Bargaining: Nash, Consensus, or Compromise?

Xiangliang Li

Games and Economic Behavior, 2023, vol. 142, issue C, 730-742

Abstract: We propose two solutions to Nash (1950)'s bargaining problem: the Consensus and Compromise solutions. They gradually diverge from the Nash solution. Regarding axioms, we decompose the Nash solution's Axiom IIA (Independence of Irrelevant Alternatives) into distinct parts. The controversial ones are identified and successively replaced, leading to the Consensus and Compromise solutions. The two replacement parts are: 1). If the additional room for cooperation, resulting from deteriorating non-cooperation, does not offer a better outcome for both players, the solution remains unchanged; 2). A solution should not be the best only for one player, i.e., each player should make at least some concession, no matter how small.

Keywords: Bargaining; Nash solution; Consensus; Compromise; No-cooperation; Cooperation (search for similar items in EconPapers)
JEL-codes: C70 C71 C78 D01 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:142:y:2023:i:c:p:730-742

DOI: 10.1016/j.geb.2023.09.011

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