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Gradual Negotiations and Proportional Solutions

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Abstract

I characterize the proportional N-person bargaining solutions by individual rationality, translation invariance, feasible set continuity, and a new axiom - interim improvement. The latter says that if the disagreement point d is known, but the feasible set is not - it may be either S or T, where S is a subset of T - then there exists a point d' in S, d' > d, such that replacing d with d' as the disagreement point would not change the final bargaining outcome, no matter which feasible set will be realized, S or T. In words, if there is uncertainty regarding a possible expansion of the feasible set, the players can wait until it is resolved; in the meantime, they can find a Pareto improving interim outcome to commit to - a commitment that has no effect in case negotiations succeed, but promises higher disagreement payoffs to all in case negotiations fail prior to the resolution of uncertainty.

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  • Rachmilevitch, Shiran, "undated". "Gradual Negotiations and Proportional Solutions," Working Papers WP2011/8, University of Haifa, Department of Economics.
    • Handle: RePEc:haf:huedwp:wp201108
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    File URL: http://hevra.haifa.ac.il/econ/wp_files/wp201108.pdf
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    References listed on IDEAS

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    10. Chun, Youngsub & Thomson, William, 1990. "Bargaining with Uncertain Disagreement Points," Econometrica, Econometric Society, vol. 58(4), pages 951-959, July.
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    Cited by:

    1. Ismail Saglam, 2017. "Iterated Kalai–Smorodinsky–Nash compromise," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 40(1), pages 335-349, November.
    2. Saglam, Ismail, 2016. "An Alternative Characterization for Iterated Kalai-Smorodinsky-Nash Compromise," MPRA Paper 73564, University Library of Munich, Germany.
    3. Shiran Rachmilevitch, 2021. "Step-by-step negotiations and utilitarianism," International Journal of Game Theory, Springer;Game Theory Society, vol. 50(2), pages 433-445, June.

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    More about this item

    Keywords

    Bargaining; Proportional solutions;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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