Negotiation and design: Supporting resource allocation decisions through analytical mediation

The common element of all negotiations is change. Design is the key to directing and managing change, and resource allocation is the most critical component of design. Negotiations about change are, therefore, fundamentally, negotiations about design and resource allocation. Negotiations vary along a continuum, from those in which negotiators have consonant interests (share objectives) to discordant ones (disagree about appropriate objectives). The joint distribution of all possible payoffs defines the structure of the negotiation problem—the opportunities the problem affords and constraints it imposes on negotiators. The analytical mediation approach supports the activities of an impartial, neutral third party who attempts to assist the disputants to reach a mutually satisfactory agreement. It makes use of different types of techniques to support negotiations, depending on their location along the negotiation continuum. Two case studies involving analytical mediation are reported. One case study involves a budgeting exercise, in which the negotiators’ interests were essentially consonant. The second case study involves a labor-management contract problem, in which the negotiators’ interests were highly discordant.