# Judicial Precedent as a Dynamic Rationale for Axiomatic Bargaining Theory

*Marc Fleurbaey* and
*John Roemer*

No 1002, IDEP Working Papers from Institut d'economie publique (IDEP), Marseille, France

**Abstract:**
Axiomatic bargaining theory (e.g., Nash’s theorem) is static. We attempt to provide a dynamic justification for the theory. Suppose a Judge or Arbitrator must allocate utility in a (infinite) sequence of two-person problems; at each date, the Judge is presented with a utility possibility set in R2+. He/she must choose an allocation in the set, constrained only by Nash’s axioms, in the sense that a penalty is paid if and only if a utility allocation is chosen at date T which is inconsistent, according to one of the axioms, with a utility allocation chosen at some earlier date. Penalties are discounted with t, and the Judge chooses any allocation, at a given date, that minimizes the penalty he/she pays as that date. Under what conditions what the Judge’s chosen allocations converge to the Nash allocation over time? We answer this question for three canonical axiomatic bargaining solutions: Nash’s, Kalai-Smorodinsky’s, and the ’egalitarian’ solution, and generalize the analysis to a broad class of axiomatic models.

**Keywords:** axiomatic bargaining theory; judicial precedent; dynamic foundations; Nash’s bargaining solution. (search for similar items in EconPapers)

**JEL-codes:** C70 C78 K4 (search for similar items in EconPapers)

**Pages:** 43 pages

**Date:** 2010-05-07, Revised 2010-05-07

**New Economics Papers:** this item is included in nep-gth

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**Citations:** View citations in EconPapers (1)

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**Related works:**

Journal Article: Judicial precedent as a dynamic rationale for axiomatic bargaining theory (2011)

Working Paper: Judicial Precedent as a Dynamic Rationale for Axiomatic Bargaining Theory (2010)

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**Persistent link:** https://EconPapers.repec.org/RePEc:iep:wpidep:1002

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