IDEAS home Printed from https://ideas.repec.org/p/vnm/wpdman/106.html
   My bibliography  Save this paper

Target-based solutions for Nash bargaining

Author

Listed:
  • Lorenzo Bastianello

    (EDE-EM, Universite Paris 1-Pantheon-Sorbonne)

  • Marco LiCalzi

    (Dept. of Management, Università Ca' Foscari Venice)

Abstract

We revisit the Nash model for two-person bargaining. A mediator knows agents' ordinal preferences over feasible proposals, but has incomplete information about their acceptance thresholds. We provide a behavioural characterisation under which the mediator recommends a proposal that maximises the probability that bargainers strike an agreement. Some major solutions are recovered as special cases; in particular, we offer a straightforward interpretation for the product operator underlying the Nash solution.

Suggested Citation

  • Lorenzo Bastianello & Marco LiCalzi, 2015. "Target-based solutions for Nash bargaining," Working Papers 5, Department of Management, Università Ca' Foscari Venezia.
    • Handle: RePEc:vnm:wpdman:106
    as

    Download full text from publisher

    File URL: http://virgo.unive.it/wpideas/storage/2015wp05.pdf
    File Function: First version, 2015
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kalai, Ehud, 1977. "Proportional Solutions to Bargaining Situations: Interpersonal Utility Comparisons," Econometrica, Econometric Society, vol. 45(7), pages 1623-1630, October.
    2. Marco LiCalzi, 2005. "A language for the construction of preferences under uncertainty," Game Theory and Information 0509002, University Library of Munich, Germany.
    3. Erio Castagnoli & Marco LiCalzi, 2005. "Expected utility without utility," Game Theory and Information 0508004, University Library of Munich, Germany.
    4. Robert Bordley & Marco LiCalzi, 2000. "Decision analysis using targets instead of utility functions," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 23(1), pages 53-74.
    5. 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.
    6. Grandmont, Jean-Michel, 1972. "Continuity properties of a von Neumann-Morgenstern utility," Journal of Economic Theory, Elsevier, vol. 4(1), pages 45-57, February.
    7. Rubinstein, Ariel & Safra, Zvi & Thomson, William, 1992. "On the Interpretation of the Nash Bargaining Solution and Its Extension to Non-expected Utility Preferences," Econometrica, Econometric Society, vol. 60(5), pages 1171-1186, September.
    8. Trockel, W., 2008. "The Nash product is a utility representation of the Pareto ordering," Economics Letters, Elsevier, vol. 99(2), pages 220-222, May.
    9. 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.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lorenzo Bastianello & Marco LiCalzi, 2019. "The Probability to Reach an Agreement as a Foundation for Axiomatic Bargaining," Econometrica, Econometric Society, vol. 87(3), pages 837-865, May.
    2. José-Manuel Giménez-Gómez & António Osório & Josep E. Peris, 2015. "From Bargaining Solutions to Claims Rules: A Proportional Approach," Games, MDPI, vol. 6(1), pages 1-7, March.
    3. Forgo, F. & Szidarovszky, F., 2003. "On the relation between the Nash bargaining solution and the weighting method," European Journal of Operational Research, Elsevier, vol. 147(1), pages 108-116, May.
    4. Robert Bordley & Marco Licalzi & Luisa Tibiletti, 2017. "A Target-Based Foundation for the “Hard-Easy Effect” Bias," Eurasian Studies in Business and Economics, in: Mehmet Huseyin Bilgin & Hakan Danis & Ender Demir & Ugur Can (ed.), Country Experiences in Economic Development, Management and Entrepreneurship, pages 659-671, Springer.
    5. Özgür Kıbrıs & Murat Sertel, 2007. "Bargaining over a finite set of alternatives," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 28(3), pages 421-437, April.
    6. DellaVigna, Stefano & LiCalzi, Marco, 2001. "Learning to make risk neutral choices in a symmetric world," Mathematical Social Sciences, Elsevier, vol. 41(1), pages 19-37, January.
    7. Joan Esteban & Jozsef Sakovics, 1999. "Why do lions get the lion's share? A Hobbesian theory of agreements," Edinburgh School of Economics Discussion Paper Series 37, Edinburgh School of Economics, University of Edinburgh.
    8. de Clippel, Geoffroy & Pérez-Castrillo, David & Wettstein, David, 2012. "Egalitarian equivalence under asymmetric information," Games and Economic Behavior, Elsevier, vol. 75(1), pages 413-423.
    9. LiCalzi, Marco & Sorato, Annamaria, 2006. "The Pearson system of utility functions," European Journal of Operational Research, Elsevier, vol. 172(2), pages 560-573, July.
    10. Naeve-Steinweg, Elisabeth, 2002. "Mechanisms supporting the Kalai-Smorodinsky solution," Mathematical Social Sciences, Elsevier, vol. 44(1), pages 25-36, September.
    11. Eric van Damme & Xu Lang, 2022. "Two-Person Bargaining when the Disagreement Point is Private Information," Papers 2211.06830, arXiv.org, revised Jan 2024.
    12. Geoffroy de Clippel, 2009. "Axiomatic Bargaining on Economic Enviornments with Lott," Working Papers 2009-5, Brown University, Department of Economics.
    13. David H. Wolpert & James Bono, 2010. "A theory of unstructured bargaining using distribution-valued solution concepts," Working Papers 2010-14, American University, Department of Economics.
    14. Jaume García Segarra & Miguel Ginés Vilar, 2011. "Weighted Proportional Losses Solution," ThE Papers 10/21, Department of Economic Theory and Economic History of the University of Granada..
    15. Ismail Saglam, 2013. "Endogenously proportional bargaining solutions," Economics Bulletin, AccessEcon, vol. 33(2), pages 1521-1534.
    16. Mariotti, Marco, 1996. "Non-optimal Nash Bargaining Solutions," Economics Letters, Elsevier, vol. 52(1), pages 15-20, July.
    17. Marek Hudik, 0. "Equilibrium as compatibility of plans," Theory and Decision, Springer, vol. 0, pages 1-20.
    18. l'Haridon, Olivier & Malherbet, Franck & Pérez-Duarte, Sébastien, 2013. "Does bargaining matter in the small firms matching model?," Labour Economics, Elsevier, vol. 21(C), pages 42-58.
    19. Marco Mariotii, 1996. "Fair bargains: distributive justice and Nash Bargaining Theory," Game Theory and Information 9611003, University Library of Munich, Germany, revised 06 Dec 1996.
    20. Shiran Rachmilevitch, 2021. "Step-by-step negotiations and utilitarianism," International Journal of Game Theory, Springer;Game Theory Society, vol. 50(2), pages 433-445, June.

    More about this item

    Keywords

    cooperative bargaining; target-based preferences; Nash solution; egalitarian and utilitarian solutions; mediation; copulas.;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vnm:wpdman:106. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marco LiCalzi (email available below). General contact details of provider: https://edirc.repec.org/data/mdvenit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.