputational damage that outlasts the deal. You might back yourself into a corner with no room to maneuver. And if you allow the game to be played, you educate the other party as to what is acceptable, setting a precedent.

So what’s the smarter play?

✅ Know when to project resolve — and when to signal flexibility.

✅ Prepare your alternatives — so you’re not bluffing with nothing behind you.

✅ Read the other side’s constraints carefully. Are they really playing Chicken — or just holding firm?

To play Chicken, be sure there are few alternatives available to the other side. To counter Chicken, having a good BATNA gives you a way out.

This is part two of our series on game theory — or rather: game practice — in B2B negotiation. Missed part one? Catch up on “The Prisoner’s Dilemma”. Next up: the Stag Hunt — and the trust it takes to pursue shared value.

#Negotiation #GameTheory #Strategy #B2B #CreatingSharedSuccess