Economic Theory

, Volume 52, Issue 1, pp 15–39

Bargaining with subjective mixtures

Research Article

DOI: 10.1007/s00199-011-0680-0

Cite this article as:
Webb, C.S. Econ Theory (2013) 52: 15. doi:10.1007/s00199-011-0680-0

Abstract

This paper reconsiders the Bargaining Problem of Nash (Econometrica 28:155–162, 1950). I develop a new approach, Conditional Bargaining Problems, as a framework for measuring cardinal utility. A Conditional Bargaining Problem is the conjoint extension of a Bargaining Problem, conditional on the fact that the individuals have agreed on a “measurement event”. Within this context, Subjective Mixture methods are especially powerful. These techniques are used to characterise versions of the Nash and the Kalai–Smorodinsky solutions. This approach identifies solutions based only on the individuals’ tastes for the outcomes. It is therefore possible to do Bargaining theory in almost complete generality. The results apply to Biseparable preferences, so are valid for almost all non-expected utility models currently used in economics.

Keywords

Bargaining Utility Subjective mixtures Biseparable preferences 

JEL Classification

C78 D81 

Copyright information

© Springer-Verlag 2011

Authors and Affiliations

  1. 1.Economics, School of Social SciencesThe University of ManchesterManchesterUK

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