The Basics of Negotiation: Lessons from the WCOOP Main Event
As most people have no doubt read by now, the World Championship of Online Poker (WCOOP) 2015 Main Event was won on Tuesday by a Belgian player named Coenaldinho7, following a four-way deal. The deal in question was not a straight ICM chop, however; Coenaldinho7 – in 2nd place at the time – and the short stack, beertjes79, each gave up significant sums of money in order to secure the deal, most of which went to the chip leader Nolet20.
What’s most remarkable about the deal is that, on paper, none of those three really had much cause to be demanding or giving up much in the way of concessions from one another, with only 1500 MTTs on record between the three of them, yet the deal was one of the more lopsided I’ve seen. The only player left at the table who could be said to be an established winner was AlwaysiNduCe, but although he received some additional money through the deal, it wasn’t nearly as much as what they collectively let Nolet20 walk away with.
Before we get into deal-making strategy, let’s break down the details of the deal itself, as well as how it came to pass. ICM figures based on chip stacks at the time gave the players the following expected equities:
- Nolet20: $1,160,775.10
- Coenaldinho7: $1,127,632.33
- AlwaysiNduCe: $984,463.92
- beertjes79: $850,128.65
AlwaysiNduCe began the negotiations by asking for an even $1 million. Nolet20 quickly refused. AlwaysiNdCe said that he was fine continuing to play until he had a few more chips to put him over $1 million according to ICM.
At this point, beertjes79 jumped in to say he’d be fine with taking only $800k if it would make the deal happen. Coenaldinho7 likewise said he’d be happy with $1.1M. Nolet20, the most on the ball of the four, immediately noticed that much more money was being offered than what was needed to make AlwaysiNduCe happy. Although he’d been quiet up until that point, he now said that he now would be unwilling to deal unless he was given all of the money being offered, minus the little bit necessary to complete AlwaysiNduCe’s million. No one put up a fight, and despite being initially the most passive party in the negotiations, Nolet20 walked away with $1,223,000 – over $62,000 more than ICM was giving him.
All told, the amounts each player gained or lost relative to ICM through the deal were as follows:
- Nolet20: + $62,224.90
- AlwaysiNduCe: + $15,536.08
- Coenaldinho7: – $27,632.33
- beertjes79: – $50,128.65
How not to be a sucker
Of course, everyone ended up happy, because they were all walking away far richer than they’d been a few days earlier, but it’s hard to imagine that a week from now, even with all that money in the bank, beertjes79 and Coenaldinho7 would be happily handing five-figure sums of money over to a stranger for virtually no reason.
Final tables are few and far between, especially ones as big as this. For the vast majority of players, being at a final table with six- and seven-figure sums at stake is an opportunity which comes once in a lifetime, if at all. That means that most of us have very little or not experience negotiating such an important deal. The basic principles of negotiation are the same, however, whether you’re chopping a big tournament or haggling for a pair of speakers on Craigslist. Here are some things to keep in mind if you don’t want to be taken advantage of.
Understand what you’re buying
The point of chopping tournaments is to reduce variance, similar to buying insurance in real life. The value in that depends largely on whether you’re a professional or an amateur. For pros, it’s largely about bankroll management, while for amateurs it’s more about diminishing returns, that is that winning twice as much money won’t generally change one’s life twice as much; your first $500,000 does more for you than the next $500,000 on top of that, for instance.
In both cases, there’s some value to the chop, so it’s tempting to give up a little equity to make it happen. However, what’s important to remember is that the chop also has value to one’s opponents for at least one of the same reasons. If something is beneficial to two parties, but only one party is paying for it, that party is being taken advantage of. As long as your opponent also stands to benefit from reducing variance, you shouldn’t be willing to pay as much as you would be if you were the only beneficiary.
In the case of a pro versus an amateur, the pro has far less to gain. For one thing, pros are generally already selling action to reduce their variance, so have less need to reduce it further, and diminishing returns don’t apply as much to a pro’s ever-fluctuating bankroll as they do to an amateur’s cash of a lifetime. For another, the pro presumably has a skill edge on the amateur, which also must be paid for in order for a deal to be mutually agreeable. In such cases, giving up a decent chunk of equity to make a deal happen can make sense for the amateur. But Nolet20, despite having won a MicroMillions Main Event, had only around 350 tournaments to his name, far too small a sample to be considered a pro. Given two players with comparable histories, neither should be willing to give up as much as beertjes79 did.
Understand what you’re offering
The straight ICM numbers you see when you’re negotiating a deal are deceptive, because they’re measured from $0 – your payout had you busted the tournament. You haven’t busted the tournament, however; you’re already at the final table and guaranteed a fairly substantial payout. In order to understand the amount of money you’re actually negotiating over, you have to subtract the money which everyone is already guaranteed. In the case of this tournament, there were four left and the payout for 4th place was around $550,000. Thus, in terms of equity remaining to be played for, players’ actual numbers looked more like:
- Nolet20 – $611k
- Coenaldinho7 – $577k
- AlwaysiNduCe – $434k
- beertjes79 – $300k
In offering to take a flat $800k, beertjes presumably felt that he was giving up only around 6% of the value of his stack: $50k out of $850k. But in fact, he already had $550k in pocket, while the expected value of his stack was only another $300k on top of that. The $50k he was giving up was therefore closer to 17% of his remaining equity in the tournament, nearly three times what he presumably felt he was surrendering. This effect is much larger the shorter your stack, so the deal was not nearly as bad in this regard for Coenaldinho, for whom $27k was under 5% of his total equity. That’s not to say he didn’t make other mistakes, however.
It’s also worth noting that the payout for 3rd place was $790k, only slightly less than the amount beertjes79 had agreed to accept. Since the deal was roughly break-even for him in the event of a 3rd place finish, he was therefore giving up all the possible money for a 1st or 2nd place finish, only to insure himself against a possible 4th place exit, while being not really that much of an underdog in chips. Ultimately, he did go out in 4th, of course, but it would be absurdly results-oriented to take this to mean that the deal was a good one; it did save him $250k in reality, but could easily have cost him over $700k if he’d gone on to win.
Don’t be the first to ask
Although beertjes79 definitely got the worst end of the deal-making, Coenaldinho7 made some mistakes of his own. For one thing, he’d been begging for a deal since the final table began. In an interview after the fact, he claimed that this was just a ruse to make himself appear to be scared money and thereby make his raises look stronger, and indeed, he did play aggressively despite his repeated requests. Regardless, whether his pleas were genuine or part of a psychological ruse, they did put him at a disadvantage in the deal-making.
Again, you have to think about what you’re buying, or rather, what your opponents think you’re buying. As we said, reducing the variance is generally to everyone’s benefit, but may benefit some more than others. In asking for a deal, especially asking repeatedly, what you’re doing is telling everyone else at the table that diminishing returns are very much an issue for you, more so than for them. Even if they also want a deal, letting them know that you’re desperate makes it easy for them to pretend they don’t, thereby giving themselves leverage to extract concessions. In effect, it’s like tipping your hand and showing Queen high; your opponent can freely grab the pot at that point, and even if you think he could be bluffing, you’ve given up any chance you have of fighting back.
One nice thing about online play compared to live is the “Discuss a Deal” checkbox, which means that no one actually has to be the first to ask. If you’re interested in negotiating, you can tick the box and wait to see if others tick it as well. If they do, then there’s no way for anyone to know who ticked first, so everyone’s on equal footing. Therefore, that’s always the first thing you should try. In the meantime, you may find that others start asking, obviating your need to do so – you may even be able to take advantage of the situation, getting concessions from others in a spot where you were prepared to make some of your own.
Still, if the boxes don’t get checked, your desire for a deal may reach the point that you’re willing to surrender your bargaining leverage to make it happen. If you feel that you have no choice but to suggest a deal in chat, then do so. However, be aware that it’s very rare for any but the most scared-money players to be interested in a deal before play is down to three, four or maybe five players; if you ask with six or more left, chances are you will only be refused, and probably just worsening your odds of getting a reasonable deal later on. Whatever you do, don’t beg or badger; if rebuffed, wait at least until another player has been eliminated, or the player who refused finds himself in a worse position than before.
Don’t offer what hasn’t been asked for
This is really Bargaining 101, yet somewhere that both beertjes79 and Coenaldinho7 went very wrong, which is what made watching the deal go down so painful for me. Getting a fair deal requires playing your cards close to your chest; as soon as you let the other party know the maximum you’re willing to pay, it’s guaranteed that this is what you’re going to pay.
Let’s say I’m trying to sell you a used car. Perhaps I’ve decided that the lowest I can profitably go is $4500. You could potentially negotiate me down to that floor, but if I open with $5000 and you start reaching for your checkbook, that’s it. Even if you subsequently realize that you might have been able to talk me down, we’re no longer on equal footing. I now know for a fact that you’re willing to buy for $5000, and you don’t know for a fact that I’m willing to sell any lower, so no matter how much you try to haggle after that point, I’m going to stand firm at $5000.
The only concession actually asked for in the course of deal-making was by AlwaysiNduCe, who only wanted an extra $15,536. Beertjes79 could have deduced that Coenaldinho7 was willing to give something as well, based on the latter’s table talk, and asked if he’d go 50/50 to make AlwaysiNduCe happy, for a cost of only $7,768 apiece. Failing that, he could have offered to pay the full amount instead. Instead, he offered $50,128, nearly three times what was necessary. Even more horrifying is that Coenaldinho7 then offered another $27,632 of his own without bothering to check whether additional concessions were even necessary.
It’s possible, even likely, that once AlwaysiNduCe had been appeased, Nolet20 would have demanded concessions of his own to allow the deal to happen. However, it’s unlikely he would have asked for quite as much as he actually got. He probably would have seen what they were willing to give AlwaysiNduCe and asked for a similar amount – an extra $15k or $20k – or, at worst, pushed for an even $1.2M, which still would have been $23,000 less than they ultimately gave him.
I’m sure even Nolet20 was surprised at how much money they willingly handed over to him, but the fact is that he got that money by having the best negotiating strategy at the table, which was to refuse the initial “fair” deal, then wait to see what everyone else did. Even if beertjes79 and Coenaldinho7 had not both shot themselves in the foot, simply getting to see what AlwaysiNduCe was able to extract from them would have given him leverage in his own subsequent negotiations.
Alex Weldon (@benefactumgames) is a freelance writer, game designer and semipro poker player from Montreal, Quebec, Canada.