A stochastic negotiation model for organizational choice

Traditional group negotiation has focused largely on human conduct with regard to large and generally isolated problems such as procurement and claim settlements. Once the negotiation is accomplished, the process usually attains closure and is quickly forgotten or the long-term impacts of the outcome are often ignored. In organizations, however, decisions involving gives and takes are also made on a continuous basis in that there is a ripple effect in the sequential nature of decision making. When lengthy periods are involved, the organizational contexts can change significantly. Hence, methods useful to a "one-shot" bargaining strategy may neither be applicable nor effective. Furthermore, when organizations face consequences of their own past decisions as well as that of external random events, it is hard to predict where the organization will be at a future time. In this research, we postulate that organizations evolve from one state to another following a probabilistic transition pattern than totally random. Considered this way, organizations can be modeled using sequential Markov chains having a tendency to achieve homeostasis. Understanding organizational behavior in this perspective can be greatly beneficial to negotiators by enabling them to accept short term losses in favor of the larger and better payoffs that are to come.