Modeling Integrative, Multiple Issue Bargaining

Integrative, multiple issue bargaining can be expected to characterize many decision making situations in marketing. In this paper we present a mathematical model specifically appropriate to such negotiations. The central features of the model are: (i) the close relation of the structure of the model to integrative, multiple issue bargaining, (ii) the importance of the reference point as a determinant of the final outcome, and (iii) the property of the solution which implies that the balance of overall power is maintained at the final outcome. The equivalence of this model to an axiomatic model of cooperative bargaining is also shown. Regarding the model's predictive ability, results of the reported multiple issue bargaining experiment provide initial support.