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Bargaining with Intertemporal Maximin Payoffs

Author

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  • Vincent Martinet
  • Pedro Gajardo
  • Michel De Lara

Abstract

We frame sustainability problems as bargaining problems among stakeholders who have to agree on a common development path. For infinite alternatives, the set of feasible payoffs is unknown, limiting the possibility to apply classical bargaining theory and mechanisms. We define a framework accounting for the economic environment, which specifies how the set of alternatives and payoff structure underlie the set of feasible payoffs and disagreement point. A mechanism satisfying the axioms of Independence of Non-Efficient Alternatives and Independence of Redundant Alternatives can be applied to a reduced set of alternatives producing all Pareto-efficient outcomes of the initial problem, and produces the same outcome. We exhibit monotonicity conditions under which such a subset of alternatives is computable. We apply our framework to dynamic sustainability problems. We characterize a “satisficing” decision rule achieving any Pareto-efficient outcome. This rule is renegotiation-proof and generates a time-consistent path under the axiom of Individual Rationality.

Suggested Citation

  • Vincent Martinet & Pedro Gajardo & Michel De Lara, 2019. "Bargaining with Intertemporal Maximin Payoffs," CESifo Working Paper Series 7471, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_7471
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    File URL: https://www.cesifo-group.de/DocDL/cesifo1_wp7471.pdf
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    References listed on IDEAS

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    Cited by:

    1. Pedro Gajardo & Luc Doyen, 2018. "Viability standards and multi-criteria maximin," Cahiers du GREThA 2018-04, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).

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