• Using Game Theory to Solve Business and Political Disputes
  • November 11, 2010 | Author: June M. Wiyrick Flores
  • Law Firm: Ater Wynne LLP - Portland Office
  • Bruce Bueno de Mesquita was the opening keynote speaker at the Family Firm Institute's 2010 annual conference in Chicago.  He is the Julius Silver Professor of Politics and Director of the Alexander Hamilton Center for Political Economy at NYU, a Senior Fellow at the Hoover Institution, Stanford University.  He is the author of The Predictioneer's Game.

    Mr. Mesquita uses mathematical game theory as a way of "evaluating how people interact when they are trying to advance their own interests".  During his presentation he indicated that for the most part, he believes all people are rationally self-interested (however, he excluded two year olds and those that are mentally ill).  In his method he analyzes who has a stake in the outcome, what do they say they want, how focused are they on the particular issue vs. another issue, how persuasive can an influencer be, and how resolved are the parties to coming to an agreement.

    When working with a family business, we must also analyze these issues.  It is important to know who has a stake in the outcome of any decisions that must be made.  This often includes family members who may not be present for any discussions or may not be the ultimate decision-maker.  One member of the family may indicate that they want a certain outcome, however that family member may not understand all the ramifications of that outcome or considered other options.  The adviser must determine how important is the present issue - can the family be persuaded to resolve other issues that will assist with resolution of this particular issue?  It is critical when working with family businesses that the non-bloodline family members who are influencers be included or have a place in the process. With regard to the level of resolution, family businesses will often wait until the pain of doing nothing far exceeds the pain of resolving issues.

    Whether or not you are a fan of game theory, the factors used by Mr. Mesquita can be used to assist anyone who is working with family businesses.