Sally and Ed each own property with a fair market value less than the amount of the outstanding mortgage on the property and also less than the original cost basis.They each were able to convince the mortgage holder to reduce the principal amount on the mortgage.Sally's mortgage is on her personal residence and Ed's mortgage is on rental property he owns.
Definitions:
Bargaining
The negotiation process between two or more parties to reach a mutually acceptable agreement.
Game Theory
A theoretical framework for conceiving social situations among competing players, in which the outcome of a participant's choice of action depends critically on the actions of other participants.
Sequential Negotiation Games
A type of game theory scenario where participants negotiate or make decisions in a predetermined order, rather than all at once.
Threat
A potential cause of harm or negative outcome, often used in strategic contexts to describe a disadvantageous situation that might materialize.
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