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.
|Date of creation:||25 Nov 1999|
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