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344 Resource allocation and negotiation problems
The group also investigated the effect of reducing the money which
was available to be invested (i.e. the effect of moving to the left of the B
package on the efficient frontier curve). The computer showed that the
next package on the curve would cost only $41 million, but would only
generate benefits which had a value of 63 (in fact this is the C package).
There was little enthusiasm for this package which would have involved
the same strategies as the B package in all regions except the West, where
the company’s operations would be closed down completely.
One of the group next suggested that not enough attention had been
paid in the model to risk. Rather than allocating an across-criteria weight
of 50, she felt that a value of 70 would have been more appropriate.
However, when this new value was entered into the computer the program
showed that there was no change in the strategies recommended
by the B package. This shows again that models are often quite robust to
changes in the figures elicited from decision makers, so there is no need
to be concerned about whether the assessments are perfectly accurate.
Moreover, although members of the group may disagree about weights,
these differences often do not matter and, if this is the case, there is little
point in spending time in debating them. When the divergent views
of the group members would lead to substantially different packages
then, clearly, these differences need to be explored. However, when
this does happen the modeling process should, at the very least, have
the effect of increasing each member’s understanding of how the other
group members perceive the problem, and this should lead to more
informed debate.
Negotiation models
Having considered the role of decision analysis in problems where a
group of people have to agree on the allocation of scarce resources we
now turn our attention to situations where individuals or groups of
decision makers find themselves involved in disputes which need to be
resolved by negotiation. As Raiffa 4 points out in his highly readable book
The Art and Science of Negotiation, negotiations can be characterized in a
number of ways. For example, they may involve two (or more than two)
parties and these parties may or may not be monolithic in the sense that
within each party there may be several different interest groups. Some
negotiations involve just one issue (e.g. the price at which a house is to
be sold), while in other cases several issues need to be resolved (e.g. the