Effects of Belief and Memory on Strategic Negotiation

We present an empirical framework for testing negotiation strategies in a complex win–lose game that lacks any analytic solution. We explore how different belief and memory models affect trading and win rates. We show that cognitive limitations can be compensated for by being an ‘optimistic’ negotiator: make your desired trade offer, regardless of your beliefs about how opponents will react. In contrast, agents with good cognitive abilities can win with fewer but more effective offers. Corpus analysis shows human negotiators are somewhere in between, suggesting that they compensate for deficient memory and belief when necessary.