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Why do lions get the lion's share? A Hobbesian theory of agreements

We propose a novel approach for N-person bargaining, based on the idea - borrowed from Hobbes - that the agreement reached in a negotiation should be determined by how the direct conflict resulting from disagreement would be resolved. The explicit modeling of the conflict game directly leads to the observation that the outcome of conflict is a function of the stakes. Thus, our basic building block is the disagreement function, which maps each set of feasible agreements into a disagreement point. Using this function and a weakening(!) of the Independence of Irrelevant Alternatives axiom, based on individual rationality, we reach a unique solution. The main feature of the solution is that it is reached via a sequence of partial agreements. We also give three alternative characterizations; two based on multi-stage, strategic bargaining games and one on the possibility of renegotiation.

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Paper provided by Edinburgh School of Economics, University of Edinburgh in its series ESE Discussion Papers with number 37.

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Length: 30
Date of creation: 25 Nov 1999
Date of revision:
Handle: RePEc:edn:esedps:37
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  1. David K Levine, 1997. "Modeling Altruism and Spitefulness in Experiments," Levine's Working Paper Archive 2047, David K. Levine.
  2. Clara Ponsati & Joel Watson, 1998. "Multiple-Issue Bargaining and Axiomatic Solutions," International Journal of Game Theory, Springer, vol. 26(4), pages 501-524.
  3. Forsythe Robert & Horowitz Joel L. & Savin N. E. & Sefton Martin, 1994. "Fairness in Simple Bargaining Experiments," Games and Economic Behavior, Elsevier, vol. 6(3), pages 347-369, May.
  4. Oliver Hart & John Moore, 1998. "Foundations of Incomplete Contracts," NBER Working Papers 6726, National Bureau of Economic Research, Inc.
  5. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers 92-199, University of California at Berkeley.
  6. Thomson, W., 1989. "Cooperative Models Of Bargaining," RCER Working Papers 177, University of Rochester - Center for Economic Research (RCER).
  7. Aumann, Robert J. & Maschler, Michael, 1985. "Game theoretic analysis of a bankruptcy problem from the Talmud," Journal of Economic Theory, Elsevier, vol. 36(2), pages 195-213, August.
  8. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 252, David K. Levine.
  9. Eric Maskin & John Moore, 1998. "Implementation and renegotiation," LSE Research Online Documents on Economics 19350, London School of Economics and Political Science, LSE Library.
  10. Powell, Robert, 1996. "Bargaining in the Shadow of Power," Games and Economic Behavior, Elsevier, vol. 15(2), pages 255-289, August.
  11. Thomson, William, 1981. "A class of solutions to bargaining problems," Journal of Economic Theory, Elsevier, vol. 25(3), pages 431-441, December.
  12. Eric van Damme, 1984. "The Nash Bargaining Solution is Optimal," Discussion Papers 597, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  13. John C. Harsanyi & Reinhard Selten, 1972. "A Generalized Nash Solution for Two-Person Bargaining Games with Incomplete Information," Management Science, INFORMS, vol. 18(5-Part-2), pages 80-106, January.
  14. Hirshleifer, Jack, 1995. "Anarchy and Its Breakdown," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 26-52, February.
  15. Grossman, Herschel I, 1994. "Production, Appropriation, and Land Reform," American Economic Review, American Economic Association, vol. 84(3), pages 705-12, June.
  16. Crawford, Vincent P, 1982. "A Theory of Disagreement in Bargaining," Econometrica, Econometric Society, vol. 50(3), pages 607-37, May.
  17. Horowitz, Andrew W, 1993. "Time Paths of Land Reform: A Theoretical Model of Reform Dynamics," American Economic Review, American Economic Association, vol. 83(4), pages 1003-10, September.
  18. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
  19. Jack Hirshleifer, 1991. "The Paradox Of Power," Economics and Politics, Wiley Blackwell, vol. 3(3), pages 177-200, November.
  20. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
  21. Esteban, Joan & Ray, Debraj, 1999. "Conflict and Distribution," Journal of Economic Theory, Elsevier, vol. 87(2), pages 379-415, August.
  22. Damme, Eric van, 1986. "The Nash bargaining solution is optimal," Journal of Economic Theory, Elsevier, vol. 38(1), pages 78-100, February.
  23. Roemer, John E., 1988. "Axiomatic bargaining theory on economic environments," Journal of Economic Theory, Elsevier, vol. 45(1), pages 1-31, June.
  24. Busch, L-A. & Wen, Q., 1991. "Perfect Equilibria in a Negotiation Model," University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers 9108, University of Western Ontario, The Centre for the Study of International Economic Relations.
  25. Chen, Mark A. & Maskin, Eric S., 1999. "Bargaining, Production, and Monotonicity in Economic Environments," Journal of Economic Theory, Elsevier, vol. 89(1), pages 140-147, November.
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