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How to Add Apples and Pears: Non-Symmetric Nash Bargaining and the Generalized Joint Surplus

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Author Info

  • Samuel Danthine

    ()
    (CREST-Ensai and CIRPÉE)

  • Noemí Navarro

    ()
    (Basque Country University (EHU/UPV) and IKERBASQUE, Basque Foundation for Science)

Abstract

We find how to compute the non-symmetric Nash bargaining solution by means of a generalized property of linear division of the joint surplus, as an alternative of solving the maximization of the generalized Nash product. This generalized property of linear division in the non-symmetric Nash bargaining solution can be applied to the case when bargainers use different utility scales, in particular when they have different attitudes toward risk, as in the case of a risk neutral firm and a risk averse individual. The surplus each agent receives has to be expressed in compatible, or comparable, units across agents. This is contrary to what has been believed in the labor literature, where many authors have partially expressed surpluses in comparable units. We finally illustrate the conditions of applicability of our result by means of a well-known example.

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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 33 (2013)
Issue (Month): 4 ()
Pages: 2840-2850

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Handle: RePEc:ebl:ecbull:eb-13-00235

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Keywords: Bargaining problems; Non-Symmetric Nash Bargaining Solution; Linear Sharing;

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References

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  1. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 252, David K. Levine.
  2. Lin Zhou, 1997. "The Nash Bargaining Theory with Non-Convex Problems," Econometrica, Econometric Society, vol. 65(3), pages 681-686, May.
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  7. Samuel Danthine & Noemí Navarro, 2010. "How to Add Apples and Pears: Non-Symmetric Nash Bargaining and the Generalized Joint Surplus," Working Papers 2010-04, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.
  8. Conley, John P. & Wilkie, Simon, 1996. "An Extension of the Nash Bargaining Solution to Nonconvex Problems," Games and Economic Behavior, Elsevier, vol. 13(1), pages 26-38, March.
  9. Herrero, Maria Jose, 1989. "The nash program: Non-convex bargaining problems," Journal of Economic Theory, Elsevier, vol. 49(2), pages 266-277, December.
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  12. Manning, Alan, 1987. "An Integration of Trade Union Models in a Sequential Bargaining Framework," Economic Journal, Royal Economic Society, vol. 97(385), pages 121-39, March.
  13. Kagel,John H. & Battalio,Raymond C. & Green,Leonard, 1995. "Economic Choice Theory," Cambridge Books, Cambridge University Press, number 9780521454889, October.
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Cited by:
  1. Samuel Danthine & Noemí Navarro, 2010. "How to Add Apples and Pears: Non-Symmetric Nash Bargaining and the Generalized Joint Surplus," Working Papers 2010-04, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.

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