DYNAMIC NEGOTIATION WITH TIME-VARYING PARETO FRONTIER

This paper examines the monotonicity and the convergence of the statio nary sub-game perfect equilibria (SPEs) of the alternating offer barga ining processes with time-varying Pareto frontiers. In most real-world negotiations, the pay-off functions to all the parties involved are n ot fixed. For example, the negotiation for how to protect intellectual property rights between the US and China were affected by the domesti c economic situation in the US and also the political situation in Chi na, Such dynamic behavior makes it very difficult to apply a static mo del to find solution. In this paper, we first introduce a general mode l to model negotiations with time-varying Pareto frontiers. Then we pr ovide four special cases about how Pareto frontiers change with time t o discuss how to use our model to design negotiation strategy, We, par ticularly focus on the monotonicity and convergence of the dynamic SPE s of the alternating offer bargaining process. (C) 1998 Elsevier Scien ce Inc. All rights reserved.