Kalai-Smorodinsky Bargaining Solution Equilibria

Giuseppe De Marco and Jacqueline Morgan

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: Multicriteria games describe strategic interactions in which players, having more than one criterion to take into account, don't have an a-priori opinion on the rel- ative importance of all these criteria. Roemer (2005) introduces an organizational interpretation of the concept of equilibrium: each player can be viewed as running a bargaining game among criteria. In this paper, we analyze the bargaining problem within each player by considering the Kalai-Smorodinsky bargaining solution. We provide existence results for the so called Kalai-Smorodinsky bargaining solution equilibria for a general class of disagreement points which properly includes the one considered in Roemer (2005). Moreover we look at the refinement power of this equilibrium concept and show that it is an effective selection device even when combined with classical refinement concepts based on stability with respect to perturbations such as the the extension to multicriteria games of the Selten's (1975) trembling hand perfect equilibrium concept.

Date: 2009-07-30
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Published in Journal of Optimization, Theory and Applications, 2010, Vol. 145, 429­449

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Journal Article: Kalai-Smorodinsky Bargaining Solution Equilibria (2010)
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