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Agent Negotiation

Master bargaining strategies and reach mutually beneficial agreements

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Measuring Value in Negotiation

Agents need a way to measure "how good" a deal is. A utility function converts outcomes into numerical scores. The seller's utility increases with price; the buyer's decreases. Negotiation seeks prices where both agents gain positive utility.

Core Concepts

Reservation Value

The minimum (seller) or maximum (buyer) acceptable price. Below/above this, the agent walks away.

Zone of Possible Agreement (ZOPA)

The range where both agents prefer a deal to no deal. Exists when seller's minimum < buyer's maximum.

Interactive: ZOPA Visualizer

Adjust the price to see how utility changes for both agents and whether a deal is possible.

NEGOTIATED PRICE

$50
$0$100
🤖

Seller

Wants higher price
Reservation Price:$30
Current Utility:+20
🤖

Buyer

Wants lower price
Reservation Price:$70
Current Utility:+20

DEAL STATUS

IN ZOPA

✓ Both agents gain utility. Deal is possible!

Total Utility Created:+40

ZOPA RANGE

Seller Min: $30Current: $50Buyer Max: $70

Utility Calculation Examples

Seller_Utility(price) = max(0, price - reservation_price)
Example: If price = $50 and reservation = $30, utility = $50 - $30 = +$20
Buyer_Utility(price) = max(0, reservation_price - price)
Example: If reservation = $70 and price = $50, utility = $70 - $50 = +$20

💡 Key Insight

The ZOPA is where magic happens. When seller's minimum price is below buyer's maximum, a range of mutually beneficial deals exists. The exact price within ZOPA determines how surplus is split. A good negotiator maximizes their own utility while staying in ZOPA—claiming more of the pie without killing the deal.

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