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Resolving a Conflict Situation with a Reference Outcome: An Axiomatic Model

Author

Listed:
  • Sunil Gupta

    (Graduate School of Business, Columbia University, New York, New York 10027)

  • Zvi A. Livne

    (Graduate School of Business, Columbia University, New York, New York 10027 and Faculty of Management, Tel Aviv University, Tel Aviv, Israel)

Abstract

We formulate an axiomatic model of conflict situations in which there exist two prominent outcomes. One is the traditional conflict outcome, the other is the reference outcome. The latter is an outcome with the following properties: (1) It is Pareto-superior to the conflict outcome, (2) It is not Pareto optimal, (3) All the bargainers agree that the conflict's solution should be Pareto superior to it. We present a solution function for this model. It satisfies uniquely several desirable requirements. The model is an extension of Nash's Bargaining Problem paradigm, and the particular solution function we propose is a variation of the Kalai-Smorodinsky solution.

Suggested Citation

  • Sunil Gupta & Zvi A. Livne, 1988. "Resolving a Conflict Situation with a Reference Outcome: An Axiomatic Model," Management Science, INFORMS, vol. 34(11), pages 1303-1314, November.
    • Handle: RePEc:inm:ormnsc:v:34:y:1988:i:11:p:1303-1314
    DOI: 10.1287/mnsc.34.11.1303
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    Citations

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    Cited by:

    1. Carlos Alós-Ferrer & Jaume García-Segarra & Miguel Ginés-Vilar, 2018. "Anchoring on Utopia: a generalization of the Kalai–Smorodinsky solution," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 6(2), pages 141-155, October.
    2. Yan, Ruiliang & Wang, John & Zhou, Bin, 2010. "Channel integration and profit sharing in the dynamics of multi-channel firms," Journal of Retailing and Consumer Services, Elsevier, vol. 17(5), pages 430-440.
    3. Albizuri, M.J. & Dietzenbacher, B.J. & Zarzuelo, J.M., 2020. "Bargaining with independence of higher or irrelevant claims," Journal of Mathematical Economics, Elsevier, vol. 91(C), pages 11-17.
    4. Zhang, Junyi & Timmermans, Harry J. P. & Borgers, Aloys, 2005. "A model of household task allocation and time use," Transportation Research Part B: Methodological, Elsevier, vol. 39(1), pages 81-95, January.
    5. Kıbrıs, Özgür & Tapkı, İpek Gürsel, 2011. "Bargaining with nonanonymous disagreement: Decomposable rules," Mathematical Social Sciences, Elsevier, vol. 62(3), pages 151-161.
    6. KIbrIs, Özgür & TapkI, Ipek Gürsel, 2010. "Bargaining with nonanonymous disagreement: Monotonic rules," Games and Economic Behavior, Elsevier, vol. 68(1), pages 233-241, January.
    7. Balakrishnan, P.V. (Sundar) & Gómez, Juan Camilo & Vohra, Rakesh V., 2011. "The Tempered Aspirations solution for bargaining problems with a reference point," Mathematical Social Sciences, Elsevier, vol. 62(3), pages 144-150.
    8. Naeve-Steinweg, E., 2004. "The averaging mechanism," Games and Economic Behavior, Elsevier, vol. 46(2), pages 410-424, February.

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