Refining Raiffa – Aspiration Adaptation within the Zone of Possible Ag

Abstract

Abstract One of the most well-known descriptive bargaining models is Raiffa’s Zone of Possible Agreements (ZOPA). We reinterpret Raiffa’s model of a price negotiation in the realm of bounded rationality by applying Simon’s theory of Satisficing. Afterward we refine Raiffa’s negotiation model using Aspiration Adaptation Theory as suggested by Sauermann, Selten, Tietz and others. We offer a model of a concession process that gives precision to the Dance of Concessions in Raiffa’s model by applying axioms of bounded rationality. Raiffa suggests a solution point derived from equity in price dimension, whereas we propose an area solution defined by equity in aspiration levels.