<b>Devangshu Datta:</b> Decide and pay

In real life, it's often impossible to price critical decisions, especially when both emotion and reason are involved

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Devangshu Datta New Delhi
Last Updated : Jan 21 2013 | 12:12 AM IST

A few days ago, chess fans witnessed a great example of reciprocal sportsmanship. David Navarra, a Grandmaster (GM) from the Czech Republic, was playing GM Alexander Moiseenko of Ukraine in the third round of the World Cup (WC).

The winner of this knockout was guaranteed at least $20,000 (if he lost in Round four), and he could collect $96,000 if he won the WC, which is a qualifier for the world championship. The loser would get just $12,800.

The WC is played on sensor-equipped boards that record and transmit moves. The games are also broadcast live on high-definition video, with cameras recording every twitch from multiple angles. The event is watched by several hundred thousand people. Many people saw exactly what occurred.

On move 35, Navarra was short of time. As he hurried to move a threatened bishop, he touched his king, on an adjacent square. It was clearly accidental. Equally clearly, Moiseenko would have been entirely within his rights to insist the king be moved. That would mean instant victory for the Ukrainian in game and match.

Moiseenko did not make this demand. Play continued. Much later, Navarra reached a winning position. Instead of delivering checkmate in two moves, he offered a draw. The two played out tiebreakers. Navarra won to go to the fourth round.

Both players went well beyond the norm in terms of sportsmanship and each made those decisions in, literally, seconds. This has happened in other sports. Gilchrist, for example, walked in the semi-finals of the cricket World Cup.

What I found interesting (as well as heart-warming) was that it was possible to compute exact costs.

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By refusing to claim a win, both players in turn risked a minimum of $7,200 and a maximum of much more. It is very rare to see such cut-and-dried equations, while making critical decisions. It was like an experiment in a behavioural sciences lab.

It reminded me of the classic “game” of fair play where A is offered, say, $100 on the condition that he share some money with B. A can decide how much to offer B. If B thinks the amount offered is too small and refuses it, neither gets anything.

Rationally, A should offer little and B should accept whatever A offers. It’s win-win to accept what’s going. In practice, people usually offer close to 50 per cent and offers below the 33 per cent threshold are refused, leading to lose-lose situations. This experiment suggests most individuals possess some sense of fair play and some degree of irrational stubbornness.

In real life, it’s often impossible to price critical decisions, especially when both emotion and reason are involved. Sometimes prices can be set in hindsight. For example, Microsoft offered to buy out Yahoo for $44.6 billion in February 2008. The price was at a premium to the market cap.

The offer was refused by the Yahoo board on emotional grounds. Now, after sacking Carol Bartz, Yahoo “enjoys” a market cap of under $17 billion and no suitors. It was a lose-lose decision. Microsoft failed to get the Web platform to challenge Google; Yahoo shareholders lost $27 billion.

Even when we cannot set prices, we can usually diagnose lose-lose situations. For example, after the aborted May attack on the Delhi High Court, a security committee discussed ways to protect the high court, without taking any concrete measures whatsoever. Doing nothing was obviously lose-lose and as individuals, each committee member should have known that. The collective indecisiveness cost 13 lives.

No committee could ever do what Navarra, Moiseenko and Gilchrist unhesitatingly did. Are these situations where committees are destined to make errors that individuals would not make? Or was it because the people involved in each case had too much time for consideration and second-guessing ? Food for thought for behavioural scientists.

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Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper

First Published: Sep 10 2011 | 12:44 AM IST

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