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Splitting the Pie and $200,000 Pay Ranges
“George: Why is there no haggling in this country?
Jerry: I guess we like to think we've progressed beyond a knife fight for a citrus drink.”
-Seinfeld, “The Chicken Roaster”
I’m an Esau apologist.
Ok, not precisely.
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Ever since one of my teachers in high school implausibly told me that Jacob favored Esau because Esau always asked good questions in yeshiva,1 I was fascinated by the way in which Jewish tradition turns Esau into a villain.2
I am not here to redeem Esau in your eyes, but Parashat Toledot does provide us with an interesting look at how negotiations affect relationships. During the course of the next several parshiyot, we will see negotiations take place between Isaac and Rebecca, Jacob and Esau, Esau and Isaac, Jacob and Laban, Jacob and “angels,” and Jacob and Esau. And, in most cases, these negotiations are zero-sum; someone basically gets 100% of what they want, someone gets 0% of what they want, and chaos often ensues.
A few weeks ago, we learned about the Fundamental Attribution Error (FAE) and how our assumptions about people can be flawed at the beginning. Today, we are going to focus on how our assumptions about information can lead to the same issue when we negotiate what matters most.
In five seconds or less, calculate this equation: 8x7x6x5x4x3x2x1.
(I never said there would be no math. Take that, Mrs. Goodsen!).4
This math problem was used in an experiment to demonstrate how human beings tend to overweight the first piece of information they receive, regardless of the data point’s relevance. This is the “anchoring bias.”
Returning to our equation, Kahneman and Tversky found that if one group of people is asked to calculate 8x7x6x5x4x3x2x1, and the other is asked to calculate 1x2x3x4x5x6x7x8, the first group makes much higher estimates because the first number in their sequence is the highest value. Although the problem one must solve is the same, the first number sets the tone.
The anchoring bias comes up all the time, including in budget planning, salary negotiations, and the criminal justice system. In each case, researchers found that the first number mentioned has a disproportionate effect on everything that follows. But anchoring is not limited to numbers.
Consider talent acquisition.
When an organization searches for a new staff member, there might be a temptation to anchor the hiring process on a single piece of data. For example,
How important is it that the CEO of a Jewish organization has experience in the corporate world and the Jewish nonprofit world?
Can you be a great counselor at camp if you were not a “homegrown” camper?
Should a congregation looking for a rabbi only hire rabbis with previous congregational experience?
Does a particular line on a person’s resume automatically move them to the top of the candidate pool (e.g. Ivy League Degree, Wexner Fellowship, etc.)?
No one intends for any of these data points to manipulate their thinking; it happens without our realizing it. And when it comes to negotiations between people, anchoring can make an already difficult conversation potentially toxic.
Almost none of the negotiations in the Torah end with a stronger bond between people; in part, that is because someone started the negotiation with a proposal that poisoned everything else.
Traditionally, Roger Fisher and William Ury’s Getting to Yes is the iconic book on negotiation.10 Fisher and Ury’s theory of negotiation is guided by the idea of focusing on “interests,” rather than “positions,” when trying to bring two parties together.
Nalebuff argues that Fisher and Ury leave unresolved “the messy problem of how to divide the gains created” (2). To put it another way, when negotiating a salary with an employee, focusing on the interests of the employer and employee without having a clear sense of what the employer and employee gain from a successful resolution leave out a crucial piece of the puzzle.
As a result, Split the Pie proposes that a better way to start a negotiation is by focusing on “what the two sides can jointly create over and above what they can do on their own,” what he calls “the pie” (20). When people are negotiating, there is some kind of value that will be created if the negotiation is successful; if the negotiation fails, “the pie disappears” (34).
If you think about the thorny questions the Jewish community tends to avoid discussing, what those conversations share is that people are afraid that their “side” will get “nothing” if they “lose” the argument, much like what we see in this week’s parasha. But what if there is something everyone has to gain by learning how to talk to each other? This is the essence of splitting the pie, and it’s beautiful.
$200,000 Pay Ranges Under NYC Law: The good news is that New York State now requires that most companies post minimum and maximum wages for open positions, which is a positive step in terms of hiring and pay equity. The bad news is that many organizations are posting absurd salary ranges to get around the law. Read more.
Searching the Right Talent Pools: Employment attrition continues, and yet many organizations respond to this gap by searching the same place for the same people that they did beforehand (i.e. “anchoring” their search criteria). Here is a report from McKinsey & Company on the need to utilize different talent pools to fill many unfilled positions.
60,000,000 Hours of Commuting Saved By Remote Work: Economists have found that workers hate their commutes to the point where most would sacrifice pay for a shorter drive to the office (it’s called “the commuter’s paradox”).11 Recently, the Federal Reserve Bank of New York estimated that 60 million hours of commuting have been saved by remote work, which should remind leaders of just how much organizations stand to gain from a happier workforce made up of fewer people sitting in gridlock every day.
What Moneyball Has Done to American Culture:12 Ok, so clearly I do not agree with this article, which is odd, since I love Derek Thompson. That said, there is a dark side to every approach, and it’s a fair critique. Read it closely.
When Your Passion Works Against You: I will admit to being someone who wants my work as a Jewish professional to be motivated by intense passion. This helps me in many ways but hurts me in others. Read about the complexity of too much passion.
If you’re currently saying “What are you talking about?” don’t focus on it too much. But if you want to learn more, read this midrash. To make a long story short, my teacher was right that such a perspective exists, but I still thought it did not make any sense.
In a D’var Torah on Parashat Toledot, Chancellor Ismar Schorsch of the Jewish Theological Seminary writes that “The rabbis consistently failed to muster any sympathy for Esau, even though the Torah does…In the Midrash, Esau can do no right and Jacob no wrong…What the rabbis did to Esau is a striking instance of misreading...”
Since I care about citations, I did not realize that this was originally from Chevy Chase’s impression of President Gerald Ford on Saturday Night Live. I learned something.
She was my AP Calculus Teacher. She was really tough, but she would admit that even I could do multiplication!
Amos Tversky and Daniel Kahneman, “Judgment Under Uncertainty: Heuristics and Biases,” in Science, Volume 185, Number 4157 (September 1974), 1124-1131.
As a philosophy major in college, my teacher Professor Charles “Chip” Manekin used to tell me, “All of Jewish philosophy is a footnote to Maimonides.” Turning to the present, all of Moneyball Judaism is a footnote to Amos Tversky and Daniel Kahneman, deservedly lauded by Richard Thaler and Cass Sunstein in this seminal article and in Michael Lewis’ recent book The Undoing Project. I am sure they will add this reference in a niche Jewish substack to their impressive resumes.
The text he cites comes from BT Bava Metzia 2a (translation from Sefaria; the bold text indicates the direct translation):
“If two people came to the court holding a garment, and this one, the first litigant, says: I found it, and that one, the second litigant, says: I found it; this one says: All of it is mine, and that one says: All of it is mine; how does the court adjudicate this case? This one takes an oath that he does not have ownership of less than half of it, and that one takes an oath that he does not have ownership of less than half of it, and they divide it.”
You will need to read the articles in the next footnote to understand what this text has to do with his approach to negotiation.
Barry Nalebuff, Split the Pie: A Radical New Way to Negotiate (New York: HarperCollins Publishers, 2022), Footnote 8, page 272. The two papers that Nalebuff cites are Barry O’Neill’s “A Problem of Rights Arbitration from the Talmud,” and Robert Aumann and Michael Maschler’s “Game Theoretic Analysis of a Bankruptcy Problem in the Talmud.”
Yes, in addition to being a tenured business professor at any Ivy League University, Nalebuff is also presumably a millionaire from creating a tea company.
Fun fact: Rabbi Craig Scheff, one of my teachers, once told me that he gives a copy of Getting to Yes to couples as a part of their pre-marital counseling. #Brilliant.
Alois Stutzer and Bruno S. Frey, “Stress That Doesn’t Pay: The Commuting Paradox,” in I.E.W. Working Papers 151 (Zurich: Institute for Empirical Research in Economics, 2004).