Looking at NBA’s “game of Chicken” from the outside

On one hand, you can see where the NBA and its players are close to a deal, one that is within reach — they are just a couple percentage points apart. Of course, that is $500 million over the course of a deal, so it’s not a small amount, but still the sides seem close.

On the other side the players seem entrenched and David Stern is talking about canceling games. Plus there are no meetings scheduled. Right now it feels like both sides are risking the entire NBA season over a couple percentage points.

University of Notre Dame Finance Professor Richard Sheehan, author of “Keeping Score: The Economics of Big-Time Sports” says that right now both sides are trying to assess if they can get the other side to move a little more (something that was clearly the focus of the union’s letter to players Wednesday).

“Both sides have to analyze how committed the other side is to their position and their own ability to move their opponent away from their position,” Sheehan said. “I suspect that this aspect is what is making life so “interesting” at the moment. You can view the negotiations as a game of “chicken” where each side has an incentive to paint themselves as absolutely crazy — crazy enough to take actions that would cancel the season — unless the other side gives in.

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