Judicial Precedent as a Dynamic Rationale for Axiomatic Bargaining Theory
AbstractAxiomatic bargaining theory (e.g., Nash’s theorem) is static. We attempt to provide a dynamic justification for the theory. Suppose a Judge or Arbitrator must allocate utility in a (infinite) sequence of two-person problems; at each date, the Judge is presented with a utility possibility set in R2+. He/she must choose an allocation in the set, constrained only by Nash’s axioms, in the sense that a penalty is paid if and only if a utility allocation is chosen at date T which is inconsistent, according to one of the axioms, with a utility allocation chosen at some earlier date. Penalties are discounted with t, and the Judge chooses any allocation, at a given date, that minimizes the penalty he/she pays as that date. Under what conditions what the Judge’s chosen allocations converge to the Nash allocation over time? We answer this question for three canonical axiomatic bargaining solutions: Nash’s, Kalai-Smorodinsky’s, and the ’egalitarian’ solution, and generalize the analysis to a broad class of axiomatic models.
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Bibliographic InfoPaper provided by Institut d'economie publique (IDEP), Marseille, France in its series IDEP Working Papers with number 1002.
Length: 43 pages
Date of creation: 07 May 2010
Date of revision: 07 May 2010
axiomatic bargaining theory; judicial precedent; dynamic foundations; Nash’s bargaining solution.;
Other versions of this item:
- Fleurbaey, Marc & Roemer, John E., 2011. "Judicial precedent as a dynamic rationale for axiomatic bargaining theory," Theoretical Economics, Econometric Society, vol. 6(2), May.
- Marc Fleurbaey & John Roemer, 2010. "Judicial Precedent as a Dynamic Rationale for Axiomatic Bargaining Theory," NajEcon Working Paper Reviews 814577000000000442, www.najecon.org.
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
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