The Bargaining Problem Revisited

Dan S. Felsenthal and Abraham Diskin
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Dan S. Felsenthal: Political Science Department, University of Haifa
Abraham Diskin: Political Science Department, The Hebrew University

Journal of Conflict Resolution, 1982, vol. 26, issue 4, 664-691

Abstract: On the basis of the results obtained by different experiments testing two-person bargaining situations, it is reasonable to assume that under certain circumstances bargainers are more likely to refer to a “minimum utility point†in forming their strategies, and hence reach different agreements than as hitherto suggested in the literature, e.g., the Nash or the Kalai-Smorodinsky solution. The employment of such a minimum utility point is not merely descriptive, but normative, and should be viewed as a modification of the Pareto-optimum axiom, as well as other axioms, applicable in certain bargaining situations. It is also argued that such a modification is more reasonable than Kalai and Smorodinsky's axiom of monotonicity, which they suggested should replace Nash's axiom of independence of irrelevant alternatives. It is suggested that many real-life, as well as laboratory, two-person bargaining situations differ from the two-person bargaining problem characterized by Nash, and hence the employment of a probabilistic model is advocated in order to predict the bargainers' expected utility.

Date: 1982
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Persistent link: https://EconPapers.repec.org/RePEc:sae:jocore:v:26:y:1982:i:4:p:664-691

DOI: 10.1177/0022002782026004005

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