Eliminating Options

Normally, you benefit from choices. We usually think that the more options we have, the more ways we might profit. The existence of some choices, however, increases the difficulty of issuing credible threats. Consequently, eliminating options can increase your payoff.

Imagine that you’re a medieval military commander seeking to capture the castle depicted in Figure 2. Your troops have just sailed over on boats to the castle’s island. Everybody knows that if you were determined to fight to the end, then your army would ultimately be victorious. Unfortunately, the battle would be long and bloody. You would lose much of your army in a full-blown battle for the castle, so you desperately pray for your enemy’s surrender. Since the enemy knows that it would lose the battle, one might think that it indeed should surrender.

Figure 2

Unfortunately, your enemy has heard of your compassion. You don’t care at all about the welfare of the enemy, but you do worry about the lives of your own soldiers (perhaps for selfish reasons). The enemy correctly suspects that if it holds out long enough, you will be sickened by your losses and retreat, for although you desire the castle, you wouldn’t decimate your army to obtain it.

Your opponents would immediately capitulate if they believed you would fight to the end, so if you could make a believable threat to fight until victory, they would give up and you would not have to risk your troops. Unfortunately, a mere threat to fight to the finish lacks credibility, so what should you do? You should burn your own boats!

Imagine that if your boats were burned, it would take many months for your allies to bring new boats to the island to rescue your army. Meanwhile, you would perish if you did not occupy the castle. Losing your boats would compel you to fight on until victory. More important, your enemy would believe that with your boats burned you would never retreat. Surrender is the optimal response of the enemy to the burning of your boats. By destroying your boats, you limit your choices. You can no longer take the easy way out of the battle by retreating. Eliminating the option of retreating makes your threat credible and allows you to win a bloodless victory.

Cortez, conqueror of the Aztecs, employed this boat-burning tactic.^[2] Shortly after landing in Mexico, Cortez destroyed his ships, thus showing his potential enemies and allies that he would not be quickly driven back to Europe. Consider the effect this tactic had on local tribes that were considering allying with Cortez against the powerful Aztecs. No tribe would want to ally with Cortez if it thought that he might someday abandon his fight against the Aztecs and return to Europe, for then the tribe would be left to the mercy of their mighty human-sacrificing neighbors. Cortez would likely have promised local tribes that regardless of how poorly he did in his fight against the Aztecs he would not leave until they were vanquished. Such a promise, by itself, was not believable. If Cortez had not burned his ships, his potential allies would have thought that Cortez would run away if he suffered an early defeat. By burning his ships and eliminating the option of quickly retreating to Europe, Cortez guaranteed that he wouldn’t leave his allies. As we shall see, eliminating options can be a useful strategy in business as well as military negotiations.

^[2]Dixit and Nalebuff (1991), 152–153.