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On the redundancy of the implicit welfarist axiom in bargaining theory

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  • de Clippel, Geoffroy

Abstract

Nash's characterization of his famous bargaining solution has long faced the objection of being welfarist: a bargaining situation is captured by a utility possibility set and a utility vector prevailing in case of disagreement, with no further information regarding the underlying economic environment. The present paper shows that a straightforward adaptation of Nash's axioms in a natural economic environment with lotteries does characterize his solution. A similar result holds for Kalai and Smorodinsky's [8] characterization of their solution if and only if the domain contains multiple goods. The non-welfarist characterization of the Nash solution extends to a larger class of preferences that accommodate some forms of non-expected utility.

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  • de Clippel, Geoffroy, 2015. "On the redundancy of the implicit welfarist axiom in bargaining theory," Journal of Economic Theory, Elsevier, vol. 157(C), pages 624-647.
    • Handle: RePEc:eee:jetheo:v:157:y:2015:i:c:p:624-647
    DOI: 10.1016/j.jet.2015.01.017
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    Cited by:

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    3. William Thomson, 2022. "On the axiomatic theory of bargaining: a survey of recent results," Review of Economic Design, Springer;Society for Economic Design, vol. 26(4), pages 491-542, December.

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    More about this item

    Keywords

    Bargaining; Welfarism; Nash; Kalai–Smorodinsky; Non-expected utility;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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