Reference · Cheat Sheet 02
Value Your Matrix
Core idea: a payoff is how much you prefer an outcome — all things considered (utility) — not the cash in it. And you can rank before you number.
The 4-step recipe
- List the outcomes. Your options × theirs = the cells. Name each in plain words ("you discount while they hold").
- Rank, don't price. Order all outcomes best→worst for you, then again from their objective. Bundle money + reputation + time + risk + the ongoing relationship — not just the invoice.
- Run dominance on the ranking. Does anyone have a strategy that's preferred against every move of the other? Ordinal order is enough — you usually stop here, no numbers needed.
- Numbers only where it flips. If you need magnitudes (mixing, uncertainty), anchor
worst = 0, best = 100 and place the rest by feel. Then sensitivity-test: pin down only the payoff sitting near a decision-flipping threshold.
What "value" includes (and what trips people up)
- Reputation & precedent — does it train a rival or patient to expect discounts?
- Time & attention — your scarcest resource; a profitable-but-consuming outcome can rank below a smaller calm one.
- Risk — a sure R$50k ≠ a coin-flip for R$100k, even at equal average. Rank by how the uncertainty feels.
- Repeat play — most of your games recur; an outcome that wins today but poisons the next ten rounds ranks low.
The expensive mistake: filling the other player's cells with your values. Always ask "what does THEY optimise?" first — a competitor maximises profit; a salaried clinic, volume; a hospital, throughput & liability; a sponsor, reach per real. Different objective → different payoffs → different prediction.
The robustness test (worked)
Your discount payoffs are estimates. Does the conclusion survive?
| They hold | They discount |
|---|
| You hold | (10, 10) | (2, 14) |
|---|
| You discount | (14 → 11?, 2) | (5, 5) |
|---|
- Discount-while-they-hold = 14 or 11? Either way 11 > 10 and 5 > 2 → discount still dominates. Don't bother pinning it down.
- But if both-hold turned out to be 16 (> 14), then when they hold you'd prefer hold → discount no longer dominates. That payoff sits on a threshold — measure it carefully.