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On the consistency of data with bargaining theories


  • Echenique, Federico

    () (Division of the Humanities and Social Sciences, California Institute of Technology)

  • Chambers, Christopher P.

    () (Department of Economics, University of California, San Diego)


We develop observable restrictions of well-known theories of bargaining over money. We suppose that we observe a finite data set of bargaining outcomes, including data on allocations and disagreement points, but no information on utility functions. We ask when a given theory could generate the data. We show that if the disagreement point is fixed and symmetric, the Nash, utilitarian, and egalitarian max-min bargaining solutions are all observationally equivalent. Data compatible with these theories are in turn characterized by the property of comonotonicity of bargaining outcomes. We establish different tests for each of the theories under consideration in the case in which the disagreement point can be variable. Our results are readily applicable, outside of the bargaining framework, to testing the tax code for compliance with the principle of equal loss.

Suggested Citation

  • Echenique, Federico & Chambers, Christopher P., 2014. "On the consistency of data with bargaining theories," Theoretical Economics, Econometric Society, vol. 9(1), January.
  • Handle: RePEc:the:publsh:1095

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    References listed on IDEAS

    1. Thomson,William & Lensberg,Terje, 2006. "Axiomatic Theory of Bargaining with a Variable Number of Agents," Cambridge Books, Cambridge University Press, number 9780521027038, March.
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    3. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    4. Carvajal, Andrés & González, Natalia, 2014. "On refutability of the Nash bargaining solution," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 177-186.
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    8. Young, H. P., 1988. "Distributive justice in taxation," Journal of Economic Theory, Elsevier, vol. 44(2), pages 321-335, April.
    9. Richter, Marcel K. & Wong, K.-C.Kam-Chau, 2004. "Concave utility on finite sets," Journal of Economic Theory, Elsevier, vol. 115(2), pages 341-357, April.
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    Cited by:

    1. Ray, Indrajit & Snyder, Susan, 2013. "Observable implications of Nash and subgame-perfect behavior in extensive games," Journal of Mathematical Economics, Elsevier, vol. 49(6), pages 471-477.

    More about this item


    Revealed preference; Nash bargaining;

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory


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