Abstract
This article proposes a quantitative model to explain how human behavior affects a bilateral negotiation agreement under incomplete information and provides theoretical basis to support decisions with equilibrium information. A real option approach is applied to our model to represent incomplete information in the negotiation such as uncertain value of goods, strategic deferment, and decisional irreversibility of a competitor. This approach allows us to develop the conditions and probability of a negotiation agreement in analytical form solution. Numerical analysis shows that the probability is generally maximized when a seller offers prices whimsically and a buyer offers coherently.
| Original language | English |
|---|---|
| Pages | 1874-1879 |
| Number of pages | 6 |
| State | Published - 2008 |
| Event | IIE Annual Conference and Expo 2008 - Vancouver, BC, Canada Duration: 17 May 2008 → 21 May 2008 |
Conference
| Conference | IIE Annual Conference and Expo 2008 |
|---|---|
| Country/Territory | Canada |
| City | Vancouver, BC |
| Period | 17/05/08 → 21/05/08 |
Keywords
- Incomplete information
- Negotiation
- Optimal timing
- Real option