Searching for joint gains in multi-party negotiations
by
Harri Ehtamo
Helsinki University of Technology
Coauthors: Raimo P. Hamalainen (Helsinki University of Technology)

We present a procedure with which two ore more parties can search for joint gains and arrive at a Pareto optimal agreement in a negotiation over continuous issues. The procedure uses an assisting mediator and calls only for local information about the parties' utility functions. The principle of the procedure is the following. At each stage, the mediator finds out the local set of agreements in which joint gains can be realized and then chooses an agreement from this set. This is done by first choosing a jointly improving direction from the set of all jointly improving directions and then proceeding along this direction to the new agreement. These stages are repeated until a Pareto optimal agreement is found.

We shall discuss the implementation of the procedure in practice as well as its mathematical properties. For example, it can be proved that the procedure results in a Pareto optimal agreement. The discussion is based on two recent articles by Ehtamo et al. (1998, 2000). When choosing an improving direction in the procedure, the mediator has to make a compromise between the parties' desires. We will show how the direction choosing problem can be approached axiomatically and discuss the possible implications this approach may have to the final outcome. At this stage we also briefly recall some other interactive methods presented recently in the literature, namely those presented by Brams (1990), and by Raith and Welzel (1998).

The method relates to the single negotiation text (SNT) concept, a cocept suggested by R. Fisher to be used in the Camp David negotiations in 1978. Raiffa (1982) describes the use of SNT as a negotiation device between Egypt and Israel with the United States acting as a mediator. The idea of the U.S. team was to generate successive, jointly improving SNTs based on the criticism of both negotiating countries, and finally step by step reach an agreement accepted by both countries.

The method of improving directions can be used by a mediator for systematic search of jointly improving SNTs. We have developed a computer implementation of the method that can be used in the internet; Kettunen and Hamalainen 1999. The Joint Gains software has been used in role playing experiments in a case dealing with water level management of a regulated lake in Finland; Hamalainen et al. 1999. The case involves many different interest groups, e.g., power companies, farmers, fishermen, and recreational users, all interested in different goal water level profiles in the lake. These experiments have shown that the method has potential use in real negotiations.

References:

H. Ehtamo, M. Verkama, and R.P. Hamalainen (1998): "How to Select Fair Improving Directions in a Negotiation Model over Continuous Issues", IEEE Trans. on Syst., Man, and Cybern. -Part C: Applications and Reviews, Vol. 29, No. 4, pp. 26-33.

H. Ehtamo, E. Kettunen, and R.P. Hamalainen (2000): "Searching for Joint Gains in Multi-Party Negotiations", European J. of Oper. Res. (To appear).

S.J. Brams (1990): "Negotiation Games: Applying Game Theory to Bargaining and Arbitration Procedures", Routledge, New York.

M.G. Raith, and A. Welzel (1998): Ädjusted Winner: An Algorithm for Implementing Bargaining Solutions in Multi-Issue Negotiations", Working Paper, Institute of Mathematical Economics, University of Bielefeld, Germany.

H. Raiffa (1982): "The Art and Science of Negotiation", Belknap/Harvard University Press, Cambridge, MA.

E. Kettunen, and R.P. Hamalainen (1999): "Joint Gains - Negotiation Support in the Internet", Computer software, Systems Analysis Laboratory, Helsinki University of Technology, Finland. (http://www.jointgains.hut.fi)

R.P. Hamalainen, E. Kettunen, M. Marttunen, and H. Ehtamo (1999): Ëvaluating a Framework for Multi-Stakeholder Decision Support in Water Resources Management", Manuscript, Systems Analysis Laboratory, Helsinki University of Technology, Finland. (Downloadable at http://www.sal.hut.fi/Publications/mhamb.pdf).

Date received: May 22, 2000

Copyright © 2000 by the author(s). The author(s) of this document and the organizers of the conference have granted their consent to include this abstract in Atlas Conferences Inc. Document # cafc-60.