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Individual rationality and bargaining

Diskin, Abraham and Felsenthal, Dan S. (2007) Individual rationality and bargaining. Public choice, 133 (1-2). pp. 25-29. ISSN 1573-7101

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Official URL: http://www.springerlink.com/openurl.asp?genre=journal&issn=0048-5829

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.

Item Type:Article
Additional Information:© 2007 Springer
Rights:http://www.lse.ac.uk/library/rights/LSERO.htm
Uncontrolled Keywords:Bargaining problem; Individual rationality; Minimal utility; Nash's bargaining solution; Pareto optimality; Reference point
Library of Congress subject classification:HB Economic Theory
Journal of Economic Literature Classification System:C78 - Bargaining Theory; Matching Theory
Sets:Centre for Philosophy of Natural and Social Science (CPNSS)
DOI:10.1007/s1112700792127
ID Code:24233
Deposited By:Professor Dan S Felsenthal
Deposited On:23 Jun 2009 12:16
Last Modified:26 Jun 2009 11:37

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