Using an Annealing Mediator to Solve the Prisoners’ Dilemma in the Negotiation of Complex Contracts

Abstract

Research on computational models of negotiation has focused almost exclusively on defining simple contracts consisting of one or a few independent issues, implying tractable contract spaces as well as single-optima utility functions for the agents involved. Many real-world contracts, by contrast, are much more complex, consisting of multiple inter-dependent issues, resulting in intractably large contract spaces and multiple-optima utility functions. Complex contracts require negotiation algorithms substantially different than those that have been considered to date for simple contracts. Previous work by the authors has shown that endowing the negotiating agents with a time-decreasing willingness to provisionally accept inferior contracts (i.e. to 'anneal') results in superior final contract utilities, but creates a prisoners' dilemma wherein agents are individually incented not to anneal. In this paper we report a solution to this problem wherein the annealing is done by a mediator, and the negotiating agents are incented to follow a truth-telling strategy that maximizes social welfare.