×

On a new solution concept for bargaining problems. (English) Zbl 1050.91501

Summary: The purpose of this paper is to discuss the properties of a new solution of the 2-person bargaining problem as formulated by Nash, the so-called average pay-off solution. This solution, of a very simple form, has a natural interpretation based on the center of gravity of the feasible set, and it is ‘more sensitive’ to changes of feasible sets than any other standard bargaining solution. It satisfies the standard axioms: Pareto-optimality, symmetry, scale invariance, continuity and twisting. Moreover, it satisfies a new desirable axiom, equal area twisting. It is surprising that no standard solution of bargaining problems has this property. The solution considered can be generalized in a very natural and unique way to \(n\)-person bargaining problems.

MSC:

91A05 2-person games
91A12 Cooperative games
91B26 Auctions, bargaining, bidding and selling, and other market models
PDFBibTeX XMLCite
Full Text: DOI EuDML