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Rationality and Solutions to Nonconvex Bargaining Problems: Rationalizability and Nash Solutions

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  • Xu, Yongsheng
  • Yoshihara, Naoki

Abstract

Conditions α and β are two well-known rationality conditions in the theory of rational choice. This paper examines the implications of weaker versions of these two rationality conditions in the context of solutions to nonconvex bargaining problems. It is shown that, together with the standard axioms of efficiency and strict individual rationality, they imply rationalizability of solutions to nonconvex bargaining problems. We then characterize asymmetric Nash solutions by imposing a continuity and the scale invariance requirements. These results make a further connection between solutions to non-convex bargaining problems and rationalizability of choice function in the theory of rational choice.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/23298/1/DP580.pdf
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Bibliographic Info

Paper provided by Institute of Economic Research, Hitotsubashi University in its series Discussion Paper Series with number 580.

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Length: 17 p.
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:hit:hituec:580

Note: August 2012
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  1. Peters, Hans & Vermeulen, Dries, 2006. "WPO, COV and IIA bargaining solutions," Research Memoranda 021, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization.
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  4. Mariotti, Marco, 1998. "Extending Nash's Axioms to Nonconvex Problems," Games and Economic Behavior, Elsevier, vol. 22(2), pages 377-383, February.
  5. Yongsheng Xu, 2002. "Functioning, capability and the standard of living - an axiomatic approach," Economic Theory, Springer, vol. 20(2), pages 387-399.
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  7. Bossert, Walter, 1994. "Rational choice and two-person bargaining solutions," Journal of Mathematical Economics, Elsevier, vol. 23(6), pages 549-563, November.
  8. Mariotti, Marco, 1999. "Fair Bargains: Distributive Justice and Nash Bargaining Theory," Review of Economic Studies, Wiley Blackwell, vol. 66(3), pages 733-41, July.
  9. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
  10. Thomson, William, 1981. "A class of solutions to bargaining problems," Journal of Economic Theory, Elsevier, vol. 25(3), pages 431-441, December.
  11. John A. Weymark & Kai-yuen Tsui, 1997. "Social welfare orderings for ratio-scale measurable utilities," Economic Theory, Springer, vol. 10(2), pages 241-256.
  12. Sen, Amartya K, 1971. "Choice Functions and Revealed Preference," Review of Economic Studies, Wiley Blackwell, vol. 38(115), pages 307-17, July.
  13. Xu, Yongsheng & Yoshihara, Naoki, 2006. "Alternative characterizations of three bargaining solutions for nonconvex problems," Games and Economic Behavior, Elsevier, vol. 57(1), pages 86-92, October.
  14. Sen, Amartya K, 1977. "Social Choice Theory: A Re-examination," Econometrica, Econometric Society, vol. 45(1), pages 53-89, January.
  15. Vincenzo Denicolò & Marco Mariotti, 2000. "Nash Bargaining Theory, Nonconvex Problems and Social Welfare Orderings," Theory and Decision, Springer, vol. 48(4), pages 351-358, June.
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