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Nash Bargaining Solution with Coalitions and The Joint Bargaining Paradox


  • Suchan Chae
  • Paul Heidhues


We propose a solution for bargaining problems where coalitions are bargainers. The solution generalizes the Nash solution and allows one to interpret a coalition as an institutional player whose preferences are obtained by aggregating the preferences of the individual members. One implication of our solution is that forming a coalition is unprofitable in pure-bargaining situations (the joint-bargaining paradox). We show, however, that forming a coalition can be profitable in a non-pure bargaining situation. ZUSAMMENFASSUNG - (Die Nash Verhandlungslösung mit Koalitionen und Harsanyi's Verhandlungsparadox) In der vorliegenden Arbeit schlagen wir ein Lösungskonzept für Verhandlungsspiele vor, bei denen die verhandelnden Parteien aus Koalitionen von Individuen bestehen können. Unser Lösungskonzept basiert auf einer Verallgemeinerung der Nash-Verhandlungslösung. Nach unserem Lösungskonzept kann eine Koalition als ein institutioneller Spieler aufgefasst werden, dessen Präferenzordnung auf einer Aggregierung der Präferenzen seiner Mitglieder basiert. Eine Implikation unserer Verhandlungslösung ist, dass Koalitionen in "reinen Verhandlungsspielen" nicht im Interesse der Individuen sind. In "nicht reinen Verhandlungsspielen" hingegen können Koalitionen durchaus vorteilhaft seien.

Suggested Citation

  • Suchan Chae & Paul Heidhues, 2001. "Nash Bargaining Solution with Coalitions and The Joint Bargaining Paradox," CIG Working Papers FS IV 01-15, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  • Handle: RePEc:wzb:wzebiv:fsiv01-15

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    References listed on IDEAS

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    Cited by:

    1. Steffen Huck & Kai A. Konrad, 2004. "Merger Profitability and Trade Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(1), pages 107-122, March.

    More about this item


    Nash Bargaining Solution; Coalition; Joint-Bargaining Paradox;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory


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