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In this paper, we offer an alternative to class-based studies of saving behavior by using individual-level ledger records from accounts opened in 1830 in the Limehouse Savings Bank, London. Our analysis suggests that such banks served a valid financial purpose for a much wider constituency of savers than the targeted “industrious poor.” True gaming of the system by the middle classes appears to be relatively limited, and instead depositors were using accounts for a variety of means and motivations. We suggest that the contemporary consternation around class was misplaced and that we can better understand and predict depositor behaviors through analysis of transaction data.
Some issues in the application of benefit–cost analysis (BCA) remain contentious. Although a strong conceptual case can be made for taking account of the marginal excess tax burden (METB) in conducting BCAs, it is usually excluded. Although a strong conceptual case can be made that BCA should not include distributional values, some analysts continue to advocate doing so. We discuss the cases for inclusion of the METB and the exclusion of distributional weights from what we refer to as “core” BCA, which we argue should be preserved as a protocol for assessing allocative efficiency. These issues are topical because a recent article in this journal recommends ignoring the METB on the grounds that desirable distributional effects offset its cost. We challenge the logic of this article and explain why it may encourage inefficient policies.
This paper traces the history of the Chinese fire insurance industry and Tai Ping Insurance, one of the most successful Chinese insurance companies in the early twentieth century. It provides a case study on the “indigenization” of fire insurance in China by retracing how a fledgling firm mastered selling a foreign financial product and managed to win market share in an ostensibly adverse environment. This paper argues that while Tai Ping benefited from the growing embrace of insurance by the Chinese public, its success was ultimately driven by the company’s economies of scale, cross-selling synergies, and tight connections to banking. This paper also explores the broader context in which fire insurance operated by examining how the indigenization of insurance in China unfolded, with Chinese insurers like Tai Ping mediating the introduction of a new financial product, the transfer of new institutions, and the diffusion of new knowledge regarding risk. More generally, the history of Tai Ping and the Chinese fire insurance industry addresses a research lacuna in the history of insurance beyond the developed markets in Western Europe and North America, which has typically focused more on the experiences of British and American multinational enterprises and less on that of native companies. By highlighting the degree of institutional convergence and divergence between the Chinese insurance industry and its global counterparts, this paper contributes to a more inclusive history of the internationalization of insurance.
To master the triple challenge of negotiation, we must be ambitious. And yet, our learning is all too easily thwarted. Each of the three challenges sets up a specific trap. We might succumb to the illusions of facing a coherent task, of being sufficiently competent, or of having the necessary acumen. One illusion easily leads to the next. Even more annoyingly: We are only deceived when we have already learned something! The illusions cannot occur to a complete novice. We must have acquired some knowledge to be fooled into believing we have all the knowledge. This is true for all three levels that we have explored in the first part of the book: The task itself, the relationship with the other side, and our own thinking. In this part we will explore why it is so tempting to negate the tactical paradox, the strategic dilemma, and the cognitive ambiguity – but only if we are experienced negotiators. Our strength can certainly become a weakness, if we overdo it. But, even more fundamentally, it is a weakness: As soon as we have learned something, learning its opposite is very hard to do. As a result, our learning progress is blocked. To overcome this blocking, learners need a degree of humility.
Some negotiators (such as US President Donald Trump) think of negotiation as a zero-sum game, others (such as German Chancellor Angela Merkel) as an opportunity for win–win. In reality, most transactions include both aspects. Paradoxically, negotiations require the creation as well as the distribution of value. While they can be compatible, often they are not. I show the six tactics that are required for each, thus arriving at the tactical paradox of the task. It is graphically illustrated by the symbol of Yin & Yang.
We have now explored the triple challenge to negotiation success, and the corresponding hurdles to negotiation learning. We have seen that the former often leads to ambivalence, while the latter often lead to blocking. We realized that we have to be ambitious and humble to succeed.
The “Great Rationality Debate” is based on whether or not humans are rational. We have two systems of thinking at our disposal: Deliberation and intuition. These systems sometimes agree, but often demand different things. This is reflected in negotiation: Because of the paradoxical nature of the task, the two systems regularly recommend different approaches. This chapter explains the benefits and limitations of both intuition and deliberation, illustrated with case studies from all walks of life.
Because both negotiators face the paradox, they are stuck in a dilemma, much like the prisoner’s dilemma. They need the other side to succeed, and indeed can achieve win–win with them. But greed and fear typically lead to a lose–lose outcome instead. We differentiate one-off interactions from repeated interactions to draw lessons from game theory, pondering the significance of metaphors in our decision-making as well as historical examples. We learn of a practical strategy that can help us negotiate in repeated interactions, changing the nature of the game to the “stag hunt game.”
The second trap is the consequence of the strategic dilemma. Some negotiation behaviors come more naturally to us than others. If the task seems more coherent than it is, we might not notice the dilemma. This can lead to the illusion of competence. When we do not realize the full picture of the task and dilemma, we do not develop the full skill set needed to address them. This is especially true in relation to cooperation, an innate ability but one at which humans have to persevere in order to become highly skilled.
As learners of negotiation, the first step to overcome the blocking of our advance is to become aware of our limited understanding, know-how, and/or thinking. This is not a pleasant experience. Plato linked it to a “torpedo’s shock.” Such a moment of aporia, however, is necessary for us to realize the need to “flip the coin”: i.e. to look at the other, opposite site of what we already know to be true to complete our understanding, know-how, and/or thinking.
Each of the three challenges introduced in Part I sets up a specific cognitive illusion for the learner. Together they conspire to block our learning. The first trap arises from the tactical paradox: It is tempting to see only one side of the coin and overlook the other, as in an optical illusion. The task appears to be more coherent than it really is, thereby preventing learners from seeing the full picture and fully understanding the task in hand.
A brief assessment of how artificial intelligence (AI) will change negotiation and the way in which we learn about it in the near future, and a note of optimism to conclude.
The triple challenge of negotiation is the tactical paradox, the strategic dilemma, and the cognitive ambiguity. One challenge leads to the next. As a result, most people are ambivalent when it comes to negotiations. They might like some aspects but often strongly dislike others. This is perhaps not surprising, given that the Latin root of the word “negotiation” literally means “not fun.” And there is a very good reason for this. By its very nature, negotiation is two-sided. There is a duality at every level of the process: The task itself requires us to both create and claim value. Figuratively speaking we have to expand the pie and divide it. This means that we face a tactical paradox: We must work with the other side as well as against them – and so do they. Hence our success depends on their choice of tactics just as much as ours.