Title: How to Select Fair Improving Directions in a Negotiation Model over Continuous Issues

Authors: Harri Ehtamo, Markku Verkama, and Raimo P. Hämäläinen

Status: IEEE Transactions on Systems, Man and Cybernetics - Part C: Applications and Reviews, Vol. 29, No. 1, February 1999.

Keywords: Improving direction; Joint gains; Negotiation; Negotiation analysis; Negotiation support; Pareto optimal; Utility function

Empirical evidence suggests that in practice it is difficult to reach Pareto optimal agreements in negotiations. In this paper we take a constructive approach to this question in two-party negotiations over continuous issues. A new negotiation procedure is presented that results in Pareto optimal agreements under fairly general assumptions. The procedure uses a mediator who assists the decision makers by choosing jointly beneficial compromises. The procedure has the appealing feature that the decision makers are only required to answer relatively simple questions, and that their individual utility functions need not be identified completely. Moreover, the decision makers reveal minimal private information to the mediator. These are properties that one would hope to have in practical procedures to be incorporated in operational negotiation support systems.