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A Theory of Agreements in the Shadow of Conflict

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  • Joan Mª Esteban
  • József Sákovics

Abstract

We present a novel approach to N-person bargaining, based on the idea that the agreement reached in a negotiation is determined by how the direct conflict resulting from disagreement would be resolved. Our basic building block is the disagreement function, which maps each set of feasible outcomes into a disagreement point. Adding this function to the description of a bargaining problem, a weak axiom based on individual rationality leads to a unique solution: the agreement in the shadow of conflict, ASC. This agreement may be construed as the limit of a sequence of partial agreements, each of which is reached as a function of the parties' relative power in the disagreement scenario. We provide a non-cooperative implementation as well.

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File URL: http://research.barcelonagse.eu/tmp/working_papers/255.pdf
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Bibliographic Info

Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 255.

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Date of creation: Dec 2005
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Handle: RePEc:bge:wpaper:255

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Keywords: Bargaining; Conflict; disagreement;

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References

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Citations

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Cited by:
  1. Erik O. Kimbrough & Roman M. Sheremeta, 2012. "Why Can’t We Be Friends? Entitlements, bargaining, and conflict," Working Papers 12-16, Chapman University, Economic Science Institute.
  2. Pelosse, Yohan, 2009. "Mediated Contests and Strategic Foundations for Contest Success Functions," MPRA Paper 18664, University Library of Munich, Germany.
  3. Erik O. Kimbrough & Roman Sheremeta, 2010. "Make Him an Offer He Can’t Refuse: Avoiding Conflicts through Side Payments," Working Papers 10-23, Chapman University, Economic Science Institute.
  4. Garfinkel, Michelle R. & Skaperdas, Stergios, 2007. "Economics of Conflict: An Overview," Handbook of Defense Economics, Elsevier.

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