MCDM'09 - paper no. 4


 

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APPLYING A FIRST PRICE AUCTION MECHANISM FOR SUPPORTING MULTI-BILATERAL NEGOTIATIONS

Petr Fiala, Tomasz Wachowicz

Abstract:

In this paper we consider a multi-bilateral negotiation problem from the perspective of all involved parties that we call the seller and the buyers. We model the negotiation process as a sequentially repeated first price auction. Since we consider a multi-issue negotiation, we do not operate with a bidding price as a single evaluation criterion but with a utility of the package (negotiation offer). To construct the optimal negotiation strategy we apply the notion of equilibrium bidding strategy. The parties? negotiation strategies are represented as vectors of bids for successive negotiation phases. The negotiation strategies are then used by a simple spreadsheet-based negotiation support tool for finding the most satisfying solution of the negotiation process. The software acts as a simple agent that converts the strategies into the values of the bids and then into the negotiation offers that maximize the payoffs of the buyer. The compromise is represented by the first bid that satisfies the current seller?s aspiration level.

Keywords:

Negotiation, utility, additive scoring system, first price auction, equilibrium strategy, negotiation support system

Reference index:

Petr Fiala, Tomasz Wachowicz, (2010), APPLYING A FIRST PRICE AUCTION MECHANISM FOR SUPPORTING MULTI-BILATERAL NEGOTIATIONS, Multiple Criteria Decision Making (5), pp. 63-80

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