The Probability to Reach an Agreement as a Foundation for Axiomatic Bargaining
Lorenzo Bastianello, Marco LiCalzi
Econometrica · 2019 · Volume 87 · Issue 3
Abstract
We revisit the Nash bargaining model and axiomatize a procedural solution that maximizes the probability of successful bargaining. Our characterization spans several known solution concepts, including the special cases of the Nash, egalitarian, and utilitarian solutions. Using a probability-based language, we offer a natural interpretation for the product operator underlying the Nash solution: when the bargainers' individual acceptance probabilities are independent, their product recovers the joint acceptance probability.
Keywords
Cooperative bargaining, mediation, arbitration, benchmarking, copulas
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