TY - JOUR
T1 - Strategic Manipulation Approach for Solving Negotiated Transfer Pricing Problem
AU - Clempner, Julio B.
N1 - Publisher Copyright:
© 2018, Springer Science+Business Media, LLC, part of Springer Nature.
PY - 2018/7/1
Y1 - 2018/7/1
N2 - This paper suggests an approach for solving the transfer pricing problem, where negotiation between divisions is carried out considering the manipulation game theory model for a multidivisional firm. The manipulation equilibrium point is conceptualized under the Machiavellian social theory, represented by three concepts: views, tactics and immorality. In this approach, we are considering a non-cooperative model for the transfer pricing problem: a game model involving manipulating and manipulated players engaged cooperatively in a Nash game, restricted by a Stackelberg game. The cooperation is represented by the Nash bargaining solution. The transfer pricing problem is conceptualized as a strong Stackelberg game involving manipulating and manipulated divisions. This structure established conditions of unequal relative power among divisions, where high-power divisions tend to be abusive and less powerful divisions have a tendency to behave compliantly. For computation purposes, we transform the Stackelberg game model into a Nash game, where every division is able of manipulative behavior to some degree: the Nash game relaxes the interpretation of the manipulation game and the equilibrium selection for the transfer pricing problem. The manipulation dynamics and rationality proposed for the transfer pricing problem correspond to many real-world negotiation situations. We present an example, that illustrates how manipulation can be employed to solve the transfer pricing problem in a multidivisional firm.
AB - This paper suggests an approach for solving the transfer pricing problem, where negotiation between divisions is carried out considering the manipulation game theory model for a multidivisional firm. The manipulation equilibrium point is conceptualized under the Machiavellian social theory, represented by three concepts: views, tactics and immorality. In this approach, we are considering a non-cooperative model for the transfer pricing problem: a game model involving manipulating and manipulated players engaged cooperatively in a Nash game, restricted by a Stackelberg game. The cooperation is represented by the Nash bargaining solution. The transfer pricing problem is conceptualized as a strong Stackelberg game involving manipulating and manipulated divisions. This structure established conditions of unequal relative power among divisions, where high-power divisions tend to be abusive and less powerful divisions have a tendency to behave compliantly. For computation purposes, we transform the Stackelberg game model into a Nash game, where every division is able of manipulative behavior to some degree: the Nash game relaxes the interpretation of the manipulation game and the equilibrium selection for the transfer pricing problem. The manipulation dynamics and rationality proposed for the transfer pricing problem correspond to many real-world negotiation situations. We present an example, that illustrates how manipulation can be employed to solve the transfer pricing problem in a multidivisional firm.
KW - Manipulation
KW - Nash bargaining
KW - Negotiation
KW - Non-cooperative
KW - Transfer pricing
UR - http://www.scopus.com/inward/record.url?scp=85046632208&partnerID=8YFLogxK
U2 - 10.1007/s10957-018-1301-x
DO - 10.1007/s10957-018-1301-x
M3 - Artículo
SN - 0022-3239
VL - 178
SP - 304
EP - 316
JO - Journal of Optimization Theory and Applications
JF - Journal of Optimization Theory and Applications
IS - 1
ER -