Negotiating Through an Agent

Abstract

Agents often bargain on behalf of their principals. In many common negotiating situations, especially where ex post ratification of the agent's agreement is required (e.g., union contracts, treaties), an agent faces inherent uncertainty about the terms that are minimally acceptable to the principal (the principal's “reservation price”). In fact, the agent's entire payoff function may be uncertain. We study bargaining behavior in these circumstances and show that the agent's minimum demands unambiguously increase with increases in uncertainty about the principal's reservation price, with increases in uncertainty about the payoff function, and with increases in the agent's degree of risk aversion. We then fashion these results about an individual agent's behavior into conclusions about the difficulty of reaching agreement in the overall negotiations. Using Axelrod's measure of the “conflict of interest” in a game, optimal insistence prices in a one-shot bargaining situation, and two equilibrium concepts in a common commitment game, we show that the inherent uncertainty of agency bargaining can frequently make disagreement more likely.

Two Level Negotiations in Bargaining Over Water

“…This can be viewed as obtaining an approximation to a particular, but plausible, noncooperative bargaining procedure. The use of the Nash bargaining solution distinguishes our analysis from those of Lax and Sebenius (1991), Iida (1993), and Mo (1995). Mayer (1992) uses the Nash bargaining approach, but less formally, and to ask a different set of questions.…”

Examining the Role of BATNA in Explaining EPA Negotiation Outcomes

“…Research on BATNA as a means to understanding the negotiation processes and outcomes was pioneered by Fisher and Ury (1981). Subsequently, many others studies have followed, including Sebenius (1984Sebenius ( , 1992Sebenius ( , 2006Sebenius ( , 2009, Lax and Sebenius (1991), Lax (1985), Odell (2002Odell ( , 2009Odell ( , 2010, and Wheeler (2002), among others. Overall, in the negotiation literature, perceived or actual alternative(s) or BATNAs are considered as very crucial to negotiation processes and outcomes.…”

A Study on Preference Impartation and Decision Support in E-Negotiation

“…The relationship between the principal's true preferences and the preferences used by the agent negotiating on behalf of the principals is important but analytically not well examined [9]. The differences between the preferences may be due to both objective and subjective reasons.…”