Negotiation Analysis: Between Decisions and Games

James K. Sebenius

HBS Negotiations, Organizations and Markets Unit

ADVANCES IN DECISION ANALYSIS, Ward Edwards, Ralph Miles, Detlof von Winterfeldt, eds., Cambridge University Press, 2006

Harvard NOM Working Paper No. 882525


Conceptually located between decision analysis and game theory, the emergent field of «negotiation analysis» seeks to develop prescriptive theory and useful advice for negotiators and third parties. It generally emphasizes assessment of the parties’ underlying interests, alternatives to negotiated agreement, approaches to productively manage the inherent tension between competitive actions to «claim» value individually and cooperative ones to «create» value jointly, as well as efforts to change perceptions of the negotiation itself. Since advice to one side does not necessarily presume the full (game-theoretic) rationality of the other side(s), negotiation analysts often draw on the findings of behavioral scientists and experimental economists.

Further, this approach does not generally assume that all the elements of the negotiation or «game» are common knowledge. It tends to de-emphasize the application of game-theoretic solution concepts or efforts to find unique equilibrium outcomes. Instead, to evaluate possible strategies and tactics, negotiation analysts generally focus on changes in perceptions of the «zone of possible agreement» and the (subjective) distribution of possible negotiated outcomes conditional on various actions. It has been used to develop prescriptive advice for the simplest bilateral negotiations between monolithic parties, for negotiations through agents or with linked «internal» and «external» aspects, for negotiations in hierarchies and networks, for more complex coalitional interactions, as well as moves «away from the table» to change the perceived negotiation itself, including the challenge of «negotiation design» to enhance the likelihood of desirable outcomes.

Negotiation Analysis- Between Decisions and Games

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