A Theory of Agreements in the Shadow of Conflict

József Sákovics and Joan Esteban ()
Authors registered in the RePEc Author Service: József Sákovics

No 255, Working Papers from Barcelona School of Economics

Abstract: We present a novel approach to N-person bargaining, based on the idea that the agreement reached in a negotiation is determined by how the direct conflict resulting from disagreement would be resolved. Our basic building block is the disagreement function, which maps each set of feasible outcomes into a disagreement point. Adding this function to the description of a bargaining problem, a weak axiom based on individual rationality leads to a unique solution: the agreement in the shadow of conflict, ASC. This agreement may be construed as the limit of a sequence of partial agreements, each of which is reached as a function of the parties' relative power in the disagreement scenario. We provide a non-cooperative implementation as well.

Keywords: conflict; bargaining; disagreement (search for similar items in EconPapers)
JEL-codes: C78 D74 (search for similar items in EconPapers)
Date: 2015-09
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Working Paper: A theory of agreements in the shadow of conflict (2006)
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