Nashs Bargaining Formula Revisited: A Note on Self-Referential Logic

James Gander

Working Paper Series, Department of Economics, University of Utah from University of Utah, Department of Economics

Abstract: The note focuses on the marginal rates of substitution (MRS) in Nashs product formula solution to bargaining and why the formula works. Two simple examples from duopoly and bilateral monopoly are used to demonstrate that the MRSs for both players are implicitly in the contract curve and the product formula. They are equal in the former by design. They become equal in the latter in equilibrium. The self-referential logic is evident. The bargaining model or system is self-contained and circular and is analogous to the proposition given by x = F(x).

Keywords: Bargaining; Pareto Optimum; Self-Referential Logic (search for similar items in EconPapers)
JEL-codes: C65 C71 C78 (search for similar items in EconPapers)
Pages: 8 pages
Date: 2008
New Economics Papers: this item is included in nep-gth and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:uta:papers:2008_10

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