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Bargaining with subjective mixtures

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  • Craig Webb

Abstract

This paper reconsiders the Bargaining Problem of Nash (Econometrica 28:155–162, 1950 ). I develop a new approach, Conditional Bargaining Problems, as a framework for measuring cardinal utility. A Conditional Bargaining Problem is the conjoint extension of a Bargaining Problem, conditional on the fact that the individuals have agreed on a “measurement event”. Within this context, Subjective Mixture methods are especially powerful. These techniques are used to characterise versions of the Nash and the Kalai–Smorodinsky solutions. This approach identifies solutions based only on the individuals’ tastes for the outcomes. It is therefore possible to do Bargaining theory in almost complete generality. The results apply to Biseparable preferences, so are valid for almost all non-expected utility models currently used in economics. Copyright Springer-Verlag 2013

Suggested Citation

  • Craig Webb, 2013. "Bargaining with subjective mixtures," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(1), pages 15-39, January.
    • Handle: RePEc:spr:joecth:v:52:y:2013:i:1:p:15-39
    DOI: 10.1007/s00199-011-0680-0
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    More about this item

    Keywords

    Bargaining; Utility; Subjective mixtures; Biseparable preferences; C78; D81;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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