VIII. Establish Equity

With jointly identified issues and ranges of possible outcome, and individually determined preferences, the next step is to establish equity, i.e., agree on how the benefits should be divided among the parties. An experienced facilitator will be helpful to parties as they choose among various available routines to exchange packages via SmartSettle’s Internet connections.

A. Opening Proposals

The SmartSettle process encourages parties to make optimistic opening proposals. Research has shown that this strategy is by far the most successful (footnote 21). In our case, the optimistic packages proposed by each party are illustrated by Figure 7. Both parties are prepared to be flexible with respect to these proposals.

B. Divisions

If at any stage, parties agree that they are equally distant from a fair solution, they can generate a Division or Compromise. Because SmartSettle accounts for party preferences, this procedure actually produces a resolution that is perceived to be fairer than simply splitting the difference on every issue. A SmartSettle function called Multiple Division will generate a series of packages to fill in the holes between proposals least acceptable to each party. Division functionality is not illustrated in this example.

C. Equivalent Packages

At any time during the SmartSettle process, either party can request SmartSettle to “Generate Equivalent Packages.” In doing this, SmartSettle will identify the least acceptable package for each party, and generate for each of them a different but equivalent package in terms of party satisfaction. Early in the negotiation process, when parties are still relatively far from resolution, this routine assists parties in fine-tuning their preferences.


Figure 7 Initial Optimistic Proposals

Listed in the Proposals group in the right pane are DEC 1 and Riverside 1. These packages are the initial optimistic (footnote 22) proposals from each party. Their issue values (footnote 23) are displayed in the left pane. DEC 1 has a rating of -758. Because Riverside is measuring satisfaction in terms of thousands of dollars, this rating implies a cost of $758,000. This sum is more than DEC expects to pay if the outcome were decided in court. On the other hand, the proposal identified as “Riverside 1” would cost Riverside only $362,000 (footnote 24).

D. Dealing with an Apparent Impasse

The hypothetical at this point in the SmartSettle process assumes that the negotiation dance has reached the point of impasse. Figure 8 illustrates the impasse as seen from Riverside’s private point of view. Figure 9 plots this impasse in satisfaction space.


Figure 8 Impasse

DEC 2 and Riverside 2 are supposedly final offers made by each party. The negotiators for each party think that they can go no farther. The issue ‘values’ of both packages are displayed in the left pane. Riverside’s proposal is displayed on top. As shown in the left pane, the two packages are different only on the guarantee issue. Riverside wants a guarantee but DEC is unwilling to give one.



Figure 9 Impasse in Satisfaction Space

The same two packages that are displayed in Figure 8 are plotted here in satisfaction space. The ratings shown on the vertical (Y) axis are the same as those seen by Riverside in its private view in Figure 8. The composite view, however, is known only at the neutral SmartSettle Internet site, and is not communicated to either party.


In this hypothetical, the parties have tentatively agreed on everything except the guarantee issue. Riverside contends that there is no way that it can agree to a Technoclean without a guarantee, particularly in light of Riverside’s prior concessions in this negotiation. Similarly, DEC contends that that it can not give the requested guarantee because DEC has already made other substantial concessions.

It is not possible to split the difference on the guarantee issue because the only options are yes or no. Therefore, this impasse looks like it could lead to a win-lose or even a lose-lose situation. The difference is really not that great to either party but either one giving in would suffer loss of face. Can SmartSettle be used to solve the impasse? The answer is shown in Figure 10.


Figure 10 Equivalent in Satisfaction Space


The impasse positions of DEC and Riverside, as plotted here and in Figure 9, are close enough for SmartSettle to be able to generate an equivalent package, i.e., one that would provide each party with the same value as their current proposal.


By this time, Riverside’s preferences are quite well represented and the equivalent package is easily accepted. After all, it would provide the same satisfaction as Riverside’s last proposal. Unbeknownst to Riverside, DEC has received the identical package and for similar reasons also accepts it. Their win-win deal is illustrated in Figure 11.



Figure 11 Equivalent Solves Impasse

From Riverside’s point of view, the generated Equivalent and Riverside’s last proposal each have a rating of -545. The Equivalent is in the Tentative group, indicating that both parties have already accepted it.