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A Characterization of the Nash Bargaining Solution

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Abstract

We characterize the Nash bargaining solution replacing the axiom of Independence of Irrelevant Alternatives with three independent axioms: Independence of Non-Individually Rational Alternatives, Twisting and Disagreement Point Convexity. We give a non-cooperative bargaining interpretation to this last axiom.

Suggested Citation

  • Nir Dagan & Oscar Volij & Eyal Winter, 2000. "A Characterization of the Nash Bargaining Solution," Economic theory and game theory 018, Nir Dagan, revised 21 Sep 2000.
  • Handle: RePEc:nid:ndagan:018
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    References listed on IDEAS

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    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Kalai, Ehud & Smorodinsky, Meir, 1975. "Other Solutions to Nash's Bargaining Problem," Econometrica, Econometric Society, vol. 43(3), pages 513-518, May.
    3. Chun, Youngsub & Thomson, William, 1990. "Nash solution and uncertain disagreement points," Games and Economic Behavior, Elsevier, vol. 2(3), pages 213-223, September.
    4. Marco Mariotti, 1999. "Fair Bargains: Distributive Justice and Nash Bargaining Theory," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 733-741.
    5. Marco Mariotti, 2000. "Maximal symmetry and the Nash solution," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 17(1), pages 45-53.
    6. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    7. Thomson, William, 1994. "Cooperative models of bargaining," Handbook of Game Theory with Economic Applications,in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 35, pages 1237-1284 Elsevier.
    8. Ehud Kalai & Robert W. Rosenthal, 1976. "Arbitration of Two-Party Disputes Under Ignorance," Discussion Papers 215, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    9. Eric van Damme, 1984. "The Nash Bargaining Solution is Optimal," Discussion Papers 597, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    10. Peters, Hans J M, 1986. "Simultaneity of Issues and Additivity in Bargaining," Econometrica, Econometric Society, vol. 54(1), pages 153-169, January.
    11. Lensberg, Terje, 1988. "Stability and the Nash solution," Journal of Economic Theory, Elsevier, vol. 45(2), pages 330-341, August.
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    Cited by:

    1. Haruo Imai & Hannu Salonen, 2009. "Limit Solutions for Finite Horizon Bargaining Problems," Discussion Papers 51, Aboa Centre for Economics.
    2. Shiran Rachmilevitch, 2011. "Disagreement point axioms and the egalitarian bargaining solution," International Journal of Game Theory, Springer;Game Theory Society, vol. 40(1), pages 63-85, February.
    3. Geoffroy Clippel, 2007. "An axiomatization of the Nash bargaining solution," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 29(2), pages 201-210, September.
    4. Nir Dagan & Oscar Volij & Eyal Winter, 2001. "The Time-Preference Nash Solution," Economic theory and game theory 014, Oscar Volij.
    5. Vartiainen, Hannu, 2007. "Collective choice with endogenous reference outcome," Games and Economic Behavior, Elsevier, vol. 58(1), pages 172-180, January.
    6. Diskin, Abraham & Felsenthal, Dan S., 2007. "Individual rationality and bargaining," LSE Research Online Documents on Economics 24233, London School of Economics and Political Science, LSE Library.
    7. Frank A. Schmid, 2001. "Equity financing of the entrepreneurial firm," Review, Federal Reserve Bank of St. Louis, issue Nov., pages 15-28.
    8. Kıbrıs, Özgür & Tapkı, İpek Gürsel, 2011. "Bargaining with nonanonymous disagreement: Decomposable rules," Mathematical Social Sciences, Elsevier, vol. 62(3), pages 151-161.
    9. KIbrIs, Özgür & TapkI, Ipek Gürsel, 2010. "Bargaining with nonanonymous disagreement: Monotonic rules," Games and Economic Behavior, Elsevier, vol. 68(1), pages 233-241, January.
    10. Xu, Yongsheng, 2012. "Symmetry-based compromise and the Nash solution to convex bargaining problems," Economics Letters, Elsevier, vol. 115(3), pages 484-486.

    More about this item

    Keywords

    bargaining problem; Nash solution; axiomatic characterization; Independence of Non-Individually Rational Alternatives; Twisting; Disagreement Point Convexity;

    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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