Advanced Search
MyIDEAS: Login to save this paper or follow this series

Learning from a Piece of Pie: The Empirical Content of Nash Bargaining

Contents:

Author Info

  • Chiappori, Pierre-André

    ()
    (Columbia University)

  • Donni, Olivier

    ()
    (University of Cergy-Pontoise)

Abstract

Consider a model of bargaining, in which two players, 1 and 2, share a pie of size y. The bargaining environment is described by a set of parameters λ 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 the agents’ utilities nor their threat points. Assuming that the agents adopt a Nash bargaining solution, we investigate the empirical content of this assumption. We first show that in the most general framework, any outcome can be rationalized as a Nash solution. However, if (i) the size of the pie y does not influence the players’ threat points and (ii) there exist (at least) two parameters λ1 and λ2 that are player-specific, in the sense that λi does not influence the utility or the threat point of player j ≠ i, then Nash bargaining generates strong testable restrictions. Moreover, the underlying structure of the bargaining, i.e., the players’ utility and threat point functions, can be recovered under slightly more demanding conditions.

Download Info

If 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.
File URL: http://ftp.iza.org/dp2128.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2128.

as in new window
Length: 35 pages
Date of creation: May 2006
Date of revision:
Publication status: published as 'Learning from a Piece of Pie in: Review of Economic Studies, 2012, 79 (1), 162 - 196 (with Ivana Komunjer)
Handle: RePEc:iza:izadps:dp2128

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: bargaining game; Nash solution; testability; identifiability; cardinal utility;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Chiappori, Pierre-Andre, 1991. "Nash-Bargained Household Decisions: A Rejoinder," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 761-62, August.
  2. Susan Snyder & Indrajit Ray, 2004. "Observable implications of Nash and subgame-perfect behavior in extensive games," Econometric Society 2004 North American Summer Meetings, Econometric Society 407, Econometric Society.
  3. Thomson, William, 1994. "Cooperative models of bargaining," Handbook of Game Theory with Economic Applications, Elsevier, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 35, pages 1237-1284 Elsevier.
  4. Chiappori, P.A., 1989. "Collective Labour Supply and Welfare," DELTA Working Papers, DELTA (Ecole normale supérieure) 89-07, DELTA (Ecole normale supérieure).
  5. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, Econometric Society, vol. 56(1), pages 63-90, January.
  6. Svejnar, Jan, 1986. "Bargaining Power, Fear of Disagreement, and Wage Settlements: Theory and Evidence from U.S. Industry," Econometrica, Econometric Society, Econometric Society, vol. 54(5), pages 1055-78, September.
  7. Ray, Indrajit & Zhou, Lin, 2001. "Game Theory via Revealed Preferences," Games and Economic Behavior, Elsevier, Elsevier, vol. 37(2), pages 415-424, November.
  8. 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.
  9. Lundberg, Shelly & Pollak, Robert A, 1993. "Separate Spheres Bargaining and the Marriage Market," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(6), pages 988-1010, December.
  10. BOSSERT, Walter & SPRUMONT, Yves, 2000. "Core Retionalizability in Two-Agent Exchange Economies," Cahiers de recherche, Universite de Montreal, Departement de sciences economiques 2000-09, Universite de Montreal, Departement de sciences economiques.
  11. McElroy, Marjorie B & Horney, Mary Jean, 1981. "Nash-Bargained Household Decisions: Toward a Generalization of the Theory of Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 333-49, June.
  12. Daniel S. Hamermesh, 1973. "Who "wins" in wage bargaining?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 26(4), pages 1146-1149, July.
  13. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer.
  14. Carvajal, Andres & Ray, Indrajit & Snyder, Susan, 2004. "Equilibrium behavior in markets and games: testable restrictions and identification," Journal of Mathematical Economics, Elsevier, vol. 40(1-2), pages 1-40, February.
  15. Coles, Melvyn G & Hildreth, Andrew, 1996. "Wage Bargaining, Inventories, and Union Legislation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1361, C.E.P.R. Discussion Papers.
  16. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, Econometric Society, vol. 18(2), pages 155-162, April.
  17. Chiappori, Pierre-Andre, 1988. "Nash-Bargained Households Decisions: A Comment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(4), pages 791-96, November.
  18. BOSSERT, Walter & SPRUMONT, Yves, 2002. "Efficient and Non-Deteriorating Choice," Cahiers de recherche, Universite de Montreal, Departement de sciences economiques 2002-10, Universite de Montreal, Departement de sciences economiques.
  19. Sprumont, Yves, 2000. "On the Testable Implications of Collective Choice Theories," Journal of Economic Theory, Elsevier, Elsevier, vol. 93(2), pages 205-232, August.
  20. Jan Svejnar, 1980. "On the empirical testing of the Nash-Zeuthen bargaining solution," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 33(4), pages 536-542, July.
  21. Chiappori, P.A. & Ekeland, I., 2006. "The micro economics of group behavior: General characterization," Journal of Economic Theory, Elsevier, Elsevier, vol. 130(1), pages 1-26, September.
  22. McElroy, Marjorie B & Horney, Mary Jean, 1990. "Nash-Bargained Household Decisions: Reply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(1), pages 237-42, February.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Carvajal, Andrés & González, Natalia, 2014. "On refutability of the Nash bargaining solution," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 177-186.
  2. Geoffroy de Clippel & Kfir Eliaz, 2009. "Reason-Based Choice: A Bargaining Rationale for the Attraction and Compromise Effects," Working Papers, Brown University, Department of Economics 2009-4, Brown University, Department of Economics.
  3. Richard Blundell & Pierre-Andre Chiappori & Thierry Magnac & Costas Meghir, 2002. "Collective Labor Supply: Heterogeneity and Nonparticipation," Research Unit Working Papers, Laboratoire d'Economie Appliquee, INRA 0210, Laboratoire d'Economie Appliquee, INRA.
  4. Chiappori, Pierre-André & Donni, Olivier, 2006. "Les modèles non unitaires de comportement du ménage : un survol de la littérature," L'Actualité Economique, Société Canadienne de Science Economique, Société Canadienne de Science Economique, vol. 82(1), pages 9-52, mars-juin.
  5. Arianna Degan & Antonio Merlo, 2006. "Do Voters Vote Sincerely?," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 06-008, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  6. Arianna Degan & Antonio Merlo, 2006. "Do Voters Vote Sincerely? Second Version," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 07-006, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 03 Jan 2007.
  7. Antonio Merlo & Xun Tang, 2011. "Identification and Estimation of Stochastic Bargaining Models, Fourth Version," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 11-035, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 19 Oct 2011.
  8. Chiappori, Pierre-André & Donni, Olivier, 2009. "Non-unitary Models of Household Behavior: A Survey of the Literature," IZA Discussion Papers 4603, Institute for the Study of Labor (IZA).
  9. Antonio Merlo & Xun Tang, 2010. "Identification and Estimation of Stochastic Bargaining Models, Third Version," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 11-008, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 11 Mar 2011.
  10. Arianna Degan & Antonio Merlo, 2007. "Do Voters Vote Ideologically?, Third Version," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 08-034, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Aug 2008.
  11. Majlesi, Kaveh, 2014. "Labor Market Opportunities and Women's Decision Making Power within Households," Working Papers, Lund University, Department of Economics 2014:4, Lund University, Department of Economics.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp2128. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.