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Reconciling the Nash and Kalai-Smorodinsky cooperative solutions: Generalized maximands of CES form

Author

Listed:
  • Ana Paula MARTINS

    (Department of Economics, Universidade Católica Portuguesa)

Abstract

This paper suggests variations to the baseline Nash cooperative solution that take into account the Kalai-Smorodinsky critique. One the one hand, a CES form of the maximand is proven to accommodate both the generalized two-person Nash and the Kalai-Smorodinsky - as other proportional - solutions as special cases. As an alternative, a Stone-Geary formulation is forwarded, weighing both the distances to the threat and to the ideal point, along with the corresponding CES generalization. Interpretations of the implied equilibrium solutions – generalizable to n-person cooperative games – are provided, arising as equations balancing geometric averages of measures of attitude towards (large) risk(s) of the players.

Suggested Citation

  • Ana Paula MARTINS, 2021. "Reconciling the Nash and Kalai-Smorodinsky cooperative solutions: Generalized maximands of CES form," Turkish Economic Review, EconSciences Journals, vol. 8(4), pages 103-134, December.
    • Handle: RePEc:cvv:journ2:v:8:y:2021:i:4:p:103-134
    as

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    References listed on IDEAS

    as
    1. Riddell, W Craig, 1981. "Bargaining under Uncertainty," American Economic Review, American Economic Association, vol. 71(4), pages 579-590, September.
    2. Kalai, Ehud, 1977. "Proportional Solutions to Bargaining Situations: Interpersonal Utility Comparisons," Econometrica, Econometric Society, vol. 45(7), pages 1623-1630, October.
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    Keywords

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    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • D39 - Microeconomics - - Distribution - - - Other

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