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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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 |
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| Official URL: | http://www.springerlink.com/openurl.asp?genre=jour... |
| Additional Information: | © 2007 Springer |
| Uncontrolled Keywords: | Bargaining problem; Individual rationality; Minimal utility; Nash's bargaining solution; Pareto optimality; Reference point |
| Library of Congress subject classification: | H Social Sciences > HB Economic Theory |
| Journal of Economic Literature Classification System: | C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C78 - Bargaining Theory; Matching Theory |
| Sets: | Research centres and groups > Centre for Philosophy of Natural and Social Science (CPNSS) Collections > Economists Online |
| Rights: | http://www.lse.ac.uk/library/rights/LSERO.htm |
| URL: | http://eprints.lse.ac.uk/24233/ |
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