Learning from a Piece of Pie: The Empirical Content of Nash Bargaining

Pierre Chiappori and Olivier Donni

No 2128, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Consider a model of bargaining, in which two players, 1 and 2, share a pie of size y. The bargaining environment is described by a set of parameters ? that may affect agents’ preferences over the agreement sharing, the status quo outcome, or both. The outcomes (i.e., whether an agreement is reached, and if so the individual shares) and the environment (including the size of the pie) are known, but neither the agents’ utilities nor their threat points. Assuming that the agents adopt a Nash bargaining solution, we investigate the empirical content of this assumption. We first show that in the most general framework, any outcome can be rationalized as a Nash solution. However, if (i) the size of the pie y does not influence the players’ threat points and (ii) there exist (at least) two parameters ?1 and ?2 that are player-specific, in the sense that ?i does not influence the utility or the threat point of player j ? i, then Nash bargaining generates strong testable restrictions. Moreover, the underlying structure of the bargaining, i.e., the players’ utility and threat point functions, can be recovered under slightly more demanding conditions.

Keywords: bargaining game; Nash solution; testability; identifiability; cardinal utility (search for similar items in EconPapers)
JEL-codes: C71 C78 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2006-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published - published as 'Learning from a Piece of Pie in: Review of Economic Studies, 2012, 79 (1), 162 - 196 (with Ivana Komunjer)

Downloads: (external link)
https://docs.iza.org/dp2128.pdf (application/pdf)

Related works:
Working Paper: Learning from a Piece of Pie: the Empirical Content of Nash Bargaining (2006)
Working Paper: Learning From a Piece of Pie: The Empirical Content of Nash Bargaining (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp2128

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().