A Negotiator's Backup Plan: Optimal Concessions with a Reservation Value

TL;DR

This paper introduces an optimal bidding strategy for automated negotiations that leverages high reservation values, enabling risk-seeking behavior and efficient decision-making in bilateral negotiations.

Contribution

It proposes the MIA-RVelous algorithm, a greedy method for optimal bid sequencing with private reservation values, improving negotiation strategies.

Findings

Algorithm finds optimal bid sequences in quadratic time.

Supports risk-seeking strategies with high reservation values.

Facilitates effective concurrent negotiations as backup plans.

Abstract

Automated negotiation is a well-known mechanism for autonomous agents to reach agreements. To realize beneficial agreements quickly, it is key to employ a good bidding strategy. When a negotiating agent has a good back-up plan, i.e., a high reservation value, failing to reach an agreement is not necessarily disadvantageous. Thus, the agent can adopt a risk-seeking strategy, aiming for outcomes with a higher utilities. Accordingly, this paper develops an optimal bidding strategy called MIA-RVelous for bilateral negotiations with private reservation values. The proposed greedy algorithm finds the optimal bid sequence given the agent's beliefs about the opponent in $O(n^2D)$ time, with $D$ the maximum number of rounds and $n$ the number of outcomes. The results obtained here can pave the way to realizing effective concurrent negotiations, given that concurrent negotiations can serve as a (probabilistic) backup plan.