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

  • Yuan Ju

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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

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File URL: http://hdl.handle.net/10.1007/s00182-012-0336-8
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Article provided by Springer in its journal International Journal of Game Theory.

Volume (Year): 42 (2013)
Issue (Month): 2 (May)
Pages: 501-520

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Handle: RePEc:spr:jogath:v:42:y:2013:i:2:p:501-520
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