Bargaining Solutions as Social Compromises
AbstractA bargaining solution is a social compromise if it is metrically rationalizable, i.e., if it has an optimum (depending on the situation, smallest or largest) distance from some reference point. We explore the workability and the limits of metric rationalization in bargaining theory where compromising is a core issue. We demonstrate that many well-known bargaining solutions are social compromises with respect to reasonable metrics. In the metric approach, bargaining solutions can be grounded in axioms on how society measures differences between utility allocations. Using this approach, we provide an axiomatic characterization for the class of social compromises that are based on p-norms and for the attending bargaining solutions. We further show that bargaining solutions which satisfy Pareto Optimality and Individual Rationality can always be metrically rationalized.
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Bibliographic InfoArticle provided by Springer in its journal Theory and Decision.
Volume (Year): 55 (2003)
Issue (Month): 4 (December)
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Web page: http://www.springerlink.com/link.asp?id=100341
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- Voorneveld, Mark & van den Nouweland, Anne & McLean, Rich, 2008. "An axiomatization of the Euclidean compromise solution," Working Paper Series in Economics and Finance 703, Stockholm School of Economics.
- Christian Roessler, 2006. "Public Good Menus and Feature Complementarity," Department of Economics - Working Papers Series 962, The University of Melbourne.
- M. Voorneveld & A. Nouweland & R. McLean, 2011. "Axiomatizations of the Euclidean compromise solution," International Journal of Game Theory, Springer, vol. 40(3), pages 427-448, August.
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