How to select fair improving directions in a negotiation model over continuous issues

Empirical evidence suggests that in practice it is difficult to reach Pareto optimal agreements in negotiations. In this paper, we take a constructive approach to this question in two-party negotiations over continuous issues. A new negotiation procedure is presented that results in Pareto optimal agreements under fairly general assumptions. The procedure uses a mediator who assists the decision makers (DM’s) by choosing jointly beneficial compromises. The procedure has the appealing feature that the DM’s are only required to answer relatively simple questions and their individual utility functions need not be identified completely. Moreover, the DM’s reveal minimal private information to the mediator. These are properties that we would hope to have in practical procedures to be incorporated in operational negotiation support systems.