Judicial precedent as a dynamic rationale for axiomatic bargaining theory

Artikel

Axiomatic bargaining theory (e.g., Nash's theorem) is static. We attempt to provide a dynamic justification for the theory. Suppose a Judge or Arbitrator must allocate utility in an (infinite) sequence of two-person problems; at each date, the Judge is presented with a utility possibility set in the nonnegative orthant in two-dimensional Euclidean space. He/she must choose an allocation in the set, constrained only by Nash's axioms, in the sense that a penalty is paid if and only if a utility allocation is chosen at date T which is inconsistent, according to one of the axioms, with a utility allocation chosen at some earlier date. Penalties are discounted with t, and the Judge chooses any allocation, at a given date, that minimizes the penalty he/she pays at that date. Under what conditions will the Judge's chosen allocations converge to the Nash allocation over time? We answer this question for three canonical axiomatic bargaining solutions: Nash's, Kalai-Smorodinsky's, and the 'egalitarian' solution, and generalize the analysis to a broad class of axiomatic models.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Theoretical Economics ; ISSN: 1555-7561 ; Volume: 6 ; Year: 2011 ; Issue: 2 ; Pages: 289-310 ; New Haven, CT: The Econometric Society

Classification and Topics

• Classification: Wirtschaft ; Game Theory and Bargaining Theory: General ; Bargaining Theory; Matching Theory
• Subject: Axiomatic bargaining theory ; judicial precedent ; dynamic foundations ; Nash's bargaining solution

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fleurbaey, Marc ; Roemer, John E.
• Event: Veröffentlichung
• (who): The Econometric Society
• (where): New Haven, CT
• (when): 2011

Further information

• DOI: doi:10.3982/TE588
• Handle: http://hdl.handle.net/10419/150156
• Last update: 10.03.2025, 11:45 AM CET