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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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Identification Number: 10.1007/s1112700792127


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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Additional Information: © 2007 Springer
Divisions: CPNSS
Subjects: H Social Sciences > HB Economic Theory
JEL classification: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C78 - Bargaining Theory; Matching Theory
Date Deposited: 23 Jun 2009 11:16
Last Modified: 04 Jan 2024 20:06

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