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Multiple-Issue Bargaining and Axiomatic Solutions

  • Clara Ponsati

    ()

    (Department d'Economia i Historia Econoica, Universitat Autonoma, Barcelona 08193, Spain, e-mail: cponsati@cc.uab.es)

  • Joel Watson

    ()

    (Department of Economics, 0508, University of California, San Diego, La Jolla, CA 92093-0508, USA, e-mail: jwatson@weber.ucsd.edu)

We study two-person, multiple-issue bargaining problems and identify four procedures by which the bargaining may take place. Drawing on some logic from non-cooperative game theory, we propose axioms which relate the outcomes of the procedures. We also promote a weak monotonicity axiom on solutions, called issue-by-issue monotonicity, which is geared toward multiple-issue bargaining. Our main result concerns the relationship between a sequential bargaining procedure - with the rule that agreements are implemented only after all issues are resolved - and global bargaining (in which all issues are negotiated simultaneously). If a bargaining solution predicts the same outcome with these two procedures, then we say that it satisfies agenda independence. We prove that a solution satisfies axioms of efficiency, symmetry, scale invariance, issue-by-issue monotonicity, and agenda independence if and only if it is the Nash solutions. This result provides new intuition for Nash's independence of irrelevant alternatives axiom. Among other results, we show that a solution is invariant to all four of the procedures and satisfies efficiency and symmetry if and only if it is the utilitarian solution with equal weights. We comment on the results of other authors who address multiple-issue bargaining.

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Article provided by Springer in its journal International Journal of Game Theory.

Volume (Year): 26 (1998)
Issue (Month): 4 ()
Pages: 501-524

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Handle: RePEc:spr:jogath:v:26:y:1998:i:4:p:501-524
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