Optimal Search in Negotiation Analysis

David A. Lax
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David A. Lax: Graduate School of Business Administration, Harvard University

Journal of Conflict Resolution, 1985, vol. 29, issue 3, 456-472

Abstract: A negotiator's reservation price or “bottom line†depends directly on the value of the no-agreement alternative to a proposed negotiated agreement. Often, one's no-agreement alternatives are uncertain and finding them requires a costly search, as in the case of a seller who must expend effort, time, and money in finding potential buyers. The value of the search should determine the seller's bottom-line or reservation price in dealings with a prospective buyer. Optimal search and stopping theory suggest useful procedures and heuristics for evaluating one's reservation price in negotiation and for searching among alternatives.

Date: 1985
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Persistent link: https://EconPapers.repec.org/RePEc:sae:jocore:v:29:y:1985:i:3:p:456-472

DOI: 10.1177/0022002785029003004

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