Learning From a Piece of Pie
AbstractWe investigate the empirical content of the Nash solution to two-player bar-gaining games. The bargaining environment is described by a set of variables that may affect agents' preferences over the agreement sharing, the status quo outcome, or both. The outcomes (i.e., whether an agreement is reached, and if so the individual shares) and the environment (including the size of the pie) are known, but neither are the agents' utilities nor their threat points. We consider both a deterministic version of the model in which the econometrician observes the shares as deterministic functions of the variables under consideration, and a stochastic one in which because of latent disturbances only the joint distribution of incomes and outcomes is recorded. We show that in the most general framework any outcome can be rationalized as a Nash solution. However, even mild exclusion restrictions generate strong implications that can be used to test the Nash bargaining assumption. Stronger conditions further allow to recover the underlying structure of the bargaining, and in particular, the cardinal representation of individual preferences in the absence of uncertainty. An implication of this finding is that empirical works entailing Nash bargaining could (and should) use much more general and robust versions than they usually do.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Columbia University, Department of Economics in its series Discussion Papers with number 1011-05.
Date of creation: 2011
Date of revision:
Contact details of provider:
Postal: 1022 International Affairs Building, 420 West 118th Street, New York, NY 10027
Phone: (212) 854-3680
Fax: (212) 854-8059
Web page: http://www.econ.columbia.edu/
More information through EDIRC
Other versions of this item:
- NEP-ALL-2011-06-11 (All new papers)
- NEP-COM-2011-06-11 (Industrial Competition)
- NEP-GTH-2011-06-11 (Game Theory)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Bo Honore & Aureo de Paula, 2013.
"Interdependent durations in joint retirement,"
CeMMAP working papers
CWP05/13, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
- Bo Honore & Aureo de Paula, 2014. "Interdependent durations in joint retirement," CeMMAP working papers CWP08/14, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
- Bo Honoré & Áureo de Paula, 2011. "Interdependent Durations in Joint Retirement," Working Papers, Center for Retirement Research at Boston College wp2011-5, Center for Retirement Research, revised Feb 2011.
- Echenique, Federico & Chambers, Christopher P., 2014. "On the consistency of data with bargaining theories," Theoretical Economics, Econometric Society, vol. 9(1), January.
- Bram De Rock & Laurens Cherchye & Thomas Demuynck, 2013.
"The empirical content of Cournot competition,"
ULB Institutional Repository
2013/151678, ULB -- Universite Libre de Bruxelles.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Discussion Paper Coordinator).
If references are entirely missing, you can add them using this form.