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How to Add Apples and Pears: Non-Symmetric Nash Bargaining and the Generalized Joint Surplus

Author

Listed:
  • Samuel Danthine

    (CREST-Ensai and CIRPÉE)

  • Noemí Navarro

    (Basque Country University (EHU/UPV) and IKERBASQUE, Basque Foundation for Science)

Abstract

We find how to compute the non-symmetric Nash bargaining solution by means of a generalized property of linear division of the joint surplus, as an alternative of solving the maximization of the generalized Nash product. This generalized property of linear division in the non-symmetric Nash bargaining solution can be applied to the case when bargainers use different utility scales, in particular when they have different attitudes toward risk, as in the case of a risk neutral firm and a risk averse individual. The surplus each agent receives has to be expressed in compatible, or comparable, units across agents. This is contrary to what has been believed in the labor literature, where many authors have partially expressed surpluses in comparable units. We finally illustrate the conditions of applicability of our result by means of a well-known example.

Suggested Citation

  • Samuel Danthine & Noemí Navarro, 2013. "How to Add Apples and Pears: Non-Symmetric Nash Bargaining and the Generalized Joint Surplus," Economics Bulletin, AccessEcon, vol. 33(4), pages 2840-2850.
    • Handle: RePEc:ebl:ecbull:eb-13-00235
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    References listed on IDEAS

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    1. Samuel Danthine & Noemí Navarro, 2013. "How to Add Apples and Pears: Non-Symmetric Nash Bargaining and the Generalized Joint Surplus," Economics Bulletin, AccessEcon, vol. 33(4), pages 2840-2850.
    2. Navarro, Noemí & Veszteg, Róbert F., 2020. "On the empirical validity of axioms in unstructured bargaining," Games and Economic Behavior, Elsevier, vol. 121(C), pages 117-145.
    3. Di Nola, Alessandro & Kocharkov, Georgi & Vasilev, Aleksandar, 2016. "Productivity, Taxation and Evasion: A Quantitative Exploration of the Determinants of the Informal Economy," EconStor Preprints 144164, ZBW - Leibniz Information Centre for Economics.
    4. Kerndler, Martin, 2016. "Contracting frictions and inefficient layoffs of older workers," VfS Annual Conference 2016 (Augsburg): Demographic Change 145711, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    Bargaining problems; Non-Symmetric Nash Bargaining Solution; Linear Sharing;
    All these keywords.

    JEL classification:

    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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