Modelling Multi-Issue Negotiation

Abstract

Multi-issue (criteria) negotiation belongs to a domain of relatively new research area which deals with both multiple criteria decision making (MCDM) and multiple participant decision making (MPDM). Its trade-off process is modelled using logrolling in order to achieve integrative solutions. Logrolling is the exchange of loss in some issues for gain in others resulting in mutual gain. Since the trade-offs among issues are also the trade-offs among negotiating parties, the solution approach using logrolling attempts to deal with MCDM and MPDM simultaneously. This study considers two-issue two-party negotiation. It is shown that logrolling is always possible except for one special case. Logrolling does not suggest a unique solution to multi-issue negotiation, but it can provide an efficient frontier which is shown to be linear or piecewise linear when the parties’ value functions are linear. Characteristics of the Nash bargaining solution are also determined.