Two-party and Multi-party negotiations

I spent nearly 4 hours today trying to read and understand something about two-party and multi-party negotiations and their differences. By the end of this piece, I felt I have gained some insights about the negotiation process and their potential outcomes. This subject is very interesting and hopefully I will find more time to read about this subject. I also think that mathematicians can be the best negotiators given the mathematical foundation of such negotiation concepts.

There are several contrasts between two-party and multi-party negotiations, among which the key differences are coalition formation, management of coalition processes and the shifting (kaleidoscopic) nature of priorities of members/parties that may threaten negotiated agreements. The content and comprehensiveness of information, and the assumptions based on it in a two-party negotiation differs from the complex character of the information that is presented in multi-party negotiations. The two-party setting can enable prevention and solution of principal-agent problems in a more direct and straight forward manner once the parties have gained each others’ trust in coming to an agreement. Though parties may have different information with different outcome possibilities there is greater likelihood in two-party negotiations that tricky issues such as withholding relevant information to protect individual interests or undervaluing each other’s information can be more readily resolved than in a multi-party negotiation process. An important consideration is the personality of party negotiators which would impact on the level of their connection and interaction. A more powerful or dominant party runs the risk of ruining or inability to sustain a negotiation /negotiated agreement if it fails to give the required space and importance to the other less powerful party. The issues of personality and power relation become more complex in a multi-party negotiation where coalition formation is aimed for to achieve the common interest of parties.

The nature of coalition politics in India is an example of the complexity of coalition building, breaking and managing. Though different (smaller/weaker) parties opposing a current (stronger) ruling party may be united in ousting their common opponent through a coalition, yet within-party interests (on social, economic and/or religious subjects) may be differ to an extent that will either prevent formation of the coalition or establish a coalition that is short-lived. Further, when an underdog political party produces an unexpected victory, the dynamics of coalition suddenly change as member parties re-think their alternatives which may result in the inclusion of a new member and/or expulsion of another. Opportunistic alliances are a threat to coalitions, and coalition members and supporters need to create and maintain a certain degree of consensus and group-think on acceptable levels of transparency, commitment and adhesion to coalition principles.

Power relation and aggressive planning can impact a coalition’s formation and responsiveness. A stronger or powerful party, in a multi-party negotiation, may initiate the process of coalition building (to less powerful parties) through the means of incentives or sanctions. The manner in which this dominant player communicates its intentions will shape the decision-making processes in the negotiation. In a two-party negotiation the weaker party has fewer manoeuvres to demand, and its agreement to the stronger party’s proposal may result in it not gaining as much as it expected. In a multi-party negotiation however, weaker parties that unite in subscribing to the coalition formation present a greater leverage that can ensure their demands are met. Coalition management needs a high degree of leadership and interpersonal skills among coalition leaders. This translates into being responsive to coalition partner sentiments and consistently providing relevant feedback through clear communication and inter-coalition coordination. It also means establishing rules and norms that are agreed upon by coalition members and having a check-and-balance mechanism to ensure compliance. In a bilateral process, negotiated agreements and their implementation is less constrained by conflicting views than in a coalition resulting from a multi-party process.

Two-party negotiations can be scaled up to multi-party negotiations depending on the emerging potential or realization of the advantages of coalitions within a particular context. Hence, processes like managing group dynamics and decision-making become imperative if the subsequent coalition that is formed becomes a winning or blocking coalition. In reality, winning and blocking co-exits within a coalition and it depends how effective winning mechanisms are employed over their counterpart to ensure the success of the coalition.