IDEAS home Printed from https://ideas.repec.org/a/spr/grdene/v23y2014i1d10.1007_s10726-012-9329-z.html
   My bibliography  Save this article

An Analytical Approach to Offer Generation in Concession-Based Negotiation Processes

Author

Listed:
  • Rudolf Vetschera

    (University of Vienna)

  • Michael Filzmoser

    (Vienna University of Technology)

  • Ronald Mitterhofer

    (Vienna University of Technology)

Abstract

We develop analytical models to assist negotiators in formulating offers in a concession-based negotiation process. Our approach is based on plausible requirements for offers formulated in terms of utility values for both the negotiator making the offer and the opponent receiving it. These requirements include value creation, reciprocity, and the fact that an offer actually leads to concessions. Trade-offs between their own and the opponent’s utilities can be formulated by negotiators and define a search path in the utility space. Solutions along this search path are then mapped back into the issue space to generate actual offers. We present and discuss several variants of optimization models to generate such offers and illustrate them with an numerical example.

Suggested Citation

  • Rudolf Vetschera & Michael Filzmoser & Ronald Mitterhofer, 2014. "An Analytical Approach to Offer Generation in Concession-Based Negotiation Processes," Group Decision and Negotiation, Springer, vol. 23(1), pages 71-99, January.
  • Handle: RePEc:spr:grdene:v:23:y:2014:i:1:d:10.1007_s10726-012-9329-z
    DOI: 10.1007/s10726-012-9329-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10726-012-9329-z
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1007/s10726-012-9329-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
    3. J. P. Brans & Ph. Vincke, 1985. "Note---A Preference Ranking Organisation Method," Management Science, INFORMS, vol. 31(6), pages 647-656, June.
    4. Guoming Lai & Katia Sycara, 2009. "A Generic Framework for Automated Multi-attribute Negotiation," Group Decision and Negotiation, Springer, vol. 18(2), pages 169-187, March.
    5. Kalai, Ehud & Smorodinsky, Meir, 1975. "Other Solutions to Nash's Bargaining Problem," Econometrica, Econometric Society, vol. 43(3), pages 513-518, May.
    6. Lutz-Alexander Busch & Ignatius Horstmann, 1999. "Endogenous Incomplete Contracts: A Bargaining Approach," Canadian Journal of Economics, Canadian Economics Association, vol. 32(4), pages 956-975, August.
    7. Lutz-Alexander Busch & Ignatius J. Horstmann, 1999. "Signaling via an agenda in multi-issue bargaining with incomplete information," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 13(3), pages 561-575.
    8. Sunil Gupta, 1989. "Modeling Integrative, Multiple Issue Bargaining," Management Science, INFORMS, vol. 35(7), pages 788-806, July.
    9. Harri Ehtamo & Raimo P. Hämäläinen, 2001. "Interactive Multiple‐Criteria Methods for Reaching Pareto Optimal Agreements in Negotiations," Group Decision and Negotiation, Springer, vol. 10(6), pages 475-491, November.
    10. Espinasse, Bernard & Picolet, Guy & Chouraqui, Eugene, 1997. "Negotiation support systems: A multi-criteria and multi-agent approach," European Journal of Operational Research, Elsevier, vol. 103(2), pages 389-409, December.
    11. Melvin F. Shakun, 2005. "Multi-bilateral Multi-issue E-negotiation in E-commerce with a Tit-for-Tat Computer Agent," Group Decision and Negotiation, Springer, vol. 14(5), pages 383-392, September.
    12. May Tajima & Niall M. Fraser, 2001. "Logrolling Procedure for Multi-Issue Negotiation," Group Decision and Negotiation, Springer, vol. 10(3), pages 217-235, May.
    13. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    14. Fershtman, Chaim, 1990. "The importance of the agenda in bargaining," Games and Economic Behavior, Elsevier, vol. 2(3), pages 224-238, September.
    15. Arvind Rangaswamy & G. Richard Shell, 1997. "Using Computers to Realize Joint Gains in Negotiations: Toward an "Electronic Bargaining Table"," Management Science, INFORMS, vol. 43(8), pages 1147-1163, August.
    16. Michael Filzmoser & Rudolf Vetschera, 2008. "A Classification of Bargaining Steps and their Impact on Negotiation Outcomes," Group Decision and Negotiation, Springer, vol. 17(5), pages 421-443, September.
    17. Ernest M. Thiessen & Daniel P. Loucks & Jery R. Stedinger, 1998. "Computer-Assisted Negotiations of Water Resources Conflicts," Group Decision and Negotiation, Springer, vol. 7(2), pages 109-129, March.
    18. Roth, Alvin E., 1977. "Independence of irrelevant alternatives, and solutions to Nash's bargaining problem," Journal of Economic Theory, Elsevier, vol. 16(2), pages 247-251, December.
    19. Robert W. Rosenthal, 1976. "An Arbitration Model for Normal-Form Games," Mathematics of Operations Research, INFORMS, vol. 1(1), pages 82-88, February.
    20. Thomson, William, 1981. "A class of solutions to bargaining problems," Journal of Economic Theory, Elsevier, vol. 25(3), pages 431-441, December.
    21. Inderst, Roman, 2000. "Multi-issue Bargaining with Endogenous Agenda," Games and Economic Behavior, Elsevier, vol. 30(1), pages 64-82, January.
    22. Otomar J. Bartos, 1977. "Simple Model of Negotiation," Journal of Conflict Resolution, Peace Science Society (International), vol. 21(4), pages 565-579, December.
    23. Ehtamo, Harri & Kettunen, Eero & Hamalainen, Raimo P., 2001. "Searching for joint gains in multi-party negotiations," European Journal of Operational Research, Elsevier, vol. 130(1), pages 54-69, April.
    24. Ambar G. Rao & Melvin F. Shakun, 1974. "A Normative Model for Negotiations," Management Science, INFORMS, vol. 20(10), pages 1364-1375, June.
    25. Patricia Jaramillo & Ricardo Smith & JoaquÍn Andréu, 2005. "Multi-Decision-Makers Equalizer: A Multiobjective Decision Support System for Multiple Decision-Makers," Annals of Operations Research, Springer, vol. 138(1), pages 97-111, September.
    26. Lang, Kevin & Rosenthal, Robert W, 2001. "Bargaining Piecemeal or All at Once?," Economic Journal, Royal Economic Society, vol. 111(473), pages 526-540, July.
    27. Bac, Mehmet & Raff, Horst, 1996. "Issue-by-Issue Negotiations: The Role of Information and Time Preference," Games and Economic Behavior, Elsevier, vol. 13(1), pages 125-134, March.
    28. Harri Ehtamo & Raimo P. Hämäläinen & Pirja Heiskanen & Jeffrey Teich & Markku Verkama & Stanley Zionts, 1999. "Generating Pareto Solutions in a Two-Party Setting: Constraint Proposal Methods," Management Science, INFORMS, vol. 45(12), pages 1697-1709, December.
    29. Schoemaker, Paul J H, 1982. "The Expected Utility Model: Its Variants, Purposes, Evidence and Limitations," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 529-563, June.
    30. Teich, Jeffrey E. & Wallenius, Hannele & Wallenius, Jyrki & Zionts, Stanley, 1996. "Identifying Pareto-optimal settlements for two-party resource allocation negotiations," European Journal of Operational Research, Elsevier, vol. 93(3), pages 536-549, September.
    31. João N. Clímaco & Luis C. Dias, 2006. "An Approach to Support Negotiation Processes with Imprecise Information Multicriteria Additive Models," Group Decision and Negotiation, Springer, vol. 15(2), pages 171-184, March.
    32. Jeryl L. Mumpower, 1991. "The Judgment Policies of Negotiators and the Structure of Negotiation Problems," Management Science, INFORMS, vol. 37(10), pages 1304-1324, October.
    33. Vetschera, Rudolf, 2009. "Learning about preferences in electronic negotiations - A volume-based measurement method," European Journal of Operational Research, Elsevier, vol. 194(2), pages 452-463, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Busch, Lutz-Alexander & Horstmann, Ignatius J., 2002. "The game of negotiations: ordering issues and implementing agreements," Games and Economic Behavior, Elsevier, vol. 41(2), pages 169-191, November.
    2. Guoming Lai & Katia Sycara, 2009. "A Generic Framework for Automated Multi-attribute Negotiation," Group Decision and Negotiation, Springer, vol. 18(2), pages 169-187, March.
    3. Ehtamo, Harri & Kettunen, Eero & Hamalainen, Raimo P., 2001. "Searching for joint gains in multi-party negotiations," European Journal of Operational Research, Elsevier, vol. 130(1), pages 54-69, April.
    4. Roberto Serrano, 2007. "Bargaining," Working Papers 2007-06, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
    5. Guoming Lai & Cuihong Li & Katia Sycara, 2006. "Efficient Multi-Attribute Negotiation with Incomplete Information," Group Decision and Negotiation, Springer, vol. 15(5), pages 511-528, September.
    6. Harri Ehtamo & Raimo P. Hämäläinen, 2001. "Interactive Multiple‐Criteria Methods for Reaching Pareto Optimal Agreements in Negotiations," Group Decision and Negotiation, Springer, vol. 10(6), pages 475-491, November.
    7. Carlos Alós-Ferrer & Jaume García-Segarra & Miguel Ginés-Vilar, 2018. "Anchoring on Utopia: a generalization of the Kalai–Smorodinsky solution," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 6(2), pages 141-155, October.
    8. Flamini, Francesca, 2007. "First things first? The agenda formation problem for multi-issue committees," Journal of Economic Behavior & Organization, Elsevier, vol. 63(1), pages 138-157, May.
    9. Alejandro Caparrós, 2016. "Bargaining and International Environmental Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(1), pages 5-31, September.
    10. Eric van Damme, 1984. "The Nash Bargaining Solution is Optimal," Discussion Papers 597, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    11. In, Younghwan & Serrano, Roberto, 2004. "Agenda restrictions in multi-issue bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 53(3), pages 385-399, March.
    12. Marx, Leslie M. & Shaffer, Greg, 2007. "Rent shifting and the order of negotiations," International Journal of Industrial Organization, Elsevier, vol. 25(5), pages 1109-1125, October.
    13. Ronghuo Zheng & Tinglong Dai & Katia Sycara & Nilanjan Chakraborty, 2016. "Automated Multilateral Negotiation on Multiple Issues with Private Information," INFORMS Journal on Computing, INFORMS, vol. 28(4), pages 612-628, November.
    14. Binmore, Ken & Samuelson, Larry & Young, Peyton, 2003. "Equilibrium selection in bargaining models," Games and Economic Behavior, Elsevier, vol. 45(2), pages 296-328, November.
    15. Sgobbi, Alessandra & Carraro, Carlo, 2007. "Modelling Negotiated Decision Making: a Multilateral, Multiple Issues, Non-Cooperative Bargaining Model with Uncertainty," Economic Theory and Applications Working Papers 8224, Fondazione Eni Enrico Mattei (FEEM).
    16. Ignatius J. Horstmann & James R. Markusen & Jack Robles, 2001. "Multi-Issue Bargaining and Linked Agendas: Ricardo Revisited or No Pain No Gain," NBER Working Papers 8347, National Bureau of Economic Research, Inc.
    17. Meir, Reshef & Kalai, Gil & Tennenholtz, Moshe, 2018. "Bidding games and efficient allocations," Games and Economic Behavior, Elsevier, vol. 112(C), pages 166-193.
    18. Naeve-Steinweg, E., 2004. "The averaging mechanism," Games and Economic Behavior, Elsevier, vol. 46(2), pages 410-424, February.
    19. May Tajima & Niall M. Fraser, 2001. "Logrolling Procedure for Multi-Issue Negotiation," Group Decision and Negotiation, Springer, vol. 10(3), pages 217-235, May.
    20. Nejat Anbarci & Nick Feltovich, 2013. "How sensitive are bargaining outcomes to changes in disagreement payoffs?," Experimental Economics, Springer;Economic Science Association, vol. 16(4), pages 560-596, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:grdene:v:23:y:2014:i:1:d:10.1007_s10726-012-9329-z. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.