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    LOCAL DEVELOPMENT APPROACH:BUILDING

    SOCIAL CAPITAL BY A

    WIN - WIN- WIN METHODOLOGY

    Prof. Leonidas A. Papakonstantinidis

    School of Management and Economicsex Director

    Technological Educational InstituteKalamata

    Abstract: The paper deals with local development, both as a regional and social sciences

    field. It has to prove that building social capital at local level mainly depends on social trust

    links among local people: Social cohesion based on social capital may be measured by the

    diversification Rate (R*) from strict globalization rules: From this point of view, local people

    intervention should be useful, so as to diversify these rules at local level adjusting them to

    local identity, including communication code, customs, ethics, culture. The Win-win-win

    methodology [Papakonstantinidis Model] should facilitate local people to readjust

    bargaining globalization rules locally, through a sensitization process: Community is defined

    as a discrete spatial/ cultural entity at its sensitization process limit.

    Key-words: Methodology, Bargain, Sensitization, Social Confidence, win-win-win model,

    Social Trust Links, Community as a Discrete Entity.

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    1. INTRODUCTION: THE CONCEPT- METHODOLOGY

    The aim of this paper is to prove that, (1) Social Capital as a concept of community

    behavior and natural resources management, defined as the capital that refers to

    connections within and between social networks (emphasizing the social trust, in this

    paper)- something of a cure-all, for the problems of a modern society (Portes, A.,

    1998) may be the base of a local development program. (2) Local Development may

    be concerned as a unique diversification / declination from the globalization rules

    (Papakonstantinidis, 2007) (3) The discrete entitys diversification rate (R*) from

    globalization/ or bargaining rules, (Walras S, 1980) may be the crucial parameter

    which would define Local Development as a social cohesion result at local level.

    (4)Local Development is concerned as the limit-end of a unique and continuous

    sensitized development process, applied in a discrete spatial entity

    (Papakonstantinidis, 2008/ May), (5) Local Development is achieved via GOOD

    CASES rather than good practices, due to the unique identity each region has, as

    well as its people with their own communication code, ethics, mentality, customs.

    (Katseli Luca 1979), (5) A win-win-win approach may be the appropriate

    methodological tool toward introducing sensitization in the development process. It

    may strengthen social cohesion process by improving its confidential indicators (so to

    trust each-other in interrelations process).

    In order to meet with paper requirements it is indispensable that the appropriate

    methodology be adopted, step by step : (1) A theoretical foundation is provided by

    recent literature (in points), connecting Local Development with Social Capital/

    Social Cohesion, as well as with The Bargaining Problem- Games Theory & the

    Modern Innovation Theory (M.I.T)[Fischer M. M 2002, Kamitza R 1994, Moseley

    M. 2003, Petrella R 2001 ] (2) According to the afore-mentioned theoretical

    background, it is necessary to strictly define the Bargaining Problem (as the basis

    of Globalization rules) by its math /philosophical validation and try to define the

    local development process in terms of diversification (R*) from Globalization

    Rules (3) Next step is to create links between the local development process (as a

    continuous sensitization process) and the bargain in terms of diversification rate

    from G. R, building Social Trust Links- see at Swensen Social Confidence

    Indicators, 2006 (4) Finally, the Community is included in the model as the third or

    http://www.in.gr/dictionary/lookup.asp?Word=strengthenhttp://www.in.gr/dictionary/lookup.asp?Word=strengthen
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    invisible part of each bargain between two persons, based on instant reflection, so

    each part wins ( the win-win-win model).

    Limitations are resulted, both by the Games Theory and the Modern Innovation

    Theory application in social sciences and their synthesis into a social market problem

    within the Community.

    2. RECENT LITERATURE IN POINTS

    From the Local Development side, Kenneth Wilkinson (1991) focuses on the

    endogenous local development process / bottom-up approach (bargain, locally) 2nd,

    Friedman / Weaver UCLA (1978)in their classic Territory and Function refer :

    The base of an autonomous local development may be a discrete value system, an

    ideology, local peoples reaction to the dominant local principles (including local

    communication code, customs, culture), creating thus the social cohesion

    environment at local level.

    From the pure Sociological side, J. Coleman (1988) as Social Capital describes the

    cooperation processes of individuals, which minimize possible dilemma, coming

    from individuals, networks and common actions. Besides, Glen Loury (1977) used

    the term social capital to describe a dynamic theory of racial income differences

    discrimination (women, minorities, etc). J Coleman adopted Glen Lourys definition,

    in developing and popularizing the concept Also, Putnam (2000) describes social

    capital as the basis of social schemes creation (i. e networks)

    In conclusion, an increasing number of recent literature in the local development field,

    currently recognizes the existence of links among local development process, social

    trust & capital A number of Local Development approaches toward this theme are

    referred below: The Political Entity (Freedman-Weaver, UCLA, 1978, the

    Selected Closed-Spatial Discrete Entity of the Intra-Scientific Vienna Centre (Stohr

    & Todtling 1980), The S. H. I. E. L. D Model, Papakonstantinidis, 1997, Rome)

    The Tre Italy Model, Bagnasco, 1987, The parallel system and The sensitized

    Community (Papakonstantinidis, 1998 & 2002), The political Democracy (LSE,

    Fotopoulos, 1998), the Grass Roots Model in Latin America (Luis Llambi, 2003)

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    Barquero A-Vasquez A (1991) These theoretical approaches pre-existed to the

    suggested win-win-win.

    3. THE BARGAINING PROBLEM

    A two-person bargaining situation involves two individuals (Neuman & Morgenstern

    1947), who have the opportunity, either to be competitors to each-other (win-lose)

    [von Neumann-Morgenstern, 1928/1947-zero sum two players game Theory]

    Filinis Kostas (1973), or to make coalitions, or even to create pure individual

    strategies, based on bargainers instant reflection behavior (win-win) [Nash J. F,

    1950, Arrow K 1954, Aumann Robert, 1987, Crawford V, 1997, Kottarides K, 2002,

    Varoufakis Y, 1990). J.F. Nash ( 1950) focused on payoff shares/utilities

    combination:

    Bargain may result either in agreement or disagreement. (Kuhun H.W-Nassar S,

    2001) Papakonstantinidis, 2003, 2005, Varoufakis Y, 1990) Utility expresses the

    constraint or the fear factor of disagreement for the negotiator who desires

    negotiations to be led in agreement more than the other one. Who needs more,

    negotiation leading to an agreement expects more utility, but probably there is a lossin terms of shares, due to lack of risk. On the contrary, who is indifferent about

    agreement or expects less utility /per unit, has- to win in shares under the dogma

    the more risk, the more profit (Crawford V. 1997).

    It is necessary to analyze the Nashnon-cooperative- instant reflection game /or a

    win-win perception as follow:

    Non-co-operative game, is a game between two (2) players/ individuals who have

    opposite interests (Aumann Robert , 1987). Each player makes his own choices, based

    on instant reflections rational movements and his physical cleverness.

    The game/ bargain is defined by the result (pay-off) and not by players expectations-

    It presupposes best choices by both players towards meeting individual interests

    [winning strategies-Harsanyi John(1973].

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    Players/ or negotiators do not regret, a posteriori, from their own decision taken,

    based on personal choices, during the bargain. Each of the players knows a priori that

    the other negotiator (or player) is as clever as he is.

    During the bargain, a mutual respect between the two bargainers to each others

    best choices is necessary.

    It is recognized that The more DETERMINED to break down the negotiation (= less

    utility), the more satisfied (=better shares) the more risk, the more profit .

    Social behavior is not recognized as an acceptable one in the bargain, thus deriving

    unfair results: That means, who needs the agreement as the result of a bargain, has

    to loose in shares, by accepting any result.

    Information may be the link between knowledge creation and the bargaining

    process. In particular, Information is a power factor in pure individuals winning

    strategies (Aumann Robert, 1987).

    The more information, the better winning strategy, the more profit. Each of the

    players / negotiators, starting negotiations with the other, expects to gain the

    maximum profit.

    Interaction, based on instant reflection individual winning strategies, is the base of the

    Nash Non Cooperative Games Theory A two (2) 2person anticipation is based on

    utilities.

    According to Nash Theory, a unique solution exists that maximises the product of the

    participants utilities. There is, therefore an interaction between utilities andstrategies In particular, utility expresses individual choices based on individual

    necessities Strategies express choices + will in personal level, taking into account

    the interaction factor (the others choices) Utility is the subjective and strategy is the

    objective factor of the same anticipation.

    Negotiation may lead either to agreement or disagreement Utility expresses the

    fear factor constraint of disagreement for those who desire the agreement, more

    than the other negotiators. (Aumann 1987).

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    In conclusion, at any moment according to the N. C. G Theory- there is only one

    equilibrium point at which any individualat any moment- makes the best choices

    for himself, in relation with the other persons best choices.

    3.1 The bargaining problem Utility Theory (math)

    Bargaining Problem is mainly based on Utility Theory- a mathematical theory of

    the Neo-classical School of Thought, able to satisfactory explain individual

    expectations/ anticipations, of a possible outcome. Usually it is expressed in the form

    of a mathematical function, f(u) = u1/2

    Individual winning strategies are corresponding 1-1 to utilities U (A) and U (B)

    (Chun Youngub, 1990). Utility theory of the individual is mainly based on the

    concept of anticipation.

    In the Two-person utility Theory there are two (2) individuals in a bargain who

    have the opportunity to collaborate for mutual benefit in more than one way. In its

    simple/initial version, no action, taken by one of the two individuals without the

    consent of the other can affect the well-being of the other one, but in real terms there

    is only ONE decision, taken by the involved in a bargain individuals.

    Utility in the bargain is a personal matter: Utility units are not compared.

    (Kuhun-Nassar, 2001)

    Utility units express fear units of a disagreement outcome

    If A needs more the agreement to be achieved, than the payoff coming

    from the bargain, then he should be ready to accept any result of agreement,

    even if it is not favorable for him (loss of shares)

    If A has decided not to accept an agreement during the bargaining process,

    then he risks more but at the same time- has to win more from the agreement,

    in terms ofshares.

    The utility range expresses the optimist and/or the pessimist instant

    reflection of each party.

    Utility expresses individual choices based on individual necessities and

    will. It is rather a subjective than objective factor, influencing individual

    behavior. On the other hand, individual strategies in the bargain the

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    objective factor- are defined by personal choices and will, resulting from the

    necessity to meet personal needs. From this point of view, Utility , as a

    subjective factor is expressed by strategy an individual winning strategy-

    in the bargain, so as to meet Utility. There are links between Utility and

    Strategy: Utility is the ability to meet needs and Strategy is the plan

    the individual plan- to achieve this ability, step by step

    Utility is the subjective factor and the Individual Winning Strategy is the

    objective factor of the same thing: Bargainers have needs (=utilities). In

    order to satisfy these needs, they use individual winning strategies, as the

    result of their instant reflections in the Bargain. (table 1)

    Lim U1i(&)U2i(&)=max U1iU2i (1)

    i

    3.2 Nash win-win random sharing/utilities- An example

    It expresses utilities/strategies, as the interaction between two negotiators and (2)

    expresses the utility function- as a shares/utility combination The bargaining problem

    decision making during negotiations of A & B -Nash highlighted the payoffs of the

    bargain, # personal expectations(Table 1):

    Table 1: BARGAIN

    Random Sharing between A and B

    Share A

    (%)

    Share B

    (%)

    Utility A Utility B Utility AXB

    100 0 0 71 090 10 1 70 70

    80 20 5 68 340

    70 30 10 64 960

    60 40 16 60 960

    50 50 23 52 1196

    4 5 55 40 31 1 240

    ( max)

    30 70 45 24 1080

    20 80 50 12 600

    10 90 61 4 244

    0 100 80 0 0

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    3.3 The equilibrium point

    Suppose that winning strategies [ Pi, Qi] are in a fine ratio with the players

    (bargainers) UTILITY ( linear function: corresponds 1-1 to bargainers Utility

    Function), under the dogma the more decisive to break the contract down, the more

    satisfied from the bargain leading to the contract (Kuhun-Nassar, 2001). That is true:

    Bargainers expectations are 1-1 to expected Utilities for each of them, coming from

    the bargain. (Bernheim & Douglas B. 1984). On the other hand, the more

    information, the more uncertainty. Bargain gets its own rules out of cooperation.

    People are competitive rather, than co-operative: Winning strategies are led by

    bargaining rules (rules of pure competition). Nash has described the bargaining

    problem not by expectations, but, directly, by the results (pay-off) of the bargain.

    In our example, the crucial point [the max] is 1240 (40x31) : this is the point of final

    agreement led by the bargain. On that point, shares are: 40% for A and 60% for

    B. On that point, personal satisfaction or utility units are 40 units for A and 31 units

    for B : Thats the point of agreement, expressing fear of breaking down the

    agreement for player A and , at the same time, the risk for the player B of

    breaking down the agreement. In a 2-person anticipation, each of the two (2)bargainers may ask themselves one question, as the result of good strategies [instant

    reflection thinking] in the bargain:

    What should be the best for me, taking into account that the other

    person (bargainer in a negotiation) should try for the best for

    himself thus recognizing that the other person may be as clever as

    I am?

    4. SUGGESTION: THE WIN-WIN-WIN MODEL

    4.1 What the suggested win win- win is

    According to the afore-mentioned analysis, paper contribution in the scientific

    thought (2008) should be summarized in introducing the third WIN for the

    COMMUNITY (the third-part pole).

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    According to my suggestion, COMMUNITY the C factormust participate in any

    bargain by its bargainers characteristics (shares/utilities), thus adding the THIRD

    WINat any two bargainers win-win expectation between TWO (the METRON

    analysis or the THREE POLES analysis like in other fields i.e philosophy, economy,

    creating an interactional flow By introducing the THIRD POLE in the bargain, then

    the crucial bargainers QUESTION must be changed in:

    What should be the best for me, taking into account that the other

    person (bargainer in a negotiation) should try for the best for

    himself thus recognizing that the other person may be as clever as

    I am and, at the same time, taking into account that COMMUNITY,

    as the third or invisible part also participates by the bargainers

    characteristics (shares/utilities)

    4.2 Win-win-win analysis methodology

    The following methodology is adopted in points (Papakonstantinidis):

    knowledge creation creating a non conflict behavior inserting sensitization

    integrated information creation uncertainty due to negative entropy thus,

    smoothing potential conflictsclosing differences in the competitive bargainpayoff-

    utilities & shares, influencing behavior in the bargain /individual winning strategies

    influencing by a new behavior in the opposite, the more decisive, the more risk

    ,should derive more profit in a globalizing world but inserting sensitization in the

    bargainthus smoothing the conflict strategies taking into account the C factor

    converting a bilateral conflict into a 3-part negotiation leading to a new social

    perception , the win-win-win perception, including a real cooperation between

    negotiators, thus, carrying alongside a social markets perspective- the

    INTERMEDIATE POSITION

    4.3 Information/ behavior & the bargaining problem (Knowledge

    transfer, information, behavior)

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    Paper conception is mainly based on Games Theory especially on its Non-

    Cooperative Games Theorys version by J. F Nash, 1950- in relation with the Modern

    Innovation Theory - (M. M. Fischer, 2000).

    M. I. T provides us with useful methodological tools as knowledge creation and

    knowledge transfer (Table 2).

    Table 2: Scheme: Knowledge Creation/ Information/ Types of Behavior

    Type of

    Knowledge-1

    Type of

    Knowledge-2

    Synthesis Resulted Behavior

    tacit tacit Sympathetic Socialization

    tacit codified Conceptual Externalization

    codified tacit Procedural Internalization

    codified codified Systemic Networking

    sympathetic systemic Conceptual Sensitization

    systemic systemic Procedural Strategic

    Papakonstantinidis, 2003

    Literature (Reinsmann, Fischer,2002 & others) introduced various processes of

    knowledge conversion based on the proven and built information systems

    incorporated in an organization. Possible cases among different types of knowledge

    produce the four (4) major processes of knowledge conversion : (1) Tacit knowledge

    to tacit knowledge produces sympathized knowledge (socialization) (2) Tacit

    knowledge to codified knowledge produces conceptual knowledge (externalization)

    (3) Codified knowledge to tacit knowledge produces procedural knowledge

    (internalization) (4) Codified knowledge to codified knowledge produces systemic

    knowledge (combination). Each of these processes of knowledge conversion

    corresponds [1-1] to a specific type of information (Papakonstantinidis 2003) i. e :

    Social Information-Sensitization

    External Information- Participation

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    Internal Information-Involvement

    Combined Information-Networking

    4.4 The suggested win-win-win approach

    According to the above analysis, paper contribution in the scientific thought (2007)

    should be summarized in introducing the third WIN or the third person in a two-

    party bargain, i. e the C invisible part, which should be the Community interest

    = C , thus taking part as community be present in every two-party bargain,

    claiming its own share from this

    Suppose that:

    Ua = Pi, Ub = Ri , Uc = Qi , ....in a mathematical approach (tables

    1, 2):

    Ua = x , Ub = (100-x)k and f = [ x (100-x)k ] = 0 , so that Ua +

    Ub = max

    THEN

    lim Pi(&) Qi(&) Ri(&) = max Pi Qi Ri = max Ua Ub Uc = Ua + Ub + Uc

    i

    or, how to transform a competition into the absolute cooperation,

    taking into account the integrated information, coming from

    knowledge transfer AND the sensitization process in the community,

    thus maximizing bargainers utilities and the Community utility (Uc)

    4.5 The Sharing problem in a Bargain [Utilities, Shares, strategies,

    decision- choices, behaviour, Final Agreement]

    Having defined: (1) How information resulting from knowledge creation

    /knowledge transfer should contribute to what we call social market (2) How

    sensitization should be introduced to given information, as to turn it to an integrated

    information (Papakonstantinidis, 2006) (3) How integrated information should

    influence human behaviour during the bargain, or negotiations (4) How a human

    social behaviour could lead to a new perception of thinking or taking a decision,

    in the bargain (see at Calvert Randall, 1995, Berger,J 2005 Cinneide M. O 1991,

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    Coleman J 1988, Yitzak Samuel 1997, Bernheim Douglas B. 1984 (5) How

    socialization could influence human choices or winning strategies during the bargain,

    based on instant reflection (Nash) (6) How scientific thought could transfer the

    problem from utilities (personal perception) to pay-offs (objective perception =

    counting size)Harsanyi John(1973), then, the data of Table 2 may be transformed in

    a new set of data, as Table 3.

    TABLE 3: Suggesting Sharing between A , B and C

    Share

    (%)

    Share

    (%)

    Utility

    A

    Utility

    B

    Utility

    AXB

    Share C

    (%)

    Utility

    C

    Utility

    AXBXC

    90 4 1 71 71 6 1 71

    80 13 2 70 140 7 2 280

    70 22 5 68 340 8 3 1020

    60 31 10 64 640 9 4 2560

    50 40 16 60 960 10 5 4800

    max

    41 50 23 52 1196 9 4 4784

    32 60 31 40 1240 8 3 3720

    23 70 40 24 960 7 2 1920

    14 80 50 12 600 6 1 600

    (Papakonstantinidis Proposal)

    Notes, as to explain the symbols :

    C expresses the Community (an acceptable system value at local level), as

    the third or invisible part in the bargain- In real terms, it reflects the

    confidence indicators, or, in other words, if and at which level each member

    of the Community trusts the other, during the bargain (H. Hans 1997).

    The less shares for A+ B the more share for C part.

    Utility is a personal matter: Utility units are not compared to each other. They

    express the fear of breaking down the agreement.

    If A needs more the agreement than the payoff, then he should be ready to

    accept any form of agreement.

    Based on this concept ( the C factor) then, it is concluded that

    Sensitization process applied in local people has succeeded to change/

    transform individual winning strategies into a NEW type of social trust

    behavior (Swensen, 2006), leading to SOCIAL COHESION, at local level

    (Papakonstantinidis, 2006, 2007, 2008).

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    TABLE 4: Social Confidence Indicators (%)

    Country Indicator (%)

    2007

    1 Denmark 64.5

    2 Norway 63.9

    3 Sweden 62.3

    4 Finland 56.4

    5 Netherland 53.9

    6 New Zeeland 52.6

    7 Canada 47.0

    8 Australia 46.9

    9 Indonesia 46.7

    10 Iceland 45.3

    11 North Ireland 43.9

    12 Suisse 42.1

    13 USA 42.1

    14 Japan 42.0

    ..46 GREECE 23.7Swensen, 2006)

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    This should be the ground for a Flag Theme local people creation (table, below)

    TABLE 5: FLAG THEME - Flow Chart

    Source: Papakonstantinidis, 2000 & 2007

    Flag Theme may be concerned as an innovative idea- an open discussion theme

    based on the sensitisation process at local level which concentrates local resources,

    skills, abilities, talents, leadership as well as priorities and properties at local level

    (Gannon Agnes, 1990, Wilkinson Kenneth, 1991).

    5. CONCLUSIONS/ PROPOSALS

    1. Social Cohesion necessary for the L-D process, thus building local people

    identity AND development (through the appropriate for the place- flag

    theme - may be , at the same time, the cause and the result of building the

    Social Capital at Local Level

    2. Building the Social Capital at Local Level, may be proved to be equivalent to

    Social Confidence, or Social Trust among local people (Llambi Louis

    2008,Lados M,& Lachewski Lutz (2003)

    3. At the same time, Community [ the C factor ] participates as the

    THIRD or invisible part in any two-person negotiations

    LocalAbilitie

    Leadership Properties

    Priorities

    Flag Theme

    Active

    ParticipationRoles in

    planning/

    Creating a

    teampsychology

    Jointing theendogenous

    forces on acommonoal

    Converging individual strategies on a commongoal, through cooperation

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    4. By introducing the C factor in any 2-person negotiation, then what should

    be result, could improve individual strategies and /or behavior in the bargain,

    from a pure conflict to round the corners of this conflict, then transforming

    competitors to instant alliances (including the Community profit) : This is

    the papers contribution)

    5. Local Development is mainly based on this new perception

    6. Based on this perception (round the conflict corners-the Community within)

    its easy for local people to find a FLAG THEM (2007- S Africa) for their

    L-D process: see at Flow Chart That is the win-win-win Methodology/

    Papakonstantinidis Model)

    7. According to win-win-win methodology, L-D process, in terms of

    diversification rate, from Globalizations Rules may be justified, creating the

    Community as a discrete spatial Entity

    8. Technological changes and human / social relations move in the opposite

    direction-vice versa.

    9. Introducing a three-poles dealing system may improve the bargaining

    perception thus influencing social behavior, introducing a new bargaining

    perception/ethic

    10. A new bargaining perception including the Community profit as the

    third or invisible parameter in a bargain between TWO persons-players

    may change some Globalization negative conditions, providing them with

    rules/ social rules through social behavior changing.

    11. Reforming a bilateral contradiction in a 3-part bargain between two players

    (including the Community C as the invisible part between TWO, in fact

    may reverse the base of human negotiation : From competition to co-

    operation Reforming the competition to step towards social cohesion ,

    the objective perception of the world may be changed into a more

    ideological: From material to a thinking world (Kamitza R 1994) The C

    partner my be proved to be the key-factor, against war feelings thus

    introducing the Greek philosophys METRON

    12. Each of the THREE parts (A, B, & C) in any bargain, may ask itself THREE

    questions, thus maximizing its own profit (economic, social, cultural,

    environmental etc) :

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    What should be the best for me, taking into account that the other person (bargainer

    in a negotiation) should try for the best for himself thus recognizing that the other

    person as clever as I, AND taking into account [at the same time] that

    Community as the third or invisible part of negotiations between TWO, also

    participates and also tries under the same conditions [ Community as clever as the

    two bargainers] so bargainers AND the Community to be winners? - 3win Model.

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