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Nash Demand Game and the Kalai-Smorodinsky Solution

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We introduce two new variations on the Nash demand game. One, like all known Nash-like demand games so far, has the Nash solution outcome as its equilibrium outcome. In the other, the range of solutions depends on an exogenous breakdown probability; surprisingly, the Kalai-Smorodinsky outcome proves to be the most robust equilibrium outcome. While the Kalai- Smorodinsky solution always finishes on top, there is no possible general ranking among the remaining solution concepts considered; in fact, the rest of the solution concepts take their turns at the bottom at various bargaining problems, depending on the specifics of the bargaining setup.

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File URL: http://www.deakin.edu.au/buslaw/aef/workingpapers/papers/2008_11eco.pdf
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Paper provided by Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance in its series Economics Series with number 2008_11.

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Length: 17 pages
Date of creation: 21 Oct 2008
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Handle: RePEc:dkn:econwp:eco_2008_11

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  1. Ken Binmore, 1998. "Game Theory and the Social Contract - Vol. 2: Just Playing," MIT Press Books, The MIT Press, edition 1, volume 2, number 0262024446, December.
  2. Eiichi Miyagawa, 2002. "Subgame-perfect implementation of bargaining solutions," Discussion Papers, Columbia University, Department of Economics 0102-16, Columbia University, Department of Economics.
  3. Bigelow, John Payne & Anbarci, Nejat, 1993. "Non-dictatorial, Pareto-monotonic, cooperative bargaining : An impossibility theorem," European Journal of Political Economy, Elsevier, vol. 9(4), pages 551-558, November.
  4. Howard, J. V., 1992. "A social choice rule and its implementation in perfect equilibrium," Journal of Economic Theory, Elsevier, vol. 56(1), pages 142-159, February.
  5. Yusuke Samejima, 2005. "A Note on Implementation of Bargaining Solutions," Theory and Decision, Springer, vol. 59(3), pages 175-191, November.
  6. Anbarci, Nejat, 1993. "Noncooperative Foundations of the Area Monotonic Solutions," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 108(1), pages 245-58, February.
  7. Anbarci, Nejat & Bigelow, John P., 1994. "The area monotonic solution to the cooperative bargaining problem," Mathematical Social Sciences, Elsevier, vol. 28(2), pages 133-142, October.
  8. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, Econometric Society, vol. 18(2), pages 155-162, April.
  9. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, Econometric Society, vol. 21(1), pages 128-140, April.
  10. Rubinstein, Ariel & Safra, Zvi & Thomson, William, 1992. "On the Interpretation of the Nash Bargaining Solution and Its Extension to Non-expected Utility Preferences," Econometrica, Econometric Society, Econometric Society, vol. 60(5), pages 1171-86, September.
  11. Kalai, Ehud, 1977. "Proportional Solutions to Bargaining Situations: Interpersonal Utility Comparisons," Econometrica, Econometric Society, Econometric Society, vol. 45(7), pages 1623-30, October.
  12. Kalai, Ehud & Smorodinsky, Meir, 1975. "Other Solutions to Nash's Bargaining Problem," Econometrica, Econometric Society, Econometric Society, vol. 43(3), pages 513-18, May.
  13. Nejat Anbarci, 1995. "Reference Functions and Balanced Concessions in Bargaining," Canadian Journal of Economics, Canadian Economics Association, vol. 28(3), pages 675-82, August.
  14. Chun, Youngsub, 1988. "The equal-loss principle for bargaining problems," Economics Letters, Elsevier, vol. 26(2), pages 103-106.
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Cited by:
  1. Nejat Anbarci & Ching-jen Sun, 2009. "Robustness of Intermediate Agreements and Bargaining Solutions," Economics Series 2009_14, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  2. Anbarci, Nejat & Feltovich, Nick, 2012. "Bargaining with random implementation: An experimental study," Games and Economic Behavior, Elsevier, vol. 76(2), pages 495-514.

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