On optimal outcomes of negotiations over resources

Abstract

We analyse scenarios in which self-interested agents negotiate with each other in order to agree on deals to exchange resources. We consider two variants of the framework, one where agents can use money to compensate other agents for disadvantageous deals, and one where this is not possible. In both cases, we analyse what types of deals are necessary and sufficient to guarantee an optimal outcome of negotiation. To assess whether a given allocation of resources should be considered optimal we borrow two concepts from welfare economics: maximal social welfare in the case of the framework with money and Pareto optimality in the case of the framework without money. We also show how conditions for optimal outcomes can change depending on properties of the utility functions used by agents to represent the values they ascribe to certain sets of resources.