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Fallback Bargaining

Author

Listed:
  • Steven J. Brams

    () (New York University)

  • D. Marc Kilgour

    () (Wilfrid Laurier University)

Abstract

Abstract Under fallback bargaining, bargainers begin by indicating their preference rankings over alternatives. They then fall back, in lockstep, to less and less preferred alternatives – starting with first choices, then adding second choices, and so on – until an alternative is found on which all bargainers agree. This common agreement, which becomes the outcome of the procedure, may be different if a decision rule other than unanimity is used. The outcome is always Pareto-optimal but need not be unique; if unanimity is used, it is at least middling in everybody's ranking. Fallback bargaining may not select a Condorcet alternative, or even the first choice of a majority of bargainers. However, it does maximize bargainers' minimum “satisfaction.” When bargainers are allowed to indicate “impasse” in their rankings – below which they would not descend because they prefer no agreement to any lower-level alternative – then impasse itself may become the outcome, foreclosing any agreement. The vulnerability of fallback bargaining to manipulation is analyzed in terms of both best responses and Nash equilibria. Although a bargainer can sometimes achieve a preferred outcome through an untruthful announcement, the risk of a mutually worst outcome in a Chicken-type game may well deter the bargainers from attempting to be exploitative, especially when information is incomplete. Fallback bargaining seems useful as a practicable procedure if a set of “reasonable” alternatives can be generated. It leapfrogs the give-and-take of conventional bargaining, which often bogs down in details, by finding a suitable settlement through the simultaneous consideration of all alternatives.

Suggested Citation

  • Steven J. Brams & D. Marc Kilgour, 2001. "Fallback Bargaining," Group Decision and Negotiation, Springer, vol. 10(4), pages 287-316, July.
  • Handle: RePEc:spr:grdene:v:10:y:2001:i:4:d:10.1023_a:1011252808608
    DOI: 10.1023/A:1011252808608
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    References listed on IDEAS

    as
    1. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    2. Steven J. Brams & Ann E. Doherty, 1993. "Intransigence in Negotiations," Journal of Conflict Resolution, Peace Science Society (International), vol. 37(4), pages 692-708, December.
    3. Satterthwaite, Mark Allen, 1975. "Strategy-proofness and Arrow's conditions: Existence and correspondence theorems for voting procedures and social welfare functions," Journal of Economic Theory, Elsevier, vol. 10(2), pages 187-217, April.
    4. Brams,Steven J. & Taylor,Alan D., 1996. "Fair Division," Cambridge Books, Cambridge University Press, number 9780521556446, October.
    5. Richard F. Potthoff & Steven J. Brams, 1998. "Proportional Representation," Journal of Theoretical Politics, , vol. 10(2), pages 147-178, April.
    6. Bilge Yilmaz & Murat R. Sertel, 1999. "The majoritarian compromise is majoritarian-optimal and subgame-perfect implementable," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 16(4), pages 615-627.
    7. Gibbard, Allan, 1973. "Manipulation of Voting Schemes: A General Result," Econometrica, Econometric Society, vol. 41(4), pages 587-601, July.
    8. Leonid Hurwicz, 1996. "Institutions As Families Of Game Forms," The Japanese Economic Review, Japanese Economic Association, vol. 47(2), pages 113-132, June.
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    Citations

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    Cited by:

    1. Fabio Galeotti & Maria Montero & Anders Poulsen, 2017. "The attraction and compromise effects in bargaining: Experimental evidence," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 17-04, School of Economics, University of East Anglia, Norwich, UK..
    2. Ronan Congar & Vincent Merlin, 2012. "A characterization of the maximin rule in the context of voting," Theory and Decision, Springer, vol. 72(1), pages 131-147, January.
    3. de Clippel, Geoffroy & Eliaz, Kfir, 2012. "Reason-based choice: a bargaining rationale for the attraction and compromise effects," Theoretical Economics, Econometric Society, vol. 7(1), January.
    4. repec:spr:grdene:v:24:y:2015:i:5:d:10.1007_s10726-014-9412-8 is not listed on IDEAS
    5. Aleksei Yu. Kondratev & Alexander S. Nesterov, 2018. "Measuring Majority Tyranny: Axiomatic Approach," HSE Working papers WP BRP 194/EC/2018, National Research University Higher School of Economics.
    6. repec:spr:grdene:v:19:y:2010:i:2:d:10.1007_s10726-008-9121-2 is not listed on IDEAS
    7. Steven Brams & Michael Jones & D. Kilgour, 2005. "Forming stable coalitions: The process matters," Public Choice, Springer, vol. 125(1), pages 67-94, July.
    8. repec:spr:grdene:v:21:y:2012:i:4:d:10.1007_s10726-010-9226-2 is not listed on IDEAS
    9. repec:spr:grdene:v:13:y:2004:i:4:d:10.1023_b:grup.0000042925.01972.ad is not listed on IDEAS
    10. repec:spr:grdene:v:23:y:2014:i:3:d:10.1007_s10726-013-9345-7 is not listed on IDEAS
    11. repec:spr:grdene:v:21:y:2012:i:3:d:10.1007_s10726-010-9195-5 is not listed on IDEAS
    12. Fabio Galeotti & Maria Montero & Anders Poulsen, 2017. "The attraction and compromise effects in bargaining: Experimental evidence," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 17-04, School of Economics, University of East Anglia, Norwich, UK..
    13. John Conley & Simon Wilkie, 2012. "The ordinal egalitarian bargaining solution for finite choice sets," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 38(1), pages 23-42, January.

    More about this item

    Keywords

    bargaining; Condorcet alternative; impasse; implementation; Nash equilibrium; social choice;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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