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Efficiency and compromise: a bid-offer–counteroffer mechanism with two players

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  • Yuan Ju

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Abstract

A bid-offer–counteroffer mechanism is proposed to solve a fundamental two-person decision choice problem with two alternatives. It yields a unique subgame perfect equilibrium outcome, and leads to an intuitive overall solution that offers a reconciliation between egalitarianism and utilitarianism. We then investigate the axiomatic foundation of the solution. Furthermore, we compare it with several conventional strategic approaches to this setting. Copyright Springer-Verlag 2013

Suggested Citation

  • Yuan Ju, 2013. "Efficiency and compromise: a bid-offer–counteroffer mechanism with two players," International Journal of Game Theory, Springer;Game Theory Society, vol. 42(2), pages 501-520, May.
  • Handle: RePEc:spr:jogath:v:42:y:2013:i:2:p:501-520
    DOI: 10.1007/s00182-012-0336-8
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    References listed on IDEAS

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    More about this item

    Keywords

    Decision choice; Bargaining; Conflict resolution; Counteroffer; Implementation; C71; C72; D62; D70;

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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