Tue July 19, 2011
How The Debt-Ceiling Negotiations Are Like Poker
Las Vegas' World Series of Poker isn't the only high stakes battle being played out right now, there's an even bigger one in Washington, D.C.
And there's a lot of strategy involved when there's so much at stake whether in cards or politics.
If you remove the politics, the talking points and the media from the debt ceiling showdown, you end up with something that looks like a high stakes, no limit Texas hold 'em poker game. You've got posturing, risk taking, betting and, of course, bluffing.
"It's a war zone. You can't be a top notch poker player without bluffing," says
Antonio Esfandiari, a champion poker player who's won millions at the tables.
"I know when I throw a hundred thousand dollars out there, and I'm on a stone cold bluff, deep down, I'm praying 'please don't call,'" he says. "But at the same time, I'm trying to show face. I'm trying to keep it as cool as I can."
Esfandiari is an announcer for the World Series of Poker, which is going on now in Las Vegas. He says the rules of poker carry over to Washington, and right now he says both sides have to be asking a fundamental question.
"What is my opponent's comfort threshold?" he says. "That's a very key factor in moving forward with bluffing and negotiating. At what point is my opponent going to crack? And everyone has their cracking point."
What's the cracking point? That's the trillion dollar question. And to find out, we travel from the world of poker to the world of academia.
Adam Galinsky is a professor at the Kellogg School of Management at Northwestern University. He studies and teaches negotiations and says if this were just about money it would be very easy for both sides to figure things out, but of course it's about much more.
"What do I believe government should look like, and should I fight for that?" he says. "There is the direct effect on the economy — so you have principle, you have politics and you have, you could call it, prosperity to make it 'three Ps.' And all of those things may matter differently to different people who are negotiating."
Galinsky say it's all kind of like a poker game, and he says that tension makes the negotiators' brains go a little haywire.
"As the stakes go up and we feel greater pressure, and we feel sort of more psychological closeness to the thing that we care about, it's harder for us to see the big picture," he says.
When things get really tense, Galinsky says we fall back on scripts, or ideas we have about what negotiations should look like — if I make an offer, you counter; I make another offer, and we split down the middle.
"I think in the political world the script you're dealing with right now is that people don't budge until the last minute. We have a script in our politics that says, you know we don't budge, we don't budge, we don't budge. And then finally we budge when the deadline is looming very, very large," he says.
What remains to be seen in the negotiations is who's got the better hand, and who is bluffing.
That is if anyone's bluffing at all.