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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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
Official URL:	http://www.springerlink.com/openurl.asp?genre=jour...
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:	11 Dec 2024 23:09
URI:	http://eprints.lse.ac.uk/id/eprint/24233

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