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Step-by-step negotiations and the Nash bargaining solution: Efficiency-free characterizations

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  • Nakamura, Kensei

Abstract

Real-world bargainings often proceed step-by-step: the agents make intermediate agreements today and continue to negotiate tomorrow to reach a final agreement. We consider two natural properties of the bargaining solutions in such step-by-step negotiations and show that the Nash solution is the only solution that satisfies either of them, a very weak axiom of individual rationality, and Nash’s axioms except for Pareto optimality.

Suggested Citation

  • Nakamura, Kensei, 2024. "Step-by-step negotiations and the Nash bargaining solution: Efficiency-free characterizations," Economics Letters, Elsevier, vol. 242(C).
    • Handle: RePEc:eee:ecolet:v:242:y:2024:i:c:s0165176524003720
    DOI: 10.1016/j.econlet.2024.111888
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    References listed on IDEAS

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    1. 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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    3. Trockel, Walter, 2014. "Robustness of intermediate agreements for the discrete Raiffa solution," Games and Economic Behavior, Elsevier, vol. 85(C), pages 32-36.
    4. Hans Peters & Eric Van Damme, 1991. "Characterizing the Nash and Raiffa Bargaining Solutions by Disagreement Point Axioms," Mathematics of Operations Research, INFORMS, vol. 16(3), pages 447-461, August.
    5. O'Neill, Barry & Samet, Dov & Wiener, Zvi & Winter, Eyal, 2004. "Bargaining with an agenda," Games and Economic Behavior, Elsevier, vol. 48(1), pages 139-153, July.
    6. Shiran Rachmilevitch, 2021. "Step-by-step negotiations and utilitarianism," International Journal of Game Theory, Springer;Game Theory Society, vol. 50(2), pages 433-445, June.
    7. Chun, Youngsub, 1988. "Nash solution and timing of bargaining," Economics Letters, Elsevier, vol. 28(1), pages 27-31.
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    More about this item

    Keywords

    Axiomatic bargaining; Nash solution; Efficiency-free characterizations; Step-by-step negotiations;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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