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Bargaining with subjective mixtures

Listed author(s):
  • Craig Webb

    ()

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

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File URL: http://hdl.handle.net/10.1007/s00199-011-0680-0
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Article provided by Springer & Society for the Advancement of Economic Theory (SAET) in its journal Economic Theory.

Volume (Year): 52 (2013)
Issue (Month): 1 (January)
Pages: 15-39

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Handle: RePEc:spr:joecth:v:52:y:2013:i:1:p:15-39
DOI: 10.1007/s00199-011-0680-0
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Web page: http://saet.uiowa.edu/

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  1. Wakker,Peter P., 2010. "Prospect Theory," Cambridge Books, Cambridge University Press, number 9780521765015, March.
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