A note on the risk dominance of the Nash demand game

Yoshio Kamijo ()
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Yoshio Kamijo: Waseda University

International Journal of Game Theory, 2024, vol. 53, issue 3, No 16, 1077-1087

Abstract: Abstract The Nash bargaining solution (Nash in Econometrica 18(2):155–162, 1950) is the most used game theory tool for analyzing bargaining problems. Its validity is examined from an equilibrium analysis using a non-cooperative game such as Nash’s demand game (NDG). Since the NDG has multiple equilibria, we need an equilibrium selection. In this note, we apply the Harsanyi and Selten (A general theory of equilibrium selection in games. The MIT Press, Cambridge, 1988) risk-dominance criterion to the NDG. We show that in a wide class of utility functions, the risk-dominant equilibrium of the NDG coincides with the Nash bargaining solution.

Keywords: Bargaining theory; Nash bargaining solution; Nash demand game; Risk dominance; Risk attitude; Fairness (search for similar items in EconPapers)
JEL-codes: C78 D1 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s00182-023-00872-1

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