Bargaining with endogenous disagreement: The extended Kalai-Smorodinsky solution |
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Authors: | Irem Bozbay Hans Peters |
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Institution: | a Department of Quantitative Economics, Maastricht University, Netherlands b London School of Economics, United Kingdom |
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Abstract: | Following Vartiainen (2007) we consider bargaining problems in which no exogenous disagreement outcome is given. A bargaining solution assigns a pair of outcomes to such a problem, namely a compromise outcome and a disagreement outcome: the disagreement outcome may serve as a reference point for the compromise outcome, but other interpretations are given as well. For this framework we propose and study an extension of the classical Kalai-Smorodinsky bargaining solution. We identify the (large) domain on which this solution is single-valued, and present two axiomatic characterizations on subsets of this domain. |
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Keywords: | C78 D74 |
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