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Generating Pareto Solutions in a Two-Party Setting: Constraint Proposal Methods

Listed author(s):
  • Harri Ehtamo

    (Systems Analysis Laboratory, Helsinki University of Technology, POB 1100, 02015 HUT, Finland)

  • Raimo P. Hämäläinen

    (Systems Analysis Laboratory, Helsinki University of Technology, POB 1100, 02015 HUT, Finland)

  • Pirja Heiskanen

    (Systems Analysis Laboratory, Helsinki University of Technology, POB 1100, 02015 HUT, Finland)

  • Jeffrey Teich

    (New Mexico State University, Las Cruces, New Mexico 88001)

  • Markku Verkama

    (Systems Analysis Laboratory, Helsinki University of Technology, POB 1100, 02015 HUT, Finland)

  • Stanley Zionts

    (State University of New York at Buffalo, Buffalo, New York 14260)

Registered author(s):

    This paper presents a class of methods, called constraint proposal methods, for generating Pareto-optimal solutions in two-party negotiations. In these methods joint tangents of the decision makers' value functions are searched by adjusting an artificial plane constraint. The problem of generating Pareto-optimal solutions decomposes into ordinary multiple criteria decision-making problems for the individual decision makers and into a coordination problem for an assisting mediator. Depending on the numerical iteration scheme used to solve the coordination problem, different constraint proposal methods are obtained. We analyze and illustrate the behaviour of some iteration schemes by numerical examples using both precise and imprecise answers from decision makers. An example of a method belonging to the class under study is the RAMONA method, that has been previously described from a practical point of view. We present the underlying theory for it by describing it as a constraint proposal method, and include some applications.

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    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 45 (1999)
    Issue (Month): 12 (December)
    Pages: 1697-1709

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    Handle: RePEc:inm:ormnsc:v:45:y:1999:i:12:p:1697-1709
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    1. James K. Sebenius, 1992. "Negotiation Analysis: A Characterization and Review," Management Science, INFORMS, vol. 38(1), pages 18-38, January.
    2. Teich, Jeffrey E. & Wallenius, Hannele & Kuula, Markku & Zionts, Stanley, 1995. "A decision support approach for negotiation with an application to agricultural income policy negotiations," European Journal of Operational Research, Elsevier, vol. 81(1), pages 76-87, February.
    3. Osborne, Dale K, 1976. "Cartel Problems," American Economic Review, American Economic Association, vol. 66(5), pages 835-844, December.
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