The Finite Negotiation Problem

Abstract

A finite negotiation problem is a finite, two-person, non-zero-sum noncooperative game. A negotiated solution to a problem is an outcome associated with two pure strategies, one for each player, which is arrived at by a negotiation process. The problem posed and solved in this article is the specification of a solution theory which reflects the expectations of negotiators and captures the strategic possibilities implicit in the original game. Instead of approaching the theory through axioms which imply the existence of a unique solution, this study describes a negotiating scenario which, when exactly described, is itself a game. Given the information of who moves first in the negotiation game, there is an equilibrium outcome, and this is taken as the solution of the problem.