VII. Quantify Satisfaction

Returning to the DEC vs Riverside case, we assume now that parties have established a mutually acceptable shared description of their negotiation problem (footnote 12), and commence entering private information independently, each at their own location. The goal of this phase is for facilitators to help parties describe their preferences in a way that enables them to easily evaluate negotiation options.

Figure 3 is a screen shot of SmartSettle’s Package Editor illustrating the bargaining ranges defined by Riverside. Displayed are two hypothetical packages; Worst on the left and Best on the right. This is how the negotiation problem would look like from Riverside’s point of view (footnote 13). The Worst package possible within defined bargaining ranges is usually below a negotiating party’s minimum acceptable level (i.e., lower than the value of what that party expects to achieve if no agreement is reached).

Figure 3 Bargaining Ranges defined by Riverside
   SmartSettle’s Package Editor is used for displaying and editing packages within defined bargaining ranges. SmartSettle orients the ranges so that preferred values for each issue appear on the right-hand side (footnote15).

Riverside expects to litigate with DEC if no satisfactory agreement can be found in this current negotiation with SmartSettle. Figure 4 shows a package with decision values that Riverside might expect in court. This assessment is Riverside’s “Best Alternative to a Negotiated Agreement” (BATNA) (footnote 14). Consequently, Riverside believes that it must achieve a better result than its BATNA in negotiations with DEC.

 Figure 4 Walkaway to Court

Displayed here is a private package with the resolutions that Riverside expects from a resolution of the conflict in court. This package represents Riverside’s BATNA and is a satisfaction level below which Riverside would walk away from negotiations.

The values displayed in Figure 4 do not represent a fixed bottom line for each issue. Rather, there are many packages that could represent a minimum acceptable level for Riverside. Riverside’s objective is not to get better resolutions on each individual issue, but rather to agree upon a comprehensive settlement package that results in greater satisfaction and value than some defined minimum acceptable level (such as Riverside’s BATNA). Therein lies a key strength of the SmartSettle software – to permit a party to look at packages analytically and comprehensively.

Riverside will determine the acceptability of any particular package by assessing the tradeoffs between issues and between options for particular issues. The SmartSettle satisfaction graphs model a party’s satisfaction on individual issues (footnote 16). The SmartSettle depiction for a particular issue depends on whether the issue is qualitative or quantitative. Potential outcomes on qualitative issues are represented by different options, whereas quantitative issues are measured within quantitative ranges. Figure 5 illustrates Riverside’s satisfaction graph for the Scrubber issue — an example of a qualitative issue with three options.

Figure 5 A Qualitative Issue called ‘Scrubber’
The Scrubber issue is a qualitative issue with three defined options; Technoclean, Rotoblu, or No Scrubber. Issues with discrete options are represented in SmartSettle with bar graphs. The height of each bar represents its relative value, or importance, to a party as compared to the other options. In this case, the Riverside’s engineers have informed the Riverside negotiators that the difference between a Technoclean and No Scrubber would be $300,000. Deciding to measure Issue Importance in terms of thousands of dollars, this issue is assigned an importance of 300.


Figure 6 illustrates the satisfaction graph for the quantitative Subsidy issue, i.e., the issue that resolves whether and how much of a technology subsidy DEC would provide to Riverside in a settlement. The satisfaction graph shown in Figure 6 is a simple, straight line. However, when using SmartSettle, a party has the option to define points along a curve to represent any complex, non-linear shape.

Figure 6 A Quantitative Issue called ‘Subsidy’
The Subsidy issue is a quantitative issue with a bargaining range defined between $0 and $450,000. With Issue Importance measured in thousands of dollars, and the satisfaction graph being a simple straight line, the importance for this issue is 450.

The importance assigned to each issue is a relative measure of the tradeoffs among issues. Direct specification of relative importance for the issues, as described above, may seem quite straightforward. However, many decision-makers have great difficulties accurately specifying the relative importance among issues by merely referring to a list of issues (footnote 17).

Fortunately, there exists another solution that is rational and powerful, yet so simple and elegant that it has withstood the test of time. More than two centuries ago, Benjamin Franklin outlined his approach to the challenge in a letter to his friend and noted scientist Joseph Priestly, who was trying to choose between two alternatives. This charming letter (footnote 18) is a “must read” for every decision-maker.

Franklin’s method compared pros and cons of an issue, striking out combinations that were approximately equal in importance. He continued to make such cancellations until one side (either pro or con) prevailed. The obvious limitation of this method was the need for approximations when pros and cons were not exactly balanced. Although many situations can accommodate this lack of precision and still produce good results, SmartSettle’s preference elicitation methodology (footnote 19) overcomes that limitation. SmartSettle provides a mechanism called Even Swaps (footnote 20) that allows a decision-maker to define the relative importance of issues by creating a hypothetical set of equivalent alternative packages. These equivalent packages are then used for comparison purposes and to adjust the relative importance assigned to each negotiation issue.

Parties’ negotiation preferences are dynamic rather than static. As such, they may change radically over the course of negotiations as information is exchanged, and the problem description evolves. Therefore, adjustments to preferences made during the SmartSettle process are as important as the initial estimations of preferences. In practice, therefore, a party may be satisfied with rough approximations of their preferences in the early stages of negotiation. That party may later fine-tune their preferences as the negotiation progresses.