Individual rationality and bargaining
AbstractWe argue that Nash’s solution to the bargaining problem should be modified such that it will be based on a New Reference Point (NRP). Such a point is needed so that a player is not considered ‘individually rational’ if he accepts an agreement that provides him with a utility lower than the minimal utility he can derive from any Pareto optimal agreement, or if he accepts an agreement that provides him a utility lower than the one he can obtain by unilateral action. The employment of such NRP requires modifying two axioms and hence leads to a new proposed solution.
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Bibliographic InfoPaper provided by London School of Economics and Political Science in its series Open Access publications from London School of Economics and Political Science with number http://eprints.lse.ac.uk/24233/.
Date of creation: Oct 2007
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Publication status: Published in Public choice (2007-10) v.133, p.25-29
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- De MESNARD, Louis, 2008. "On the Talmud division : equity and robustness," LEG - Document de travail - Economie 2008-07, LEG, Laboratoire d'Economie et de Gestion, CNRS UMR 5118, Université de Bourgogne.
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