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Bargaining over shares of uncertain future profits

  • Yigal GerchakEmail author
  • Eugene Khmelnitsky
Original Article
  • 10 Downloads

Abstract

We address the following basic question: How should parties, with possibly different risk-attitudes and beliefs, who are contemplating creating a partnership, divide uncertain future profits? We assume that the formula for division of profits is a result of negotiations, and model it via the Nash-bargaining-like solution (NBLS). After characterizing the optimal contract, using calculus of variations, we assume a linear contract and find its optimal parameters for various cases of interest. We also consider the implications of an asymmetric NBLS.

Keywords

Profit sharing Nash bargaining 

Mathematics Subject Classiication

91A12 

Notes

Supplementary material

40070_2019_95_MOESM1_ESM.pdf (895 kb)
Supplementary material 1 (PDF 895 kb)

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Copyright information

© EURO - The Association of European Operational Research Societies and Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of Industrial EngineeringTel Aviv UniversityTel AvivIsrael

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