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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

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    File URL: http://virgo.unive.it/wpideas/storage/2015wp05.pdf
    File Function: First version, 2015
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    References listed on IDEAS

    as
    1. Nikolay Nenovsky & S. Statev, 2006. "Introduction," Post-Print halshs-00260898, HAL.
    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. Trockel, W., 2008. "The Nash product is a utility representation of the Pareto ordering," Economics Letters, Elsevier, vol. 99(2), pages 220-222, May.
    6. 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)

    More about this item

    Keywords

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

    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

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