Bilateral negotiation model for intelligent decision-making under uncertainty

The relevance of bargaining in construction material procurement can easily be ascertained, yet the study of any bargaining process is extremely hard, involving a multiplicity of questions and complex issues. The objective of this paper is to provide new insights on some dimensions of the bargaining process - asymmetries and uncertainties in particular - by using a non-cooperative game theory approach. We develop a computational model which simulates the process of negotiation between supplier and contractor, who bargain over the material price. Through numerically simulating negotiation games between two players, we identify the main features of players' optimal strategies and equilibrium agreements. Our results confirm that uncertainty affects players' behaviour and modifies the likelihood of a self-enforcing agreement to emerge. The model proposed here can have several applications, in particular in the field of computer-aided decision and automation in construction procurement, where conflicts over how to optimise negotiation price.