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A note on the risk dominance of the Nash demand game

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  • Yoshio Kamijo

    (Waseda University)

Abstract

The Nash bargaining solution (Nash in Econometrica 18(2):155–162, 1950) is the most used game theory tool for analyzing bargaining problems. Its validity is examined from an equilibrium analysis using a non-cooperative game such as Nash’s demand game (NDG). Since the NDG has multiple equilibria, we need an equilibrium selection. In this note, we apply the Harsanyi and Selten (A general theory of equilibrium selection in games. The MIT Press, Cambridge, 1988) risk-dominance criterion to the NDG. We show that in a wide class of utility functions, the risk-dominant equilibrium of the NDG coincides with the Nash bargaining solution.

Suggested Citation

  • Yoshio Kamijo, 2024. "A note on the risk dominance of the Nash demand game," International Journal of Game Theory, Springer;Game Theory Society, vol. 53(3), pages 1077-1087, September.
    • Handle: RePEc:spr:jogath:v:53:y:2024:i:3:d:10.1007_s00182-023-00872-1
    DOI: 10.1007/s00182-023-00872-1
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    References listed on IDEAS

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    More about this item

    Keywords

    Bargaining theory; Nash bargaining solution; Nash demand game; Risk dominance; Risk attitude; Fairness;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D1 - Microeconomics - - Household Behavior

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