Bargaining with Intertemporal Maximin Payoffs
Pedro Gajardo and
Michel De Lara
No 7471, CESifo Working Paper Series from CESifo
We frame sustainability problems as bargaining problems among stakeholders who have to agree on a common development path. For infinite alternatives, the set of feasible payoffs is unknown, limiting the possibility to apply classical bargaining theory and mechanisms. We define a framework accounting for the economic environment, which specifies how the set of alternatives and payoff structure underlie the set of feasible payoffs and disagreement point. A mechanism satisfying the axioms of Independence of Non-Efficient Alternatives and Independence of Redundant Alternatives can be applied to a reduced set of alternatives producing all Pareto-efficient outcomes of the initial problem, and produces the same outcome. We exhibit monotonicity conditions under which such a subset of alternatives is computable. We apply our framework to dynamic sustainability problems. We characterize a “satisficing” decision rule achieving any Pareto-efficient outcome. This rule is renegotiation-proof and generates a time-consistent path under the axiom of Individual Rationality.
Keywords: social choice; axiomatic bargaining theory; economic environment; monotonicity; dynamics; sustainability; intergenerational equity; maximin (search for similar items in EconPapers)
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Working Paper: Bargaining with Intertemporal Maximin Payoffs (2019)
Working Paper: Bargaining with intertemporal maximin payoffs (2011)
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