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Nash demand game and the Kalai-Smorodinsky solution

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  • Anbarci, Nejat
  • Boyd III, John H.

Abstract

We introduce two new variations on the Nash demand game. In one, as in all past variants of Nash demand games, the Nash bargaining solution is the equilibrium outcome. The other demand game allows for probabilistic continuation in cases of infeasible joint demands. Specifically, with probability (1-p) the game terminates and the players receive their disagreement payoffs; but with probability p the game continues to a second stage in which one of the two incompatible demands is randomly selected and implemented. Surprisingly, the Kalai-Smorodinsky solution is always the outcome of the most robust equilibrium of this game. Moreover, ranking other solution concepts is impossible.

Suggested Citation

  • Anbarci, Nejat & Boyd III, John H., 2011. "Nash demand game and the Kalai-Smorodinsky solution," Games and Economic Behavior, Elsevier, vol. 71(1), pages 14-22, January.
  • Handle: RePEc:eee:gamebe:v:71:y:2011:i:1:p:14-22
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    References listed on IDEAS

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    2. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
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    12. Miyagawa, Eiichi, 2002. "Subgame-perfect implementation of bargaining solutions," Games and Economic Behavior, Elsevier, vol. 41(2), pages 292-308, November.
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    Cited by:

    1. Spinnewijn, Johannes & Spinnewyn, Frans, 2015. "Revising claims and resisting ultimatums in bargaining problems," LSE Research Online Documents on Economics 66197, London School of Economics and Political Science, LSE Library.
    2. Anbarci, Nejat & Feltovich, Nick, 2012. "Bargaining with random implementation: An experimental study," Games and Economic Behavior, Elsevier, vol. 76(2), pages 495-514.
    3. Johannes Spinnewijn & Frans Spinnewyn, 2015. "Revising claims and resisting ultimatums in bargaining problems," Review of Economic Design, Springer;Society for Economic Design, vol. 19(2), pages 91-116, June.
    4. Kang Rong, 2015. "Bargaining with split-the-difference arbitration," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(2), pages 441-455, September.

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