The Balanced Threat Agreement for Individual Externality Negotiation Problems

Peter Borm, Yukihiko Funaki () and Yuan Ju

Homo Oeconomicus: Journal of Behavioral and Institutional Economics, 2020, vol. 37, issue 1, No 5, 67-85

Abstract: Abstract This paper introduces a model to analyze individual externalities and the associated negotiation problem, which has been largely neglected in the game theoretic literature. Following an axiomatic perspective, we propose a solution, as a payoff sharing scheme, called the balanced threat agreement, for such problems. It highlights an agent’s potential influences on all agents by threatening to enter or quit. We further study the solution by investigating its consistency. We also offer a discussion on the related stability issue.

Keywords: Individual externalities; Negotiation; Balanced threat; Characterization; Consistency (search for similar items in EconPapers)
JEL-codes: C71 D62 D63 D74 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s41412-020-00097-7

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