The Probability to Reach an Agreement as a Foundation for Axiomatic Bargaining

Lorenzo Bastianello and Marco LiCalzi

Econometrica, 2019, vol. 87, issue 3, 837-865

Abstract: We revisit the Nash bargaining model and axiomatize a procedural solution that maximizes the probability of successful bargaining. Our characterization spans several known solution concepts, including the special cases of the Nash, egalitarian, and utilitarian solutions. Using a probability‐based language, we offer a natural interpretation for the product operator underlying the Nash solution: when the bargainers' individual acceptance probabilities are independent, their product recovers the joint acceptance probability.

Date: 2019
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https://doi.org/10.3982/ECTA13673

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Working Paper: The probability to reach an agreement as a foundation for axiomatic bargaining (2018)
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