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Advisor(s)
Abstract(s)
In bilateral Negotiation Analysis, the literature often considers the case with complete information.
In this context, since the value (or utility) functions of both parties are known, it is not difficult to
calculate the Pareto frontier (or efficient frontier) and the Pareto efficient solutions for the negotiation.
Thus rational actors can reach agreement on this frontier. However, these approaches are not applied
in practice when the parties do not have complete information. Considering that the additive value
(or utility) function is used, often it is not easy to obtain precise values for the scaling weights or the
levels’ value in each issue. We compare four decision rules that require weaker information, namely
ordinal information on weights and levels, to help a mediator suggesting an alternative under these
circumstances. These rules are tested using Monte-Carlo simulation, considering that the mediator
would be using one of three criteria: maximizing the sum of the values, maximizing the product
of the excesses regarding the reservation levels, or maximizing the minimal proportion of potential.
Simulations asses how good is the alternative chosen by each rule, computing the value loss with
respect to the alternative that would be suggested if there was precise cardinal information and
determining if the chosen alternative is efficient or, if not, how far is the nearest efficient alternative.
We also provide guidelines about how to use these rules in a context of selecting a subset of the
most promising alternatives, considering the contradictory objectives of keeping a low number of
alternatives yet not excluding the best one. A further issue we investigate is whether using only
ordinal information leads to treat one of the parties unfairly, when compared to a situation in which
precise cardinal values were used instead.
Description
Keywords
Negotiation Mediation Imprecise/ incomplete/ partial information Ordinal information Simulation