Authors: Pham Vu Hong Son; Sou-Sen Leu; Luong Duc Long
Addresses: Department of Construction Engineering and Management, Ho Chi Minh City University of Technology, Ho Chi Minh City, Vietnam ' Department of Civil and Construction Engineering, National Taiwan University of Science and Technology, Taipei City, Taiwan ' Department of Construction Engineering and Management, Ho Chi Minh City University of Technology, Ho Chi Minh City, Vietnam
Abstract: The relevance of bargaining in construction material procurement can easily be ascertained, yet the study of any bargaining process is extremely hard, involving a multiplicity of questions and complex issues. The objective of this paper is to provide new insights on some dimensions of the bargaining process - asymmetries and uncertainties in particular - by using a non-cooperative game theory approach. We develop a computational model which simulates the process of negotiation between supplier and contractor, who bargain over the material price. Through numerically simulating negotiation games between two players, we identify the main features of players' optimal strategies and equilibrium agreements. Our results confirm that uncertainty affects players' behaviour and modifies the likelihood of a self-enforcing agreement to emerge. The model proposed here can have several applications, in particular in the field of computer-aided decision and automation in construction procurement, where conflicts over how to optimise negotiation price.
Keywords: construction procurement; bilateral negotiation; Bayesian networks; game theory; intelligent decision making; uncertainty; construction materials; simulation.
International Journal of Computer Applications in Technology, 2016 Vol.54 No.2, pp.89 - 95
Accepted: 08 Sep 2015
Published online: 02 Sep 2016 *