Six famous negotiations, told simply
Each case takes about five minutes: the story, the game behind it, the big idea, and three questions to check yourself. Read the case before class — the lecture will go much deeper.
Samsung & Apple: sue your customer, supply your enemy
The story in 60 seconds
The game behind the story
People said Samsung was behaving strangely. It was not. Look at Samsung’s choices as a table (points from 0–10, higher is better — first number Samsung, second Apple):
| Apple: keep suing | Apple: settle | |
| Samsung: keep supplying | 6, 6 what really happened | 9, 5 more total value — reached only in 2014 |
| Samsung: stop supplying | 2, 2 both lose big | 3, 4 |
For Samsung, “keep supplying” is better in both columns (6 beats 2, and 9 beats 3). This is a dominant strategy — the best choice no matter what Apple does. And given that Samsung supplies, Apple prefers to keep suing (6 beats 5) — the lawsuits protected its patents and kept the pressure on. So the lawyers fought, the factories kept shipping, and the game “rested” in the gold cell for three years. That resting point is a Nash Equilibrium.
Also notice the green cell: settling while supplying created more total value (9 + 5 = 14, against 6 + 6 = 12). Why didn’t it happen? Because Apple would lose by moving there alone (5 is less than 6). Nobody volunteers to be worse off. It finally happened when the payoffs themselves changed: by 2014, years of legal costs made settling more attractive to Apple, and the two companies dropped their lawsuits outside the US. Equilibria move when payoffs move — that is what skilled negotiators work on.
Check yourself
Toyota & GM: the deal that was won before the meeting
The story in 60 seconds
The game behind the story
On paper, the deal was equal: 50/50. But two hidden mechanisms decided everything.
1 · The real decisions happened before the meeting. Toyota treated the formal negotiation as the last step, not the first. By meeting day, the union, the managers and the plans were already aligned — by Toyota. GM prepared presentations; Toyota prepared people. If you are still making arguments at the formal meeting, you have already lost.
2 · The payoffs arrived at different speeds. Toyota’s goals (learn to build cars in America, work with the union, prove its system abroad) were achieved in 3–5 years. GM’s goal (absorb Toyota’s culture) needed decades. The partner whose goals are satisfied first holds the power in the middle of the relationship.
Check yourself
Disney & Fox: the $18.9 billion wall move
The story in 60 seconds
The game behind the story
A deal is possible in the space between the seller’s minimum and the buyer’s maximum — the ZOPA. Those two “walls” are set by each side’s plan B (BATNA). When Comcast appeared, Fox’s wall jumped, the zone moved, and Disney had to follow.
But why did Fox pick Disney? Because a bid is really worth its value × its chance of completing. Comcast’s bid carried bigger regulator risk (maybe ~60–65% chance of completing — an illustrative estimate). Disney’s carried much less (~90%+). Risk-adjusted, Disney’s offer was stronger. And one more thing: Disney’s boss, Bob Iger, had spent about a year building a relationship with the Murdoch family before any offer. Relationships change numbers too.
Check yourself
SoftBank & WeWork: the $14 billion “yes” that should have been “no”
The story in 60 seconds
The game behind the story
Son is not stupid. So what happened? Three traps, each one predictable:
1 · Sunk cost. “We already invested billions — we can’t stop now.” But money already spent should never decide the next step. Only the future matters.
2 · Pattern matching. Son once made a quick bet on Alibaba and earned a legend. “Extraordinary founder + fast decision = fortune” became his template. WeWork looked like the pattern — but an office-rental company is not an internet platform.
3 · The relational BATNA. Stopping meant admitting a mistake — in front of his investors, his public image as “the world’s greatest tech investor”, and his own story about himself. His financial plan B said stop; his relational plan B (reputation, relationships, identity) said continue. The relational one won — and cost $14 billion.
Check yourself
Brexit: 45 months of “no” — then a deal in days
The story in 60 seconds
The game behind the story
This is the Prisoner’s Dilemma played by governments. “Cooperate” = make concessions; “defect” = hold firm. Both holding firm was bad for both — but each side’s politics at home made visible concessions feel impossible. In game language: both sides had a low discount factor (δ) — the future mattered less than tomorrow’s newspaper headlines.
The deadline changed everything. Suddenly “no deal” stopped being a tough negotiating pose and became a real, immediate, visible disaster with names attached. Both sides’ δ snapped upward at the same moment — and cooperation instantly became rational.
Check yourself
The £22.5 billion auction (and the one that went wrong)
The story in 60 seconds
The game behind the story
The UK auction worked because of three design choices: guarantee real competition (the reserved licence), let bidders learn from each other’s bids (open rounds reduce the fear of over-paying), and commit to the rules (nobody could negotiate a special deal afterwards).
India’s process removed the auction — but competition did not disappear. It moved: from open bidding, where competition creates public value, to queue-jumping and connections, where it creates private value. That is the deep lesson: you cannot delete competition; you can only choose where it happens.
One warning for bidders: in auctions where the prize’s value is the same for everyone (a licence, an oil field), the winner is usually the bidder with the most optimistic estimate. This is the winner’s curse — winning can mean over-paying. Professionals bid below their estimate on purpose.
