Ethical universals in practice: An analysis of five principles

Ethical Universals in Practice: An Analysis of Five Principles

M.C. MOLDOVEANU AND H. STEVENSON Harvard Business School Concepts, like individuals, have their histories, and are just as incapable of withstanding the ravages of time as are individuals.

--Soren Kierkegaard ABSTRACT: This paper discusses the application of five general principles of moral reasoning to situations that are characteristic of negotiations and bargaining scenarios. The five moral theories discussed are: utilitarianism, Kantian reasoning, discourse ethics, the maximization of one's own expected utility, and the maximization of the predictability of the consequences for those involved in the bargaining or negotiation. These principles are individually introduced and criticized by examining how they 'perform' in individual test cases taken from common negotiation experience. The purpose of the analysis is to lay bare the difficulties faced by the moral philosopher, economist, psychologist or sociologist when attempting to explain, interpret or normatively endorse behavior in concrete cases of bargaining scenarios on the basis of general principles. Because bargaining underlies most of the phenomena of interest to the economist and sociologist, the analysis illuminates a problem of general interest to practitioners of economics and sociology. It is argued that the calculability of the consequences of acting in accordance to a norm and the communicability of the norm in actual negotiation sessions both sharply constrain the application of the principles in practice. The essay therefore represents a reasoned invitation towards further investigation and reflection about the application of moral principles in bargaining and negotiations.

THE PROBLEM

The ethical problem that a person involved in bargaining faces perpetually has many different facets, but often comes down to the following formulation: How *Direct all correspondence to: Professor Howard H. Stevenson, Baker Library 366, Harvard Business School, Soldiers Field, Boston, MA 02163. Journal of Socio-Economics, Volume 27, No. 6, pp. 721-752 Copyright © 1998 by JAI Press, Inc. All rights of reproduction in any form reserved. ISSN: 1053-5357

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should one act towards others in concrete situations when interests are different but negotiable, perceptions are malleable, actions are constrained and intentions and reasons are communicable? The problem is a difficult and vexing one in part because it requires a universal norm (i.e. "How should one act?") that is applicable to any particular case (i.e. "in a concrete bargaining situation"). The problem is also difficult because it leaves unspecified the criteria that an ethical principle should meet: a person's intuition and 'moral sense' is often the ultimate arbiter of the suitability of using a given principle in a particular case. Finally, the problem is difficult because it leaves unspecified the way in which a principle is to be applied to a concrete situation: should it be construed to govern the outcomes or consequences of that situation? the processes by which the outcome is actually reached or rather the procedures that one is committed to in applying a particular principle in a particular situation? The distinction drawn here between procedures and processes is that procedures relate to the ex ante expectations of the participants about the goings-on between them, whereas processes relate to the ways in which they see and interpret the negotiation in hindsight. Insofar as socio-economics is concerned with the interpersonal and intersubjective determinants of economic behavior, it must in some way come to grips with the problem of norms and their legitimation, because meaningful interactions are usually based on the--sometimes implicit--inter-subjective understanding about a set of rules, references and meanings that embed that interaction. To exemplify, engaging in a conversation entails an implicit adherence to the rules of grammatical convention, a set of expectations about the meanings of the words that the other person uses, and a set of expectations about the behaviors which will follow that conversation. M o r e o v e r ~ s Karl Otto Apel has pointed out and we elaborate below--participation in a conversation may also entail adherence to certain laws of logical form (such as closure, the law of the excluded middle) without which one's utterances could not be intelligible. To the extent that transactions and other non-verbal interactions are also serve expressive, symbolic and identity-affirming purposes, they also will rely on presuppositions about expressive meaning (threat, posture or promise), the context of the interaction (encounter in the desert or on Wall Street) and the norms which could or should apply to the interaction (fair division, competition for scarce resources, utilitarian considerations, Kantian maxims). In what follows, we shall analyze five general principles of ethics as they apply to bargaining and negotiation scenarios--that we consider to encapsulate the central problem, that an economic analysis of behavior is trying to address. Bargaining involves both words and deeds. People who bargain bring to their interaction their assumptions, moral beliefs and propositional beliefs about the world, and the result of the negotiation process is the price and cost data that the economists use to test their models and hypotheses. The analysis of the intersubjective and trans-subjective

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processes of negotiation--therefore the problem of the legitimation and application of norms--is the critical step that takes us from understanding of individual psychology to the economic data resulting from the interaction of two or more people. We will draw test cases for each of the principles from situations characterized by various numbers of participants and issues to be negotiated, various numbers of past and expected future interactions between the participants, and various tradeoffs to be made between procedural 'rightness' and the optimality of end-states. In order to gauge the performance of the five principles in actual negotiation scenarios, we assume that what makes an ethical principle causally relevant in a concrete situation is its usefulness in helping participants place a value on their actions--or predict, ex ante how they will feel, ex post about a particular outc o m e - - a n d the ease and precision with which it is understood by all of the participants to a negotiation. Thus, an ethical principle resolves simultaneously a problem of computability and a problem of communicability for the people who are using the principle to guide their behavior. Sine computability, a fully communicable norm is useless, because it does not allow a person using it to form expectations about the behavior of other persons using it in a particular situation. For example, a nominal commitment to 'justice'--while communicable--leaves a person ascribing to in the dark relative to the behavior of other people professing to uphold it, in the absence of further specification of what is meant by justice in the first place. Sine communicability, a norm offering high predictability for its user will lose its status as a source of universal or shared value, which is to be placed on particular means and ends. One may, for example, be able to predict individual behavior in some situations using technically sophisticated arguments evolved from evolutionary biology and psychology, but that ability, in itself, will not make evolutionary biology an ethical theory, nor will it give moral value to survival or adaptation, unless there is agreement among negotiators concerning the desirability of outcomes favored by evolution. This agreement, which is the source of moral weight for a principle, can only come about, however, if the principle in question is communicable--if, that is, people can come to a common understanding of its terms and their applications through conversation or other interactions. Thus, computability and communicability are both highly desirable properties of a suitable ethical principle, to the extent that when either is completely lacking, the principle in question becomes either devoid of meaning or devoid of value. We shall refine this critique in each case, below, and shall summarize it in the last section of the paper. THE FIVE PRINCIPLES, THEIR APPLICATIONS AND LIMITATIONS We will not be concerned here with answering questions like 'Why is there anything that I ought to d o T - - t h e amoralist's question, as Williams puts it (1972)--

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but rather we shall start by assuming that some general principle of being-towards-others should be followed in particular instances of discussions and negotiations, and we ask: what could this principle be? To be sure, as Mill points out (1861, reprinted 1979), "[f]rom the dawn of philosophy, the question concerning the summum bonum, concerning the foundation of morality, has been accounted the main problem in speculative thought, has occupied the most gifted intellects and divided them into sects and schools carrying on a vigorous warfare against one another." Accordingly, we will not write an essay on morality, but rather a distillation of the problems of moral reasoning to the concrete cases likely to be faced by bargainers and negotiators. The five principles discussed below range broadly in their age, fame and intellectual reputation. Expected utility maximization can be traced to Aristotle--who suggested that all human action is undertaken for some good. The analysis of the predictability of consequences finds echoes in the writings of Epicurus--as it recognizes a person's urge to minimize the discomfort of the unknown. Discourse ethics is a more recent entrant in the arena of moral discourse. In each case, we shall give a brief statement of the general principle involved, and shall discuss the application of the principle in several test cases drawn from bargaining and negotiations scenarios.

Utilitarian Ethics: The Greatest Happiness Principle Utilitarian ethics bids that a person should take each individual action so as to create the greatest happiness for the greatest number of people. This principle is often called the Greatest Happiness Principle (GHP). There are two versions of it: Act-utilitarianism (GHP-A) focuses on individual actions, and considers them independently of any rules that may be embodied in them; accordingly, it asks, what consequences will this actual action have in these particular circumstances, in order to arrive at an estimate of the total happiness produced. Rule-utilitarianism (GHP-R) focuses on the rule embodied by an action, and asks about the global utility-consequences of acting in accordance with that rule, given what we know about how everyone else usually acts. GHP-R is supposed to make GHP more actionable than GHP-A, by opening up ethical inquiry to empirical studies aimed at finding the law-like relationships between certain kinds of actions and their global utility effects. The two general objections usually raised against GHP (Williams, 1972) are that the definition of a global happiness, defined by the sum of all individual pleasure less the sum of all individual pain, requires that individual pleasure be commensurable and additive. Mill himself seemed to own up to this difficulty when he began writing about the relative values that people should place on different kinds of pleasure: "It is quite compatible with the principle of utility to recognize the fact that some kinds of pleasure are more desirable and more valuable than others. It would be absurd that, while in estimating all other things quality is considered as

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well as quantity, the estimation of pleasure should be considered to depend. quantity alone" (Mill, 1861, reprinted 1979, ibid.). Let us see how GHP fares in a simple negotiation scenario: a price negotiatiq between a buyer and a seller, where both buyer and seller have reservation price which they have decided upon prior to the negotiation. Whatever money is gain, by one person will be lost to the other. A simple-minded application of GHP wou therefore predict that any price within the zone of possible agreement betwe, buyer and seller is adequate, since the sum of the gains and losses anywhere with this zone must cancel each other out. The application is simple-minded because assumes that the utility for money of the buyer is (or should be) everywhere equ to the utility for money of the seller. It is by no means clear that this is (or should be) the case. In any event, the app cation of GHP to a straight price negotiation with pre-determined reservatia prices requires some interpersonal comparisons in the utility for money. Thus, order for someone to use GHP in order to predict how someone else using GI: will act in a price negotiation, that person will need to understand how his or h utility for money compares with another person's utility for money so that a 'gl bal utility for money' may be calculated by adding the two quantities together. may be hoped (to salvage GHP) that empirical work on the ways in whiq risk-averse people value different amounts of money relative to equivalent-val~ gambles can lead to the desired interpersonal comparison principle. Friedman al Savage (1948; in Nozick, 1985) proposed a scheme for reconstructing a person utility for money, from his or her observed choice among fixed sums of money al equivalent-value bets. They proposed that the utility curve for money is ever where increasing and continuous, and is first convex--a person will insure rath than gamble, then concave--a person will gamble rather than insure, and then co vex again as we advance along the scale measuring utility. The choices betwe~ gambling and insurance behavior predicted by Friedman and Savage were n observed empirically. Markowitz (1952; Nozick, 1985) proposed that the utility for money depends c a person's current level of wealth, and is concave just above the utility correspon ing to the current level of wealth and convex just below it. But, what should tl present level of wealth be? If we take it to be the output of a net present value c~ culation, a person' s estimate of his or her current level of wealth depends in part c his or her estimate of a future course of events, as is required by net present yah calculations. In this case, the Markowitz hypothesis is far less informative than ir tially supposed. Tversky and Kahneman (1979; Nozick, 1985) proposed y another modification to the curve, wherein the reference point is dependent on tl way in which a decision is framed or interpreted by the decision-maker. Loss ave sion is more pronounced than preference for gain in their model. Their model h the advantage that it withstands empirical scrutiny more successfully than tl alternative models; however, it leaves open the question regarding how a particul

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decision will be framed in a particular case. Ultimately, the utility for money 'depends' on a particular cognitive frame, though it may depend predictably on some frames. Can some 'frame' be imposed as intersubjectively legitimate? Certainly not. Individual cognitivism reveals individual relativism--and therefore their proposal seems to shed cold water on the project of a trans-subjective utilitarian principle. Nozick (1985) points out that all that is required for a successful scheme of interpersonal comparisons of utility is the establishment of a general shape for the utility curve for money. If this curve turns out to have inflection points (as the Friedman/Savage and Markowitz curves do and the Tversky/Kahneman curves do not) then these inflection points, which are invariant under positive linear transformations, can serve as the requisite points of interpersonal utility comparison in one-shot price bargaining situations. Whether or not such inflection points (i.e. points of indifference between gambling and insurance behavior) exist is, at present, an open question. Should they be 'discovered,' their application can only be 'rough' in the sense that they can only provide an approximate 'alignment' of the utility curves of the two participants: the degree to which their utilities for money at a given point can be compared will depend on the distance between that point and the measured inflection point on their utility curves. Suppose, now, that some device, which enables interpersonal comparisons in the utility for money, is found, perhaps by Nozick's proposal of using the inflection points in the utility curves. The application of GHP (in either form) will still depend on the existence of some moral principle or empirical law which stipulates that, in a price negotiation, only money matters. Suppose that you are negotiating with your brother in law--a person whose silky style and gaunt good looks arouse your envy and make you want to 'do better' than he does--for the sale of his antique convertible. In this case, the 'envious utility' for the difference between his surplus and your own surplus from the negotiation should be included in the calculation of global utility, according to the utilitarian norm. If he, too, has a similarly 'envious utility' for a relatively higher surplus than yours, then one might be tempted to reduce both utilities to the utility for money simpliciter and to apply the scheme for comparing interpersonal utility described above. Yet such a reduction would avoid the problem altogether, for it is equivalent to a denial of the legitimacy of envious preferences, which are characterized precisely by relative payoffs for the two negotiators. The application of GHP to a price negotiation thus ends up forbidding actions motivated by envy. This may be considered to be a desirable effect. However, the application of GHP in the same way will also forbid actions motivated by a concern for fairness. The utility for a fair outcome is such that it decreases with the distance between the final price and the average of the buyer' s and seller' s reservation prices. Reducing a concern for fairness to a concern about money alone also eliminates the value placed on fairness from the set of 'permissible' values, which

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could be taken into account by GHP. Making fairness an independent value and placing a utility on it, on the other hand, requires making the utility for fairness in some way additive or commensurable with the utility for money alone, so that one person's utility loss due to money losses can be compared to another person's utility gain due to fairness gains. The failure of GHP to account for fairness concerns can be corrected by making the utility for fairness depend on the participants' different utilities for money: if one person values money more than another (and this can somehow be ascertained independently) then the gain of the person who values money more should weigh more heavily than the gain of the person who values money less. This stipulation would reduce the problem faced by negotiators concerned with fairness to the problem faced by negotiators committed to GHP, but are merely concerned with maximizing the global utility for money alone. Some may feel that this is an impermissible re-definition of what we mean by 'fairness' in a particular context, since it makes a person's subjective state, rather than an impartial principle, the arbiter of what is to be considered as a 'fair' outcome. On the other hand, if accepted, this modification has the happy consequence of permitting concerns for fairness to enter the application of GHP, while excluding envious preferences from the set of legitimate sources of global value. The 'straightforward' application of GI-IP to price negotiation can give rise to misunderstandings about the values that are being disputed. It is, for example, misleading to represent envy and fairness concerns by their money equivalents. On the other hand, incorporating these concerns explicitly into the global utility function requires reaching agreement about the value of fairness and envy in a particular context. However, it is by no means clear that such an agreement can be easily reached. For one thing, bringing up envy in a conversation may make each of the participants deny its value to him or her personally: since 'envy envies' the envious may be least likely to admit the fact that he or she is placing a value on relative endowments. The problem that GHP can raise therefore, is that its communicability cannot be easily established by commonly available means of communication and can excite obfuscatory strategies in the participants to the negotiation. Now consider a negotiation among several different persons who expect to interact with one another several more times in the future, and involving many separate issues (or possible sources of value). The application of GHP would require either that people's utilities for the various values being negotiated be discovered by a process similar to that used in the case of the utility for money, or that the various sources of value be reduced to monetary values. The first alternative is impractical at best, and impossible in the case of non-divisible goods. The second alternative has unhappy consequences: the assignment of a monetary value to some goods being negotiated, sometimes implicitly, (such as 'recognition,' 'goodwill,' or 'control') often has the effect of rendering those goods value-less, since it is precisely their 'non-tradable' nature that makes them valuable. To see this effect

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by simulation and introspection, imagine offering 'three "good-day's" and two "how-are-you's" per day' to someone asking 'for a little respect.' Some quantities are devalued by explicit reference to them. This makes the fact that a quantity is left implicit a value in itself; however, this value cannot be taken into account by an explicit calculation of the global utility. How does the expectation of repeated interactions affect the application of GHP to the multi-party negotiation? Suppose that there is one negotiator who everyone expects will shirk or take some globally destructive action in the future, after all agreements have been signed, with massively negative utility consequences for all involved. Then pre-emptive acts by the other participants with lesser, but still negative, global utility consequences will be encouraged by GHP, in order to forestall the destructive acts of the acknowledged wrongdoer. Of course, the 'evil-doer' does not have to have bad intentions in order for GHP to lead to this escalation result. He may be simply perceived to have bad intentions, or to be incompetent at predicting the consequences of his own actions. If a wink or a grimace from one negotiator to a supposedly impartial arbitrator is interpreted as a sign of hidden collusion between the two of them by the other party, then he or she may break off talks or back off from a mutually advantageous position, in order to pre-empt greater, yet-unknown, harms which may come in the future. Faced with the problem of incommensurability among the values placed by people on various outcomes, and hence the non-additivity of these values in order to craft the summum bonum that must be maximized, the utilitarian might resort to a two-step negotiation protocol. In the first step, a set of superordinate goals is agreed to by the participants to the negotiation. These goals are those that are shared by both parties. Two people negotiating a stream of payments from a large corporation to a wildlife preservation fund, for example, may agree that a speedy resolution to the negotiation is desirable, in order to avoid the intervention of government regulators and grass roots environmental concern and protection groups. They may also agree that the solution that is reached should minimize the likelihood of such an intervention in the future. Having agreed on these goals, each party then focuses on a set of private, subordinate goals, whose global utility consequences can be evaluated in the reference frame provided by the superordinate goals that are shared. An offer by one party for a lump-sum payment not large enough to require board approval can, in this case, be considered vis-~i-vis the shared goal of bringing the negotiation to a speedy and quiet conclusion. This 'solution' shifts the negotiators' problem from one of attempting, sometimes in vain, a reconciliation of private ends in view of a poorly defined summum bonum to one of finding or agreeing upon the set of over-arching superordinate goals which can provide a reference frame for the negotiation. Usually, agreements are of two types (Stevenson, 1997): agreements on what the negotiators want, and agreements on how they think the world works. The negotiators above may agree, for instance, that a speedy and quiet conclusion to their talks s desirable. However,

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they may not agree on whether or not any particular proposal will, in fact, achieve the desired effect. Disagreements of one kind are resolved differently from disagreements of the other: Disagreements about 'what we want' can usually be resolved by relegating a superordinate goal to a subordinate position. If we cannot agree that the negotiation should end quickly, then, clearly, we are in conflicting positions relative to this particular issue, and each negotiator should rationally try to maximize his or her individual utility. Disagreements about how the world works, on the other hand, can be resolved by empirical or analytical means: the negotiators can seek data that tests hypotheses about the consequences of any particular action, or can simulate these consequences, starting from a set of assumptions that they can agree upon. For example, the environmental negotiators can evaluate the consequences of any particular offer vis-~i-vis the superordinate goal of a quiet conclusion, by using their knowledge of the internal decision-making processes in their organizations. They might sensibly ask: Is the offer likely to attract shareholder scrutiny? Is it likely to excite a defensive or envious reaction from a key decision-maker? Is it likely to be seen as a sell-out by some people of consequence to either party? As is usually the case with the application of abstract principles to concrete cases, there are difficulties with the two-step scheme as well. If, as Bob Abelson has suggested (1986), 'beliefs are like possessions', which people are averse to letting go of, then disagreements about how the world works may not be resolvable by empirical or analytical means, because they are, at their core, disagreements about how we want the world to work, and therefore fall in the set of disagreements about what we want. If, for instance, one vice-president in a large f'Lrm wants to institute an auction scheme for allocating jobs to people because of an ideological commitment to auction mechanisms, whereas another negotiator wants to institute a pay-for-performance scheme based on stock options for the same purpose, then, even though apparently they share the same superordinate goal of maximizing shareholder wealth, each will interpret "evidence" about the merits of the respective schemes vis-fi-vis this goal in a way that favors his or her particular solution. Because theories can be rescued from evidence by adding on new assumptions and initial conditions, each particular scheme for implementing corporate change can be salvaged from empirical or analytical arguments challenging its validity by someone with the motivation to do and the resourcefulness to construe refuting arguments in a suitable way. Now we will consider how GHP applies to the processes and procedures of negotiations. Should you hint that you have an advantageous alternative in hand in a price negotiation, when in fact you are only vaguely aware of its possibility? Should you lie about your reservation price in a single shot price deal, particularly when you have reason to believe that the other person will do the same thing? Having agreed to a single negotiating text, should you back out of the negotiations when an outcome is beginning to take shape, saying that you had only tentatively

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agreed to the text in the first place? Should you schedule a meeting to negotiate a price deal so as to force a decision from the other party under severe time pressure? Should you hint at the possibility of divorce periodically when you negotiate the division of the household chores with your spouse? From a utilitarian perspective, these decisions can be captured to a greater or lesser extent by 2-person and N-person prisoner's dilemma games, with various payoffs for cooperative and non-cooperative behavior. Non-cooperative behavior (such as lying, deceiving, 'leading to believe' falsely, and shaping a context for maximum strategic advantage) can lead to substantial individual payoffs in the short run for repeated interactions, or in single-shot interactions, provided that everyone else behaves cooperatively. The benefits of non-cooperative behavior decrease sharply if and when additional people begin to behave non-cooperatively (Raiffa, 1982). The sustainability of the negotiating process often depends on the rate at which joint benefits decrease as a function of the frequency of individually non-cooperative behavior. The application of GHP to the processes and procedures of negotiation will often require different individual actions, depending , n the expected payoff structure of cooperative and non-cooperative behaviors for the entire group and the definition of the relevant 'group' of people involved in the utilitarian calculation. Any thoughtful person committed to GHP will come up against the following questions: How should payoffs at various intermediate and end-states of the negotiation process be traded off against each other? Do ends justify means? How should uncertain outcomes be treated in the global utility calculus? Should one hide the possibility that there may be some fuel contamination on a piece of real estate about to be sold to a developer who has worked for one year to secure a partner and a financial backer? Merely hinting at it may scare off the bank altogether and lead to the collapse of the deal, when after all, there may be no fuel contamination to speak of. Should one lead each of three interested parties to believe that a 'deal is imminent' with each of the other two? Doing so may make the deal happen, when, otherwise, it would not have; however, if two of the parties commit on the faith that the third, who does not, will, then the group as a whole stands to take some utility losses. Should one lie about the real status of one's product development at a standards adoption meeting, in order to scare off would-be entrants? If the relevant 'group' for which the summum bonum is to be maximized is only that of the incumbents, then a vehement 'vaporware' strategy seems to make sense, according to GHP. Should you bring up a person's criminal record (which you knew about beforehand but he did not know you knew) in a re-negotiation of a contract with a talented but stubborn agent? Doing so may 'bring him to his senses' and help you both continue a fruitful relationship, but can also radically undermine his trust in the relationship, and lead to deceptive and destructive behavior on his part in the future. Thus, the application of GHP to negotiation processes and procedures will strongly depend on the ways in which a particular nego-

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tiation context is construed, and on the expectations, which various participants have formed. While some may welcome this freedom to adapt behavior to context, others may consider that GHP really offers no normative guidance at all in situations whose descriptions are detailed enough to capture predicaments of consequence. The application of GHP will also differ, depending on whether one takes an act-utilitarian or a rule-utilitarian perspective. GHP-A bids one to focus on the utility consequences of a single, isolated action, and therefore presages the assignment of different levels of utility to the different participants in a particular situation, without regard to the consequences of acting in that way as a rule, as does GHP-R. The two refinements of GHP will therefore deal differently with one-shot negotiations. GHP-A will only require that the isolated consequences of a lie or a false self-presentation be considered for the purpose of deciding on the desirability of lying or deceiving, whereas GHP-R will ask that the negotiator consider the utility consequences to a larger group, perhaps society as a whole, of everyone acting according to the rule embodied in the action in question. Consider an example of an N-person prisoner's dilemma g a m e - - a meeting among the department faculty at a college, aimed at negotiating a general statement about the role of the department, for the year's calendar. Should one raise a divisive issue that motivates one's own agenda, or rather should one give a procedural reason for adoptiftg one's own point of view? GHP-A would seem to favor the latter: utility gains for that meeting for that group are far outweighed by the expected utility losses associated with bickering, open conflict, and the attending festering resentment. GHP-R, on the other hand, may encourage a broader consideration of the advantages and disadvantages of open dialogue and of the positive utility consequences of attending openly to conflict and discussing positions, attitudes and interests in a principled way. Finally, suppose that you are the member of a coalition of people who have succeeded in reaching an agreement on a standard of behavior for an entire organization. The coalition is fragile, in that the loss of any one member can lead to its unraveling. Another member of the organization, who is not currently part of the coalition, proposes that you join a budding group with competing interests, and provides reasons that show there is an overriding benefit to the standard proposed by the new coalition. What should you do? Here again, GHP-A and GHP-R would take you in different directions. GHP-A will recommend that you focus only on the general welfare consequences of you accepting this particular offer--which may well be greater relative to that associated with the consequences of rejecting it. Therefore, GHP-A may recommend that you accept the offer. GHP-R, on the other hand, will bid you to consider the global welfare consequences of breaking, as a rule, implicit contracts among co-coalitionists, with the attending contracting and monitoring costs which must be incurred in order for would-be co-coalitionists to join together with some confidence that the coalition will survive attempts by out-

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siders to break it up. Depending on you estimate of this cost, GHP-R may advise that you remain in the coalition, in spite of the foregone global welfare gain which you would have caused had you left it.

Expected Utility Maximization: An Arbitrage Principle for Moral Reasoning Expected utility maximization as a behavioral norm can be summarized by the maxim: (M) Act so as to maximize the expected benefits or gains of your actions to yourself. It may seem odd to some that (M) could be properly considered an ethical principle. After all, ethics has to do with ways of being-towards-others, and the principle of the maximization of expected utility says nothing about the incorporation of the interests, goals and concerns of others in the processes by which a person makes his or her choices. Suppose, however, that there exists a mechanism of allocating resources to various people who act so as to maximize their respective utilities, which results in an allocation of resources wherein one cannot make anyone better off without making anyone else worse off (a Pareto-optimum condition). Then the individual norm of self-maximization can be a posteriori justified on ethical grounds by empirical evidence that self-interested behavior indeed leads to collectively optimal effects. Therefore, (M), in combination with some invisible-hand explanation for the ways in which (M) at the individual level leads to desirable global effects. There are four invisible-hand explanations that are often used and they are of two varieties arbitrage principles ( A ) ~ d evolutionary principles (E): (AG) Globally non-optimal individual behaviors will die out when various groups vie or compete for resources on an efficient market, because successful groups will draw resources away from unsuccessful groups; [group-level arbitrage] (EG) Globally non-optimal individual behaviors will die out when various groups co-exist in the same ecological niche because successful groups will grow and reproduce themselves in future groups, whereas unsuccessful groups will die out. Therefore, over long periods of time, only groups characterized by globally optimal behavioral norms will survive; [group-level evolution] (Eg) Globally non-optimal individual behaviors will die out in an evolving population over long periods of time because maximally adaptive behaviors are based on successful coordination, and therefore genotypes favoring cooperative behaviors will be selected for and genotypes not favoring cooperative behavior will be selected against in the process of natural selection; [gene-level evolution] (AI) Globally non-optimal individual behaviors will die out when various individuals compete for scarce resources because successful cooperation and coordi-

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nation is essential for individual survival, and non-cooperative individual behavior leads to the isolation of the individual from groups which could support him; [individual-level-arbitrage] (M), in conjunction with either (AG), (AI), (Eg), or (EG), can be used as a de facto ethical norm--something that is explicitly done by Milton Friedman when he claims that the 'social responsibility of a fh-m is to maximize its profits'. In order for (M), in combination with some invisible-hand explanation to work as a moral principle, it is necessary that a value be placed on some quantities, which are to be allocated among the people in a group. It is the possession of this value that makes a global effect desirable. A Pareto-optimum distribution, for instance, is defined in some commodity space. In order for such a distribution to constitute a globally desirable outcome, the value of the commodity that is allocated must itself be universal; it must be valued (even if at various discount rates) by all of the people involved in the group. (M), does not, of course, rule out the incorporation of someone else's welfare in calculations of one's own utility. It is just that one can accept (M) without being compelled to heed concerns about others. Moreover, (M) in conjunction with (A) or (E) can be construed to suggest that no amount of calculation of the global welfare effects of one' s actions will lead one to taking a 'better action'; rather, it is by a process of trial and error that successful norms evolve and propagate forward in time. In other words, morality itself evolves. Any attempt at instituting general principles of behaving towards others which are 'adequate in all possible worlds' is similar in intent to attempts to control the allocation of resources in society through a central planning mechanism, How does (M), in combination with either (E)-type or (A)-type principles, work in practical negotiation and bargaining scenarios? Quite poorly, as we shall see below, unless some restrictions are placed on the kinds of goals and interests that are pursued in virtue of (M). This conclusion may seem intuitive to some who believe that 'negotiation is about compromise.' For others, the analysis below may lend to support to the assertion that 'negotiation is about compromise' of which they were previously wary. First, to the extent that (M) relies on the assignment of some global value function in order for it to turn into a legitimate moral principle makes it prone to the same criticisms leveled at (GHP) in the previous section. One may try to dodge some of the criticism by claiming that the global value function itself changes according to (E)-type or (A)-type arguments. However, this strategy amounts to admitting that the global value function is unknown, or, at least, incalculable, and therefore invalidates our attempts to turn (M) into a valid normative principle-one which retains the property of predictability of the ethical implications of individual actions.

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Let us turn to some examples. Consider first the case of a one-shot price negotiation with set reservation prices. Should one attempt, by any means possible, to persuade the other person that one has an alternative offer that is well above one's reservation price? (M) seems to say: 'Yes, provided that the likely benefits of (lying, creating false impressions) exceed the likely losses caused by these behaviors.' Do we have any reason to consider (M) a valid ethical principle here? If lying is an adaptive behavior, then telling many self-interested lies could be considered to be maximizing some global value function: that of the 'survivors.' Whether or not this is the case will turn on detailed investigations of various 'games' played across many generations by many liars and truth-tellers. Of course, as La Rochefoucauld noted, liars (and their lie-strategies) may be of several different kinds, so that any particular simulated outcome can be undone by some 'innovation' in the field of lying. Thus, as to the ethical implications of lying, (M) is deeply mired into the problem of unpredictability of the actions of other people who are allegedly using the same principle. (M) furthermore says nothing about the ways in which one should form beliefs about the consequences of one's actions. If, as it turns out in practice, the sharp temporal discounting of utility makes the lure of an immediate payoff completely overshadow the perspective of future losses due to the discovery of the lie or to a loss of reputation, then there is, in effect, nothing further than (M) could do without modification. If the negotiator applies (M) strategically, i.e. considers the negotiation in the event that his or her counterpart also acts in accordance with (M), then the need for communication is completely obviated, and the science of negotiation reduces to the theory of games: words are cheap because no one has an incentive to send truthful signals and no one has a reason to accept such signals. A price negotiation among pure, strategic self-maximizers who only care about the ultimate payoffs of the negotiation, would proceed silently, with each party sullenly advancing written offers which the other party can either accept or decline. (M) fares similarly poorly on the analysis of negotiation process. If a game of Prisoner's Dilemma is played once, then game-theoretic reasoning would lead both parties to behave non-cooperatively, given the fight payoff structure. However, as Kreps and Wilson have shown, even if the game is repeated a (known, finite) number of times in the future, the dominant strategy (derived by backward induction) will still be a non-cooperative one. Thus, it is uncertainty about the number of future interactions, which one will have with a particular person, which can salvage (M) from invariantly prescribing non-cooperative behavior, when only selfish interests are taken into account. How does coalitional strategy fare when people are strict self-maximizers? Any member of a coalition can be lured away from his or her allegiances by the credible promise of a more attractive deal elsewhere. The maximizing framework is such that 'perverse' preference reversals (such as the refusal of a payoff for leaving the

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coalition just because it was specifically identified as a payoff) cannot be easily accommodated. The reason for this is that a person's utility for a particular commodity or state of the world is supposed to be invariant under changes in the description or interpretations of that state of the world. As a descriptive statement, this principle of invariance is very likely to be false. Nevertheless, as a normative statement, if heeded, it does not allow one to change one's preference according to the description of the various choosable options that one has. Therefore the choice that a coalitional member makes regarding whether or not to shirk on an (implicit or explicit) agreement with the other incumbents, should, according to (M) be made on the basis of that person' s evaluation of the utility of the consequences of his actions alone. Thus, (M) would require that the person choose between abandoning the coalition for a reward and staying in the coalition sine reward independently of whether the act of leaving is depicted as a daring move which could ultimately save the other members, or as the outcome of a calculation of purely personal gain. Failure of invariance under (M) can be seen as a deeper failure of communicability: because every action has multiple possible interpretations representations-each admitting of a different sort of maximization process to take place, announcing that one is taking a particular action does not entail that one is maximizing a particular set of quantities. Moreover, because several actions can serve to maximize the same normative end, announcing that one is maximizing a certain quantity does not commit one to a particular course of action. Because neither the action-model nor the model-action mapping is one-to-one, (M) poses a difficult problem of communication to any two people who have never dealt with one another beforehand. What are the consequences of (M) to the evolution of coalitions? Riker (1962) has produced a model of coalitional formation based on the assumptions that the participants are pure maximizers of their own interests in the possession of perfect information, that the game is zero-sum, that side payments are allowed, that 'the winner takes all' (i.e. winning coalitions are the only coalitions that have value), that individual members of winning coalitions receive positive payoffs and that coalitional adherence is non-binding, either to the coalitionist or to the coalition. Riker's model predicts that the winning coalition with the minimum number of members will form: subtracting any member of such a coalition will change it from a winning coalition into a non-winning coalition. Based on Riker's model, a person adhering to (M) who is part of a coalition should respond to invitations to join other coalitions based solely on the basis on his beliefs about the individual payoffs to be had as part of the new coalition. If the game is zero-sum and each participant has perfect knowledge of the consequences of his or her actions, then there will never be an incentive for player to leave a winning coalition, when the payoffs are divided equally among the participants to a winning coalition. If either the game is non-zero-sum (in which case Riker's analysis still applies) or if the sharing rule in

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a budding coalition is advantageous, then a participant in a winning coalition may have an incentive to leave the incumbent group, and (M) will indeed bid that he do SO.

The above discussion relates to the application of (M) in resource or commodity space alone. However, as Robert Abelson has noted (1986), 'beliefs are like possessions,' in which case the refutation of an idea, or an association with a person who subscribes to its logical complement under negation, may amount, in utility space, to a decrease in the utility of the agent. If (M) is modified so that people can maximize their utility for holding a particular belief or adhering to a particular ideology or theory, then coalitional behavior among (M)-subscribers will resemble Axelrod's (1970) model which assumes that only coalitions among co-ideologues would form, and treats ideological complementarity or consistency as a pre-condition for the consideration of any particular party as a co-coalitionist. In this case, (M) would require a coalitionist faced with a desertion proposal to consider both the ideological and the minimum-survivability consequences of his or her move to a new coalition, and leave only if a survivable coalition with a group of people with ideologies more harmonious with his own and equal individual payoffs, or a survivable coalition with a group of people having equally harmonious ideologies with the incumbent group, and higher individual payoffs, can be formed.

Kantian Reasoning: The Universalization Principle "The good will is not good because of what it effects or accomplishes, or because of its adequacy to achieve some proposed end; it is good only because of its willing, i.e. it is good of itself... Even if it should happen that, by a particularly unfortunate fate or by the niggardly provision of a stepmotherly nature, this will should be totally lacking in power to accomplish its purpose, and even if the greatest effort should not avail it to achieve anything of its end, and if there remained only the good will (not as a mere wish but as the summoning of all the means in our power) it would sparkle like a jewel in its own right, as something that had its full worth in itself. Usefulness or fruitlessness can neither diminish nor augment this w o r t h . . . "(Kant, Foundations of the Metaphysics of Morals, translated 1959). Having stripped individual action of any consequentialist or end-statist source of value, Kant proceeds to find the 'in itself' value of any particular action in the willingness of its undertaker to accept the rule embodied in that action as a universal law. Thus, we have the deontological principle, (U) Never act in such a way that you should not also will that your maxim should be a universal law.

How is 'will' in (U) to be construed? Construing it in terms of the private or social utility consequences of having a particular maxim become a universal norm amounts to transforming (U) into a sophisticated version of (GHP-R). Kant him-

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self comes out decisively against this move: "If the action is good only as a means to something else, the imperative is hypothetical; but if it is thought of as a good in itself, and hence as necessary in a will which of itself conforms to reason as the principle of this will, the imperative is categorical... The categorical imperative would be one which presented an action as of itself objectively necessary, without regard to any other end" (Kant, ibid.). To see more clearly what he has in mind, consider how he deals with the question, "May I, when in distress, make a promise with the intention not to keep i t ? . . . To be truthful from duty is an entirely different thing from being truthful out of fear of disadvantageous consequences, for in the former case the concept of the action itself contains a law for me, while in the latter I must first look about to see what results for me may be connected with i t . . . I immediately see that I could will the lie but not a universal law to lie. For with such a law there would be no promises at all, inasmuch as it would be futile to make a pretense of my intention in regard to future actions to those who would not believe this pretense or, if they overhastily did so, who would pay me back with my own coin. Thus my maxim would necessarily destroy itself as soon as soon as it was made a universal law" (Kant, ibid.). Kant therefore seeks to rule out those actions that would lead to self-annihilating or self-defeating norms. A universal norm that sanctions lying, for instance, is self-annihilating--or morally problematic--in the same way in which the statement 'I am telling a lie' is self-contradictory, and logically problematic. This parallel suggests that the moral reasoning is subject to the same incompleteness-based criticism that Kurt Godel leveled at logical reasoning: moral systems based on deductive inference, like logical systems themselves, must be either incomplete or inconsistent, in that they cannot certifiably generate prescriptions for an arbitrary predicament, starting from a finite set of principles or axioms. Kant's hope to make human behavior based on moral choice law-like bristles with a Newtonian optimism about the existence of a cosmic system of moral laws, akin to the universal system of classical mechanics which promised to make all of the workings of nature transparent to the human mind, and consequently the future of the universe transparent to human scrutiny. The failure of classical mechanics as a predictive tool in some cases (chaotic dynamics or quantum phenomena, say) offers a metaphor by which Kant's moral system fails the test of computability: for, as we shall see below, knowing that someone is acting according to (U) is rarely enough to predict his or her behavior in concrete circumstances since several laws or law-like statements can be equally well applied to a particular situation. Let us turn to some bargaining examples. Suppose that you are negotiating for the purchase of a new school building for needy children in the Boston inner city, and have been given 48 hours by the school board to reach an agreement with the current owner. Your offers are very far apart, with no end in sight. If the negotiation fails, then you have reason to believe that no further resources will be made available for finding a new place, and no school will be built in the foreseeable

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future. Should you hint, falsely, or give to understand by your behavior that you have been developing another alternative? No, would say Kant, if the maxim embedded in your action is one that sanctions lying. But is it? What if it is "Act so as to give others the opportunity to develop their abilities?"----one that Kant himself favors. Then you might choose to lie in order to redeem the prospects for the new school. On the other hand, if the categorical imperative is interpreted so as to strike out any consequentialist kind of reasoning from universalizable maxims, then "Act so as to give others the opportunity to develop their abilities?" may be found to entail an impermissible dependence on the expected consequences of telling a lie. To probe this argument further, consider an example in which you are asked whether or not 'the king of France is bald,' and are constrained by time from explicating that answering either 'yes' or 'no' is misleading, since it implies that there exists (currently) a king of France, which you know to be false. What should you do? Suppose further that, unbeknownst to you, after you have answered 'No' a fully-haired King of France is anointed. Have you lied? The above examples should highlight the fact that no single maxim can be distilled from any particular action. Can any one maxim be unambiguously distilled from an action? For example, should a negotiator hired to strike a deal on the sale of your f'u'm be given information about your reservation price? One might argue that doing so would make the negotiator more successful, because it would head off his or her discomfort at securing positive payoffs once the reservation price 'hurdle' has been cleared (Raiffa, 1982). If he or she does not know when the reservation price has been exceeded, then he or she will not feel uncomforted by 'fairness' concerns at pushing for maximum gains from the other side. Not giving the negotiator the reservation price information may be thought to entail a maxim condoning the withholding of information. As more and more information is withheld in communication among people, there will arise situations in which withholding information becomes synonymous with lying: imagine giving someone a cryptic message, from which you know that she has understood that you are willing to marry her, when in fact you are not. The maxim condoning the withholding of information also condones lying in some cases, where it becomes indistinguishable from a maxim condoning lying. Imagine, also, that you are selling a piece of property, which you know to have been used as a dumpsite for chemical weapons in the past. Withholding the information from the would-be buyer seems to come much closer to 'lying' than withholding the reservation price information from the negotiator who has turned squeamish. Beliefs about what maxims are embedded in a particular action can also change after that action is taken, as expectations are refuted by subsequent events. Suppose that, in the heat of an argument, you threaten your spouse with divorce, expecting her to back off, and therefore expecting not to have to break your marriage vows. Much to your surprise, she takes you up on your offer, and even offers to file the papers herself the following week. Now, you find yourself pleading with

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her to back off from her own decision. Have you lied when you asked for a divorce? Are you lying now? The non-uniqueness of the mapping between concrete behaviors and universal norms of behavior also underlies the problems of communicability faced by someone using (U). The reason for this is that (U) provides no mechanism by which a particular maxim, having passed Kant's test for universalizability, can indeed be tested against the moral intuitions of others, in order to discover whether or not the universalization procedure has worked. A norm that passes (U) based on individual scrutiny can only be considered to be tentatively universalized: its universality must be confirmed, and the norm therefore derives moral weight from the assent of others to it. Where such assent is easy to secure, as in the case of an injunction against lying in general, the norm is probably too broad to be useful in any particular circumstance. Let us illustrate these problems with some examples involving lying and deception-favorite topics among critics of negotiators. Having given true but difficult-to-interpret signals to another person regarding your intentions to hire her, are you engaged in deception when you do not correct her apparent, but falsely formed impression that she is about to receive a contract in the mail? Having received a highly profitable offer for the equity of a partnership of which you are the general partner, together with even more advantageous prospects of future growth, are you engaged in deception when you present to your limited partners the cash offer in a glowing light and the future prospects in a more skeptical disposition, while giving no verifiably false information? If, as Jerome Bruner has pointed out, the human mind is such that it always goes well beyond the facts in drawing inferences, then opportunities for lying and deception which do not involve telling a verifiable falsehood should grow with the complexity of our moral predicaments. Thus, a general injunction against lying (even though it may pass (U) upon introspection) will not be refined enough to handle cases of practical interest, such as those described above. The universalization of a norm proscribing lying, therefore, proves to be the outcome of a much longer process of dialogue and interaction, which is neither required nor mandated by (U). It is only by focusing on the problem of reaching agreement, through communication, about the application of a universal law in a concrete case, that the universalization process can lead to the desired result. It is partly in response to this problem of communicability that discourse ethics was constructed.

Discourse Ethics: A New Universalization Principle The justification of any norm runs up against a problem which Albert refers to as the Munchausen trilemma (Albert, 1985). According to his critique, there are three possible ways to justify a normative statement and they are all unsatisfactory: logical circularity, recourse to absolute certainty and infinitely regressive arguments. Both Kantian ('act according to a maxim which you can will to be a univer-

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sal law') and Rawlsian ('act according to a set of laws which you would set in ignorance of your subsequent role or position in society') programs for the creation of norms fall prey to this criticism, because each requires some further justification. The possibility that, during a candid conversation, we discover that what we would have as a general rule of conduct, someone else would consider abhorrent throws some doubt on the Kantian method for the establishment of norms. Similarly, sharp disagreements can emerge during discussions about fundamental rights of individual persons, even though these disagreements do not stem from conflicts of individual interests (these are canceled by the Rawlsian mechanism) but rather from differences of opinion about what it means to be a person. In both cases, open discussion helps, because it increases the legitimacy of the norms that emerge, and therefore of the resulting social actions. Jurgen Habermas (1987) has proposed to replace the Kantian principle for the universalization of norms with one requiring a process of open discussion of various alternative maxims, as follows: (D)Rather than ascribing as valid to all others any maxim that I can will to be a universal law, I must submit my maxim to all others f o r purposes of discursively testing its claim to universality. The emphasis shifts from what each can will without contradiction to be a general law, to what all can will in agreement to be a universal norm (Habermas, 1987, ibid.).

Habermas recognizes that a norm requiring 'discursive testing' raises the same problems of justification, as does any other norm. He appeals therefore to Karl Otto Apel's argument for the justification of open dialogue, which criticizes as incoherent any principled refusal to participate in the discursive testing of norms. Apel (1980) proposes that the skeptic's expressed refusal to participate in a dialogue involves him in a performative contradiction: an unresolved tension between his stated position and his position as someone who expresses himself with the expectation of being understood. For example, the sentence, "I (here and now) do not exist" entails a performative contradiction of the fact that I (here and now) exist, which in turn is a precondition for my ability to make the statement. Thus, Apel argues, "no sooner does the skeptic object than he commits himself to an argumentation game based on presuppositions that entangle him in a performative contradiction." Participating in a dialogue for the sole purpose of saying that one does not wish to participate represents a contradiction of a set of preconditions that are already true, if one's refusal to participate is to be intelligible. What are these preconditions? Robert Alexy (1978; 1990) has drawn up a list of them, some of which we would like to follow and discuss here in greater detail. Alexy assembles these preconditions into a discourse ethics, meant to govern the process, products and procedures of dialogue. Chief among Alexy's preconditions is,

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(1) No speaker may contradict himself We suspect that Alexy meant to say 'contradiction' in a logical sense. This precondition of dialogue (which also underlies Apel's idea of a performative contradiction) carries with it a significant amount of structure. It requires, for example, that the law of contradiction (~(p&-p)) be adhered to by speakers. Suppose that you take back an offer (which you have previously made unconditionally) to withdraw troops from a small region, on the basis of new information about the strength of the enemy's troops, which has just become available to you. Are you contradicting yourself?. In a narrowly construed sense of (1), yes. However, you may be able to explain the apparent contradiction as perfectly reasonable if you are willing to disclose the reasons why you are now backing off your offer. However, making such contradictions disappear will require a more stringent formulation of what is meant by sincerity (i.e. (2) below), since it will require that all of the information used to justify a particular statement be disclosed. Once all such information has been disclosed, it is likely that self-contradictions will disappear. For instance, if, along with the offer of withdrawing troops, all of the assumptions and expectations on which the offer is based is disclosed along with the offer itself, then withdrawing the offer when one of the assumptions is refuted by subsequent events will not entail a contradiction. Does (1) also require the application of the law of the excluded middle (i.e. either p or (not p))? It does, particularly when conjoined with the next precondition: (2) Each speaker may only assert what he himself believes If a speaker, when asserting p, does not automatically assert that not(not p) then (1) and (2) are vacuous--or rather, (1) is vacuous in view of (2). If the law of the excluded middle does not hold, then by agreeing with a statement, one does not necessarily disagree with its negation. Thus, agreement with a statement (or the expression thereof) becomes unintelligible. (2) is a precondition requiring sincerity. Indeed, participation in a dialogue is not internally coherent in the absence of sincerity, since assertions must at least represent claims to truthfulness. Many conversations undertaken for 'strategic' or 'dramaturgical' motives, to use Habermas' language, are not dialogues, in Apel's sense of the word. Does (2) require that you disclose your reservation price in a negotiation, if you are asked for it? It does not. The injunction to be sincere is perfectly consistent with the (reasoned) refusal to provide certain information, so long as these reasons are themselves refutable by further arguments. For example, the opposing negotiator may point out that the marginal cost of the negotiation session is quickly wiping out any joint gains from a possible deal, and thus it is mutually advantageous

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for the negotiators to disclose their reservation prices, in order to discover immediately whether or not there is a zone of possible agreement between them. In this case, provided that his or her arguments are acceptable, (2) would indeed require that each of the negotiators disclose their reservation prices truthfully. What if, in the spirit of (2), someone asserts that she does not believe in the law of the excluded middle? Alexy's rule (1) would make her position self-contradictory: for how could she be negating that which establishes the meaning of a negation, which lends sense to her negation in the first place. What if, to test the limits of (1) while heeding (2), someone says that she is not saying what she is really thinking? This also involves her in a contradiction, formally equivalent to the Cretan Epimenides' assertion that all Cretans are liars. Admittedly, this is a different kind of contradiction than the ones that Apel seems to have in mind. This contradiction involves one in a circular process of assertion and refutation (the statement is true if it is false and false if it true) that Kurt Godel has transformed into an overarching critique of all formal logical systems. The injunction against self-contradiction is an implicit injunction to obey the law of closure. If we are committed to believing that 'All Greeks are mean' and that 'All mean people are mortal,' then closure requires us to believe that 'All Greeks are mortal.' Two statements that seem to have opposite meanings will not be held to be 'in tension' if closure is denied. The requirement for closure can also be understood as a precondition arising from a performative contradiction. Suppose that someone says: "I do not believe in the law of closure." The statement 'entails' nothing, since it is the commitment to closure that 'does the work' of entailment. Denying closure therefore also denies that one is actively participating in a dialogue, because it is closure, which makes it possible for a statement or argument to be 'responsive' to another statement or argument. For instance, the statement 'I know an honest Greek person' is not relevant to the statement 'all Greeks are liars' if there is no shared commitment to closure. The absence of closure therefore can turn a dialogue into a pair of parallel monologues. Alexy next expands the requirement for logical consistency into a requirement for representational consistency: (3) Each speaker applying predicate F to a must be willing to apply F to any b resembling a in every respect. Why is this a pre-condition for a coherent participation in dialogue? Because it recognizes the role of language as an instrument of reference and representation, by means of which one can make claims to validity, and not only as a sequence of oral noises undertaken in response to unforeseen stimuli (i.e. 'ouch'). Words act as placeholders for the objects they represent. In this role, they represent the universal quantities that allow us to reason from one particular to another. In order for a universal to be able to 'refer' to particulars, we must either agree on the ways in which

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universals 'point.' Absent such agreement, or the possibility of reaching it through dialogue, words cannot refer, and cannot be interpreted to be more than oral noises. Having called a particular weapon development program of the opposing side a 'threat to our position' and the annulment of the program a 'sine qua non of continuing discussions,' the negotiator cannot, in view of (3) proceed to offer money to support the program, in exchange for other concessions. Thus, as applied (3) is a requirement for coherence in negotiations. (3) also serves the more complex purpose of disciplining the way in which we match universals to particulars so as to guarantee intelligibility when it is taken in conjunction with rule (4): (4) Different speakers may not use the same expression with different meanings Of course, (4) may be problematic, depending on what one means by 'meaning.' In spite of our best efforts to be communicative and accurate, we may have different things in mind even when referring to simple predicates like 'red.' For, as Sidney Shoemaker has argued, how can I know that my subjective experience of 'red' is not in fact the same as someone else's experience of 'green,' in spite of the fact that we both refer to red objects as 'red'? Thus, (4) should be revised to read, (4r) Different speakers must exert their best efforts to avoid using the same expression with different meanings Alexy also proposes the following set of pre-conditions that regulate the procedures of dialogue: (5) Every speaker must justify what he or she asserts upon request, unless he or she can provide grounds, which justify avoiding giving such a justification (6) Everyone who can speak may take part in the discourse (7) Anyone may question any assertion (8) Anyone may introduce any assertion (9) Anyone may express his or her wishes, desires and needs (10) No one may be prevented from exercising the options created by conditions (5)-(9). Why has one always-already agreed to justify one's assertions upon request, merely by the act of taking part in the dialogue? Because refusing to justify an opinion, having just stated it, places in doubt the claims--to truth, tmthlikeness

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and truthfulness--that are embedded in the assertion, thus leading to a performative contradiction. An assertion, if it represents a claim to validity, is an invitation for a request to justification. If the speaker does not mean to extend such an invitation, then the assertion carries no claim to validity, in which case it cannot be understood as a contribution to a dialogue, or as expressive act meant to be understood. Rules (6)-(9) are logically necessary pre-conditions for the interpretation of an assertion in a dialogue as a claim whose validity is thereby put into discussion. Finally, Alexy proposes a set of rules that govern the process of dialogue. These rules speak about 'how things are' between participants to a dialogue, once they have engaged with one another: (11) Whoever treats person A differently from person B is obliged to justify this

(12) Whoever has put forward an argument is only committed to further arguments in the case of a counter argument (13) Whoever introduces an assertion or a statement concerning his opinions, wishes or needs into the discourse, which as argument is not related to a different statement, has to justify upon request why he or she has introduced this assertion or this statement It is striking that Apel's mechanism for justifying discourse ethics also justifies a commitment to 'fairness,' as required by (11). Treating the statement p as it is uttered by person A differently from the statement p as it is uttered by person B implicitly denies that one is reacting to p alone. Furthermore, if one's opinion of A works its way into one's reaction to A's utterance of p, but that reaction is presented as a reaction to p alone, then one has already contradicted rule (2) concerning sincerity. Of course, one may be self-deceived in these matters, and this is often the case. Once one person has made a statement, we cannot ask another person to make the same statement in order to figure out exactly what we are reacting to. A person may not know, therefore, if her reaction to a statement is in fact determined or constrained by her reaction to the person making that statement. Therefore, (11) should serve as an invitation to more reflection aimed towards higher levels of self-awareness. (12) represents an injunction against a 'mechanical' questioning of an assertion and all of its possible justifications, by an infinite sequence of "Why?'"s which could have been pre-recorded and played back at timely intervals. Does the use of a tape deck for this purpose involve (the tape deck' s owner) in a performative contradiction? It certainly does, since the tape deck's presence does not entail the commitment to dialogue implied by the questions it produces--it is not capable of ascertaining the meaning of the responses, and of adjusting its questioning strategy accordingly.

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Following a line of reasoning due to Austin, Alexy argues for (12) on the basis of the vacuous nature of 'subsequent' requests for justification: "If you say 'That is not enough'" writes Austin (1970) "then you must have in mind some more or less definite lack. If there is no definite lack, which you are at least prepared to specify on being pressed, then it's silly (outrageous)just to go on saying 'That is not enough.'" If someone makes a request for justification without being prepared to voice the difficulty which is making him ask for it in the first place, then what seems to be a request is really a dramaturgical or 'stalling' act, which contradicts the 'meaning' of the request, as it is understood in the context of a dialogue. Suppose, however, that someone genuinely desires a justification for every one of a series of statements made by another participant to the discourse, and that he asks, for each statement, for a clarification of its terms, or a further justification of its claims, while being prepared to supply reasons for his need for further justification. Would Socratic discourse involve performative contradictions? It would not, so long as the person carrying out the inquiry has not pre-committed to a strategy of deconstruction before hearing any of the arguments of her interlocutor. A pre-commitment to a 'questioning' strategy would be a passive negation of the fact that one is taking part in a dialogue, since it would a priori foreclose the possibility that one can agree with some of the answers given. The 'openness of the future' with regards to the causal powers of words seems to be one of the features of discourse ethics. (13) requires the renewal of the engagement of the speaker in the dialogue. It draws its energy from the need to differentiate dialogue from parallel monologues, which represent passive negations of the interactive nature of dialogue. Consider a negotiation involving the wording of a 'platform,' ideological stance, or a statement of purpose for a political party, firm or university department. In such a negotiation, people put forth claims and propositions and then adduce reasons for justifying them. The introduction of new claims 'on the s l y ' by sheltering them from open dialogue--is usually undertaken for two purposes-both defensive: the first is to strengthen what seems to be a losing argument, without having to acknowledge one's own position in that argument. A new claim can be used, for example, to cast doubt on another discussant' s credibility, by bringing up one of his past shortcomings. The second purpose is to effect a nimble 'change of subject', and is a frequently used device in everyday conversation. "Don't raise controversial questions, don't hold on too hard to any opinion, don't talk too long about any one subject... "parodies Max Horkheimer, with some irony, the advice commonly given to a young American man going off to a party, in an essay suitably entitled, "Threats to Freedom" (Horkheimer, 1965). Both of the above examples of the 'naive introduction' of new claims entail implicit negations of the position entailed by one' s involvement in the dialogue. In the first case, the introduction of 'new evidence' is usually undertaken for the benefit of an audience (a TV viewership, for instance) and represents a theatrical act,

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not a communicative one. In the second case, the positions of the discussants in a dialogue, as partakers of a particular argument or line of inquiry, are passively denied. A new dialogue is 'smuggled in' as if this was the dialogue that was carded on to begin with. Discourse ethics, for all of its attractions, raises the troubling specter of 'endless discussion' for the negotiator, because it requires that all claims must be justified upon request. It places no restrictions on the types of arguments that can be used either to justify or to critique a statement, and offers no solutions for negotiators that are operating under time constraints. Since some dialogues must be left unfinished in order for the negotiators to proceed to other activities, or because of factors not under their immediate control, the negotiators committed to (D) must either arbitrarily cut off unfinished discussions, or alternatively, to forego their commitment to (D) in order to reach an agreement within a specified period of time. In either case, the applicability of (D) to concrete negotiation scenarios, and particularly to one-shot interactions, is undercut. On the other hand, a commitment to (D) in the context of repeated negotiations among the same set of participants can serve to greatly enhance the mutual trust and credibility of the negotiators, by increasing the level of understanding that each negotiator has about the others' interests, ideas and circumstances. The troubles of (D) under time constraints instantiates the tradeoffs that one is forced to make between commitments to computability and commitments to communicability. To be sure, (D) is sharply aimed at resolving the communicability problems faced by the Kantian norm (U). (D) is relevant precisely where (U) must be silent, because it offers help and guidance on arriving at behavioral norms that are certifiably universal. On the other hand, the prospect that discussion may have to be cut short at an arbitrary moment raises the troubling specter of a choice between morally arbitrary action, since no agreement has been reached about what the morally 'right' action is, or strategic manipulation of the dialogue by someone who wants to prevail. (D) offers the strategically minded negotiator a mechanism of tatonnement by repeated questions and counter-arguments which can well serve the purpose of someone favoring the status quo, or who perceives any further talks as a mere opportunity to lose. To exemplify, suppose that several managers in a large automotive manufacturer are negotiating the administrative structure of their division, under some cost and time pressure. At each point in the negotiation (and for each negotiator) there is the option of getting up from the table without another word, and leaving the room. Doing so may be the optimal strategy for some negotiators, but for the hostile and inconsiderate intention that his or her action signals to the others; it is this collateral damage of leaving negotiations that makes the sudden departure from the negotiation table unattractive. Here is where (D) helps: it offers the suitably nimble-minded negotiator a way of preserving the current impasse, which favors him or her directly, without necessarily giving the impression of hostility or lack of

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appreciation for the others. With a concerned look on his face, the negotiator can proceed through a long and exhausting sequence of questions aimed at the other participants---ostensibly for the purpose of 'understanding' their positions---but with the ulterior effect of heading off any substantive compromise of his or her position. Knowing this, other negotiators may proceed to use the same tactics, or to devise counteracting tactics of their own. Dialogue turns into a strategic game in which each negotiator is maximizing a personal value, and (D) begets the computability problems of principles like (M) and (GHP) without delivering on the promise for broader agreement.

Predictability Analysis Predictability analysis relies on the intuition that people face a common problem in trying to predict their own future, or the actual consequences of their actions. Therefore, it requires that people choose or create actions, which will increase predictability for all of the various people who are impacted by these actions, on all relevant time scales. The maxim of predictability analysis may therefore be summed up by: (P) Act so as to increase the predictability of the action-consequences for the people whom your action impacts. (P) rules out intuitively reprehensible acts such as murdering, lying or stealing, because such acts decrease the predictability of the future for the people subjected to them. At the same time, (P) is consistent with actions aimed at maximizing wealth for a group or an individual, since wealth generally increases the predictability of one's future. (P) therefore resolves the problem of the utilitarian (resulting from the non-commensurability of various personal utility values) by a reasoned compromise: it places an explicit value on those actions which increase the predictability of a particular decision scenario for the group of people to whom that scenario is relevant. Just as utility scales can be constructed by offering people choices between insurance and gambling actions at various levels of wealth, predictability scales can be constructed by representing the fear of the unknown as an aversion to uncertainty and ambiguity (Moldoveanu, 1997) and then offering people choices among risky lotteries and uncertain lotteries, at varying levels of initial wealth, or at various levels of background risk (Becker & Brownson, 1964). Moreover, because uncertainty-avoidance effects are less susceptible to endowment and framing effects than are risk-aversion effects, the analysis of predictability, once backed by the right empirical evidence, can proceed with greater confidence in the robustness of its results across different people, situations or cultures. (P) can also be considered as a restriction on the set of Kantian maxims deemed relevant in bargaining. In particular, some maxims (such as the injunction against

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lying) can clearly serve as predictability-enhancers, whereas others (such as that concerning the withholding of relevant information) can serve as predictability-minimizers. (P) differs sharply in its orientation from Kant's analysis, however, in that it takes a consequentialist view of particular scenarios--although it does not go as far towards an end-statist view as do (GHP) and (M). In particular, (P) bids you to take actions that maximize both the immediate, and future predictability of the predicament that you and others are facing, and therefore relates both to the processes and procedures of a negotiation, and also to its outcomes. (P) encourages, but does not require outright, many of the norms (1-13) of discourse ethics. Because quite often the confidence that a particular scenario is predictable requires an understanding of the positions, principles, motives and situational constraints of the participants to the negotiation, dialogue aimed at facilitating this understanding is implicitly encouraged. Additionally, (P) places a (much-needed) restriction on the types of dialogue that one may fruitfully engage in, by requiring the proponent of a new issue to explain how his or her proposition relates to the predictability of the situation faced by the group of negotiators as a whole. (P) can be thought of as offering a compromise between computability and communicability aims or goals. Because it places an explicit value on actions that enhance people's feeling of control and competence, it mitigates the problem of computability, by offering a way to narrow the range of possible actions in a particular context. At the same time, because predictability is a subjective phenomenon, (P) places a value on understanding precisely what the concerns, wishes and fears of another person are in a particular negotiation scenario. The focus on uncertainty and ambiguity reduction both encourages communication and simplifies it, because it provides a forum in which discussions (possibly governed by (D)-like principles) can proceed. Like any 'compromise' principle, (P) involves making tradeoffs: should one maximize long-term or short-term predictability in wage negotiations with a union? Should one negotiating environmental issues concentrate on the predictability of the situation faced by members of the negotiating group or rather focus on the predictability of the situation faced by the people in the entire affected region? Quite often, such complexities have a cascading structure. Because predictability is a subjective quantity, focusing on the predictability of a situation for a larger number of people involves understanding their particular situations and thought-patterns and incorporating these insights into the negotiation process. In turn, such an expansion of the number of included interests an have a predictability-diminishing effect on the situation of the members of the negotiating group. Let us turn to some specific bargaining applications of (P). Should you exaggerate your alternatives in a price negotiation? (P) gives no unequivocal guidance on this subject. Its application will depend on your perceptions or beliefs in that particular situation. Suppose that you believe the opposing negotiator is using his or

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her clout to extract a large surplus from you. He or she, you believe, is using her monopoly power capriciously, in order to satisfy a craving for self-promotion or self-esteem by the realization of the higher profit. You reason that the higher profit will fuel his or her ego further, and the monopolist will use the additional power to extract greater profits from other people with whom you are interacting, squeezing their own profit margins and therefore the time scales on which they look forward to the future. In this case, and if you additionally predict that the monopolist will be sensitive to an insinuation, you may well decide to exaggerate your alternatives, and delay reaching an agreement. Delaying the negotiation, on the other hand, may make the current situation quite uncertain for yourself and others who depend on a positive outcome in order to take actions of their own, as in the example of the inner-city school negotiation above. In such cases, (P) does not function as an arbiter of action, but simply as a principle that allows you to make tradeoffs consciously and understandingly of their consequences. Where does this application of (P) leave the Kantian injunction against lying, and, in particular, what happened to the logical support which (P) was supposed to give to this injunction? The support which (P) gives (U)-type maxims is contingent, not absolute. (P) highlights the fact that, in behaving according to (U), and in the absence of a universal moral code which is both complete and consistent, one is always making tradeoffs in predictability space among the interests of various people whose lives depend on one's actions. Interestingly, if it did turn out that there was a universal moral code which was both complete and consistent, then (P) would sanction all actions taken in accordance with this code, since these actions would lead to a maximally predictable evolution of society: one would only have to know the universal code and that the society operates according to (U) in order for one to predict the consequences of one's actions from this knowledge. Conversely, the maximally predictable set of actions is likely to satisfy (U), if a complete and consistent moral code existed. At the other end of the spectrum of principles, if predictability is the good that is sought by all for itself, rather than for some ulterior purpose, then (P) reduces to (GHP). (P) runs into difficulties in concrete bargaining situations for reasons that are largely similar to those impacting the applicability of (U) and (D): it is a subjective quantity, and thus subject to different interpretations in a given set of circumstances (essentially the problem of (U)); and therefore it requires open, potentially lengthy communication in order to align the expectations of the negotiating parties (essentially the difficulty faced by (D)). (P) opens up moral discourse to a conscious choice or set of choices which each negotiator has to make, between maximizing predictability across one time scale rather than another and for one group of people rather than another. (P) is about making choices rather than taking pre-ordained actions. Thus, the application of (P) does not dispose of some moral choices or make them automatic, but rather makes these moral choices explicit and unavoidable. For example, union negotia-

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tors who threaten to strike immediately over a wage dispute with the management of an automotive firm essentially choose to decrease the predictability in the short run and the long run for the management of the firm in order to increase the long-term predictability of a newly forged agreement between the two parties for both of the parties involved. (P) does not, like (D), require discussion. Sometimes, unilateral, unanticipated action by one side of a negotiation can make the situation more predictable for all. For example, having gotten nowhere with discussions in principle with an environmental agency to shut down a polluting chemical plant in exchange for tax concessions, increasing output at that plant (thereby tripling pollution levels in the short run) can force the hand of the agency negotiator and cause a deal to be signed immediately. Or, as the United States proceeded to do in the Panama Canal negotiations with France, leaking to the press and the public inflationary reports about an alternative option can force the hand of a large elected body of officials to close on a deal that would have otherwise lingered on, creating unpredictable predicaments for many along the way. Thus, whereas (M) turns negotiation into game analysis and (D) turns strategic games into protracted negotiations, (P) provides a middle ground, in which there is room for both silent, unilateral action and reasoned arguments. A SYNTHESIS OF THE MAJOR DIFFICULTIES FACED BY THE FIVE PRINCIPLES We started out by stipulating that moral principles should provide the negotiator with justifiable answers to the question, 'What should I do?' in contexts where others' actions and welfare depends on his or her own words and actions. The five general principles, which we took for a 'test drive' through concrete bargaining scenarios all, turned up difficulties in their practical application. These difficulties are of two general kinds: they present the negotiator either with problems of calculability or with problems of communicability. The problem of calculability is that of deciding how a moral principle is to be applied so that it leads to the intended result. Someone committed to GHP, for example, may ask, "how are the utilities of the negotiators to be compared with one another for the purpose of arriving at a system of tradeoffs?" As we saw, this problem hinges on empirical studies of the ways in which different people might value the Same sum of money, which in turn may turn up answers which depend on the frame used to represent a particular situation, or on their current endowments. Someone committed to (U), on the other hand, may question what particular maxim is to be gleaned from an action. Several maxims may be used in a particular case, and they may conflict: how is one to choose from among them? On the other hand, no maxim may fully apply to a situation, unless it is so refined and textured to fit the details of the situation that it ceases to be universalizable at all, and simply becomes tautological. Someone committed to (D) may legitimately ask himself or

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herself if and when the dialogue governed by (D) will converge to a negotiated outcome, and what that outcome shall be. Someone committed to (P), alas, may query about how the tradeoffs among various levels and resolutions on which predictability operates should be made: one time scale or many? One person or many? One group or all of society? The problem of communicability is that of deciding how to get others to respond to one' s application of a moral principle, such that the aim of that principle is realized, and how to apply a moral principle in a particular situation in such a way that, ex post, the action will indeed have instantiated that principle. The essence of bargaining is that choices are private and consequences are collective or public. Therefore, when a moral principle relates to the consequences or end-states or results of applying it in a particular scenario, the way in which it is applied may depend on one's expectations about what others will do in response to one's actions. As Habermas has pointed out, "to act morally is to act with insight." Quite often (except, perhaps, in the case of Kantian ethics), insight relates to insight about consequences. Reciprocity instincts, for example, may determine whether a particular offer is interpreted as an attempt to maximize a collective utility function or some unshared, private end. Therefore the others' response to that action, and therefore the actual consequences of the action in the bargaining context that is relevant, will depend upon their interpretation of the action in that context. Furthermore, their actions will determine the extent to which the action has fulfilled the moral value that the principle underlying it has justified or postulated. REFERENCES Abelson, R. (1986). Beliefs are like possessions. Journal for the Theory of Social Behaviour, V. 16, Number 3, October. Albert, H. (1985). Treatise on critical reason. Princeton University Press, Princeton, NJ. Alexy, R. (1990). A theory of practical discourse. In S. Benhabib & F. Dallmayr, (eds.), The communicative ethics controversy. M.I.T. Press, Cambridge. Apel, K.-O. (1980). The a priori of the communication community and the foundations of ethics. In K.-O. Apel, Towards a transformation of philosophy. Routledge and Kegan Paul, London, 1980. Austin, J. (1970). How to do things with words. Harvard University Press, Cambridge. Axelrod, R. (1984). The evolution of cooperation. University of Michigan Press, Ann Arbor, MI. Becker, S. W. & Brownson, F. O. (1964). What price ambiguity? Or, the role of ambiguity in decision-making. Journal of Political Economy, Vol. 72, 62-73. Habermas, J. (1990). Discourse ethics: Notes on a program of philosophical justification. In J. Habermas, Moral consciousness and communicative action, translated by C. Lenhardt and S. Weber Nicholsen from Moralbewusstsein und kommunikatives Handeln, Frankfurt am Main, 1983, M.I.T. Press, Cambridge, MA. Horkheimer, M. (1994). Critique of instrumental reason: Lectures and essays since the end of world war II, translated by Matthew J. O'Connell and others from Zur Critik der instrumentellen Vemuft, Frankfurt, 1967. The Continuum Publishing Company, New York.

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Kant, I. (1959). Foundations of the metaphysics of morals. Translated by Lewis White Beck. Bobbs-Merrill Company, Inc., Indianapolis. Mill, J. S. (1979). Utilitarianism, (1861). The Hackett Publishing Company, Indianapolis, IN. Moldoveanu, M. C. (1997). Random deviations from the logic of decision are surprisingly predictable. Submitted for publication, Psychological Review, 1997. Nozick, R. (1997). Interpersonal comparisons of utility, (1985). Reprinted in R. Nozick, Socratic puzzles, Harvard University Press, Cambridge. Raiffa, H. (1982). The art and science of negotiation. Harvard University Press, Cambridge, MA. Shoemaker, S. (1984). Causality and properties. In S. Shoemaker, Identity, cause and mind. Cambridge University Press, Cambridge, UK. Stevenson, H. (1997). Do lunch or be lunch: The power of predictability in creating your future. Harvard Business School Press, Boston. Williams, B. (1972). Morality: An introduction to ethics. Harper and Row, New York.