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Bargaining with Intertemporal Maximin Payoffs

Author

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  • Vincent Martinet

    (Economie Publique, AgroParisTech, Inra, Universtié Paris Saclay)

  • 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," Working Papers 2019.02, FAERE - French Association of Environmental and Resource Economists.
  • Handle: RePEc:fae:wpaper:2019.02
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    More about this item

    Keywords

    social choice; axiomatic bargaining theory; economic environment; monotonicity; sustainability;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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