The Nobel Prize-winning game theorist Thomas Schelling wrote in his most important book, "The Strategy of Conflict," that a man who shows up on your doorstep with a knife and threatens to stab himself if you don't pay him $10 is more likely to get the money if his eyes are bloodshot. I translate this important observation to my law and business students this way: In negotiation, the crazy person wins.
If your counterpart is willing to act in a way that harms both sides rather than making any concessions, you are outflanked. As a rational individual, you should give in, because doing so will make you better off than you otherwise would be, even though your concession will reward your irrational, uncooperative and completely maddening counterpart. You might not want to part with $10, but you probably want a suicide on your doorstep even less.
The world is not fair, I tell my students. Live with it. You can either be a grown-up and accept this fact, or indulge your childish desire to retaliate, which feels good in the short term but makes you worse off in the long run.
My students often express frustration at the searing injustice of my lesson, so I would imagine they are celebrating this week's illustration by congressional Republicans of an important limitation on the "let the crazy person win" principle. It is proper strategy to concede to a lunatic in a one-off negotiation encounter, but not necessarily if you know you will have to negotiate with him again in the future. If repeat interactions are in the cards, the benefit of minimizing your losses today needs to be weighed against the long-term costs of encouraging the man with the bloodshot eyes to double-down on crazy the next time because your response has taught him that doing so works.
This is why parents should not give in to a 3-year-old willing to throw a temper tantrum in the grocery store check-out line until he gets candy. A single candy purchase won't hurt him, and buying one beats causing a scene in public any day of the year, even if it might spoil his dinner. The problem is, plunk down a dollar for Skittles and you might not have a pleasant trip to the store for years. The same logic accounts for why governments in general should not concede to terrorist groups that threaten to kill a hostage, even though the pressure to do so is often great.
For much of his presidency, Barack Obama has chosen to be the rational grown-up, making concessions to the bloodshot-eyes caucus in Congress in the face of its constant threats to shut down the government, default on the national debt, or both, in the absence of completely unrelated concessions. He can see that their threats are not idle, and he can calculate that the ransom demanded is cheaper for the American people than the cost of a complete impasse.
Unsurprisingly, many congressional Republicans seemed to believe right up until midnight on Sept. 30 that the president would once again concede. After all, postponing the Affordable Care Act's penalty for not buying health insurance for one year or repealing its medical device tax, as the Republicans demand as the price of peace, would be far less injurious to the country than closing the government for an indefinite period of time or refusing to pay our bills.
But Obama and his congressional allies have finally come to terms with the fact that you cannot reasonably expect to pay off the bloodshot-eyes caucus only once. Its members will be back to threaten to wreak havoc on the entire country — themselves and their constituents included — again and again.
The polling data demonstrating that even most Americans who oppose the Affordable Care Act fault the Republicans for the current government shutdown shows that they intuitively understand that the president has no plausible choice other than to stand firm, whatever the wreckage that ensues, until the bloodshot-eyes caucus finally sobers up.
Russell Korobkin is faculty director of the Negotiation and Conflict Resolution Program at the UCLA Law School and the author of "Negotiation Theory and Strategy."