IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/24233.html
   My bibliography  Save this paper

Individual rationality and bargaining

Author

Listed:
  • Diskin, Abraham
  • Felsenthal, Dan S.

Abstract

We argue that Nash’s solution to the bargaining problem should be modified such that it will be based on a New Reference Point (NRP). Such a point is needed so that a player is not considered ‘individually rational’ if he accepts an agreement that provides him with a utility lower than the minimal utility he can derive from any Pareto optimal agreement, or if he accepts an agreement that provides him a utility lower than the one he can obtain by unilateral action. The employment of such NRP requires modifying two axioms and hence leads to a new proposed solution.

Suggested Citation

  • Diskin, Abraham & Felsenthal, Dan S., 2007. "Individual rationality and bargaining," LSE Research Online Documents on Economics 24233, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:24233
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/24233/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Eyal Winter & Oscar Volij & Nir Dagan, 2002. "A characterization of the Nash bargaining solution," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 19(4), pages 811-823.
    2. Alvin E. Roth, 1977. "Individual Rationality and Nash's Solution to the Bargaining Problem," Mathematics of Operations Research, INFORMS, vol. 2(1), pages 64-65, February.
    3. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    4. Aumann, Robert J. & Maschler, Michael, 1985. "Game theoretic analysis of a bankruptcy problem from the Talmud," Journal of Economic Theory, Elsevier, vol. 36(2), pages 195-213, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pishchulov, Grigory & Trautrims, Alexander & Chesney, Thomas & Gold, Stefan & Schwab, Leila, 2019. "The Voting Analytic Hierarchy Process revisited: A revised method with application to sustainable supplier selection," International Journal of Production Economics, Elsevier, vol. 211(C), pages 166-179.
    2. De MESNARD, Louis, 2008. "On the Talmud division : equity and robustness," LEG - Document de travail - Economie 2008-07, LEG, Laboratoire d'Economie et de Gestion, CNRS, Université de Bourgogne.
    3. Zheng Peng & Wenxing Zhu, 2013. "An Alternating Direction Method for Nash Equilibrium of Two-Person Games with Alternating Offers," Journal of Optimization Theory and Applications, Springer, vol. 157(2), pages 533-551, May.
    4. Tüselmann, Heinz & Sinkovics, Rudolf R. & Pishchulov, Grigory, 2015. "Towards a consolidation of worldwide journal rankings – A classification using random forests and aggregate rating via data envelopment analysis," Omega, Elsevier, vol. 51(C), pages 11-23.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vartiainen, Hannu, 2007. "Collective choice with endogenous reference outcome," Games and Economic Behavior, Elsevier, vol. 58(1), pages 172-180, January.
    2. Shiran Rachmilevitch, 2021. "No individual priorities and the Nash bargaining solution," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 56(4), pages 855-863, May.
    3. Rachmilevitch, Shiran, "undated". "Gradual Negotiations and Proportional Solutions," Working Papers WP2011/8, University of Haifa, Department of Economics.
    4. Jingyi Xue, 2018. "Fair division with uncertain needs," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 51(1), pages 105-136, June.
    5. Padilla Tinoco, Silvia Valeria & Creemers, Stefan & Boute, Robert N., 2017. "Collaborative shipping under different cost-sharing agreements," European Journal of Operational Research, Elsevier, vol. 263(3), pages 827-837.
    6. José-Manuel Giménez-Gómez & António Osório & Josep E. Peris, 2015. "From Bargaining Solutions to Claims Rules: A Proportional Approach," Games, MDPI, vol. 6(1), pages 1-7, March.
    7. William Thomson, 2011. "Consistency and its converse: an introduction," Review of Economic Design, Springer;Society for Economic Design, vol. 15(4), pages 257-291, December.
    8. Samir AMINE, 2017. "Job complexity and wage bargaining," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(610), S), pages 189-196, Spring.
    9. Nejat Anbarci & Ching-jen Sun, 2011. "Distributive justice and the Nash bargaining solution," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 37(3), pages 453-470, September.
    10. Rachmilevitch, Shiran, 2015. "Nash bargaining with (almost) no rationality," Mathematical Social Sciences, Elsevier, vol. 76(C), pages 107-109.
    11. KIbrIs, Özgür & TapkI, Ipek Gürsel, 2010. "Bargaining with nonanonymous disagreement: Monotonic rules," Games and Economic Behavior, Elsevier, vol. 68(1), pages 233-241, January.
    12. Osamu Mori, 2018. "Two simple characterizations of the Nash bargaining solution," Theory and Decision, Springer, vol. 85(2), pages 225-232, August.
    13. Ronghuo Zheng & Tinglong Dai & Katia Sycara & Nilanjan Chakraborty, 2016. "Automated Multilateral Negotiation on Multiple Issues with Private Information," INFORMS Journal on Computing, INFORMS, vol. 28(4), pages 612-628, November.
    14. Geoffroy Clippel, 2007. "An axiomatization of the Nash bargaining solution," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 29(2), pages 201-210, September.
    15. Kıbrıs, Özgür & Tapkı, İpek Gürsel, 2011. "Bargaining with nonanonymous disagreement: Decomposable rules," Mathematical Social Sciences, Elsevier, vol. 62(3), pages 151-161.
    16. S. Nuray Akin & Murat R. Sertel, 2007. "The Kalai-Smorodinsky Bargaining Solution Manipulated by Pre-Donations is Concessionary," Working Papers 0718, University of Miami, Department of Economics.
    17. Dominik Karos, 2015. "Stable partitions for games with non-transferable utilities and externalities," Economics Series Working Papers 741, University of Oxford, Department of Economics.
    18. Barry Feldman, 2005. "Lost in Translation? Basis Utility and Proportionality in Games," Game Theory and Information 0507001, University Library of Munich, Germany, revised 28 Feb 2006.
    19. Samir Amine & Sylvain Baumann & Pedro Lages Dos Santos, 2018. "Bargaining Solutions and Public Policies in Matching Models," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 3-14.
    20. Laurens Cherchye & Thomas Demuynck & Bram De Rock, 2013. "Nash‐Bargained Consumption Decisions: A Revealed Preference Analysis," Economic Journal, Royal Economic Society, vol. 123, pages 195-235, March.

    More about this item

    Keywords

    Bargaining problem; Individual rationality; Minimal utility; Nash's bargaining solution; Pareto optimality; Reference point;
    All these keywords.

    JEL classification:

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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:24233. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LSERO Manager (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.