I think most businessmen are very skillful in negotiation, gamesmanship, or, perhaps most apt of all, brinkmanship. The art of being unreasonable is not, of course, restricted to smoke-filled rooms at corporate headquarters. The principles are regularly applied by good negotiators, diplomats, and extortionists as well as by businessmen.
Here the situation is clearly a standoff. Both parties lose unless they can agree. Any division of the profit is arbitrary. The only leverage either party possesses is the threat to break off negotiations, and that would clearly be an irrational, emotional and unreasonable decision.
No escape from agreement is possible here. Although there are many arguments that have some validity and bear on the price, the only possible agreement depends on a compromise which is primarily based on the attitude of the two partners.
I believe there are two crucial points on this case . The first is that the management of a system must persuade each competitor to voluntarily stop short of his/her maximum effort to acquire profits. The second point is that persuasion should depend on emotional and intuitive factors rather than on analysis or deduction.
Actually I base my arguments on a considerable amount of experience with businessmen and observation of their behaviour.
Admittedly, my impressions run counter to most management theory and are not to be found in any text on behavioural economics.
