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Generating Pareto Solutions in a Two-Party Setting: Constraint Proposal Methods

Author

Listed:
  • Harri Ehtamo

    (Systems Analysis Laboratory, Helsinki University of Technology, POB 1100, 02015 HUT, Finland)

  • Raimo P. Hämäläinen

    (Systems Analysis Laboratory, Helsinki University of Technology, POB 1100, 02015 HUT, Finland)

  • Pirja Heiskanen

    (Systems Analysis Laboratory, Helsinki University of Technology, POB 1100, 02015 HUT, Finland)

  • Jeffrey Teich

    (New Mexico State University, Las Cruces, New Mexico 88001)

  • Markku Verkama

    (Systems Analysis Laboratory, Helsinki University of Technology, POB 1100, 02015 HUT, Finland)

  • Stanley Zionts

    (State University of New York at Buffalo, Buffalo, New York 14260)

Abstract

This paper presents a class of methods, called constraint proposal methods, for generating Pareto-optimal solutions in two-party negotiations. In these methods joint tangents of the decision makers' value functions are searched by adjusting an artificial plane constraint. The problem of generating Pareto-optimal solutions decomposes into ordinary multiple criteria decision-making problems for the individual decision makers and into a coordination problem for an assisting mediator. Depending on the numerical iteration scheme used to solve the coordination problem, different constraint proposal methods are obtained. We analyze and illustrate the behaviour of some iteration schemes by numerical examples using both precise and imprecise answers from decision makers. An example of a method belonging to the class under study is the RAMONA method, that has been previously described from a practical point of view. We present the underlying theory for it by describing it as a constraint proposal method, and include some applications.

Suggested Citation

  • Harri Ehtamo & Raimo P. Hämäläinen & Pirja Heiskanen & Jeffrey Teich & Markku Verkama & Stanley Zionts, 1999. "Generating Pareto Solutions in a Two-Party Setting: Constraint Proposal Methods," Management Science, INFORMS, vol. 45(12), pages 1697-1709, December.
    • Handle: RePEc:inm:ormnsc:v:45:y:1999:i:12:p:1697-1709
    DOI: 10.1287/mnsc.45.12.1697
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    References listed on IDEAS

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    1. James K. Sebenius, 1992. "Negotiation Analysis: A Characterization and Review," Management Science, INFORMS, vol. 38(1), pages 18-38, January.
    2. Teich, Jeffrey E. & Wallenius, Hannele & Kuula, Markku & Zionts, Stanley, 1995. "A decision support approach for negotiation with an application to agricultural income policy negotiations," European Journal of Operational Research, Elsevier, vol. 81(1), pages 76-87, February.
    3. Osborne, Dale K, 1976. "Cartel Problems," American Economic Review, American Economic Association, vol. 66(5), pages 835-844, December.
    4. Markku Kuula, 1998. "Solving Intra-Company Conflicts Using the RAMONA-Interactive Negotiation Support System," Group Decision and Negotiation, Springer, vol. 7(6), pages 447-464, November.
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    Cited by:

    1. Rudolf Vetschera & Michael Filzmoser & Ronald Mitterhofer, 2014. "An Analytical Approach to Offer Generation in Concession-Based Negotiation Processes," Group Decision and Negotiation, Springer, vol. 23(1), pages 71-99, January.
    2. Pirja Heiskanen, 2001. "Generating Pareto‐optimal boundary points in multiparty negotiations using constraint proposal method," Naval Research Logistics (NRL), John Wiley & Sons, vol. 48(3), pages 210-225, April.
    3. Ehtamo, Harri & Kettunen, Eero & Hamalainen, Raimo P., 2001. "Searching for joint gains in multi-party negotiations," European Journal of Operational Research, Elsevier, vol. 130(1), pages 54-69, April.
    4. Zhang, Linlan & Song, Haigang & Chen, Xueguang & Hong, Liu, 2011. "A simultaneous multi-issue negotiation through autonomous agents," European Journal of Operational Research, Elsevier, vol. 210(1), pages 95-105, April.
    5. Heiskanen, Pirja & Ehtamo, Harri & Hamalainen, Raimo P., 2001. "Constraint proposal method for computing Pareto solutions in multi-party negotiations," European Journal of Operational Research, Elsevier, vol. 133(1), pages 44-61, August.
    6. Paula Sarabando & Luís C. Dias & Rudolf Vetschera, 2013. "Mediation with Incomplete Information: Approaches to Suggest Potential Agreements," Group Decision and Negotiation, Springer, vol. 22(3), pages 561-597, May.
    7. Nicolas Quérou & Patrick Rio & Mabel Tidball, 2007. "Multi-Party Negotiation When Agents Have Subjective Estimates of Bargaining Powers," Group Decision and Negotiation, Springer, vol. 16(5), pages 417-436, September.
    8. Guoming Lai & Katia Sycara, 2009. "A Generic Framework for Automated Multi-attribute Negotiation," Group Decision and Negotiation, Springer, vol. 18(2), pages 169-187, March.
    9. Gregory E. Kersten, 2001. "Modeling Distributive and Integrative Negotiations. Review and Revised Characterization," Group Decision and Negotiation, Springer, vol. 10(6), pages 493-514, November.
    10. M. Kitti & H. Ehtamo, 2009. "Adjustment of an Affine Contract with a Fixed-Point Iteration," Journal of Optimization Theory and Applications, Springer, vol. 140(3), pages 477-497, March.
    11. Guoming Lai & Cuihong Li & Katia Sycara, 2006. "Efficient Multi-Attribute Negotiation with Incomplete Information," Group Decision and Negotiation, Springer, vol. 15(5), pages 511-528, September.
    12. Harri Ehtamo & Raimo P. Hämäläinen, 2001. "Interactive Multiple‐Criteria Methods for Reaching Pareto Optimal Agreements in Negotiations," Group Decision and Negotiation, Springer, vol. 10(6), pages 475-491, November.
    13. Ivan Marsa-Maestre & Miguel A. Lopez-Carmona & Juan A. Carral & Guillermo Ibanez, 2013. "A Recursive Protocol for Negotiating Contracts Under Non-monotonic Preference Structures," Group Decision and Negotiation, Springer, vol. 22(1), pages 1-43, January.
    14. Kitti, Mitri & Ehtamo, Harri, 2007. "Analysis of the constraint proposal method for two-party negotiations," European Journal of Operational Research, Elsevier, vol. 181(2), pages 817-827, September.
    15. H. J. Corsair & Jennifer Bassman Ruch & Pearl Q. Zheng & Benjamin F. Hobbs & Joseph F. Koonce, 2009. "Multicriteria Decision Analysis of Stream Restoration: Potential and Examples," Group Decision and Negotiation, Springer, vol. 18(4), pages 387-417, July.
    16. Lou, Youcheng & Wang, Shouyang, 2016. "Approximate representation of the Pareto frontier in multiparty negotiations: Decentralized methods and privacy preservation," European Journal of Operational Research, Elsevier, vol. 254(3), pages 968-976.

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