A common question I get is what game theory tells us about negotiating a pay raise. Because I just published a book on bargaining, this is something I have been thinking about a lot recently. Fortunately, I can narrow the fundamentals to three simple points:
1) Virtually all of the work is done before you sit down at the table.
When you ask the average person how they negotiated their previous raise, you will commonly hear anecdotes about how that individual said some (allegedly) cunning things, (allegedly) outwitted his or her boss, and received a hefty pay hike. Drawing inferences from this is problematic for a number of reasons:
- Anecdotal “evidence” isn’t evidence.
- The reason for the raise might have been orthogonal to what was said.
- Worse, the raise might have been despite what was said.
- It assumes that the boss is more concerned about dazzling words than money, his…
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Utopia, you are standing in it! 
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