In this paper we examine the merit of bargaining theory, in its economic and ecological forms, as a model for understanding variation in the frequency of participation in cooperative fishing among men of Ifaluk atoll in Micronesia. Two determinants of bargaining power are considered: resource control and a bargainer’s utility gain for his expected share of the negotiated resource. Several hypotheses which relte cultural and life-course parameters to bargaining power are tested against data on the frequency (...) of cooperative sail-fishing participation. Consistent with predictions generated from bargaining theory, we show that (1) age is negatively correlated with cooperative fishing participation, (2) men of highranking clans and men with high levels of education fish less than men of low-ranking clans and less-educated men, (3) men with high expected utility gains from fishing returns fish more than men with low expected utility gains, (4) number of dependents is positively correlated with cooperative fishing participation, and (5) the number of young genetic offspring residing with a man is positively correlated with cooperative fishing participation, whereas the number of genetic offspring more than 13 years old who are residing with a man is negatively correlated with cooperative fishing participation. (shrink)

In this paper we deal with the extension of Nash bargaining theory to nonconvex problems. By focussing on the Social Welfare Ordering associated with a bargaining solution, we characterize the symmetric Nash Bargaining Solution (NBS). Moreover, we obtain a unified method of proof of recent characterization results for the asymmetric single-valued NBS and the symmetric multivalued NBS, as well as their extensions to different domains.

The first unified and systematic treatment of the modern theory of bargaining, presented together with many examples of how that theory is applied in a variety of bargaining situations. Abhinay Muthoo provides a masterful synthesis of the fundamental results and insights obtained from the wide-ranging and diverse bargaining theory literature. Furthermore, he develops new analyses and results, especially on the relative impacts of two or more forces on the bargaining outcome. Many topics - (...) such as inside options, commitment tactics and repeated bargaining situations - receive their most extensive treatment to date. In the concluding chapter, he offers pointers towards future research. Bargaining Theory with Applications is a textbook for graduate students in economic theory and other social sciences and a research resource for scholars interested in bargaining situations. (shrink)

For contractarians, justice is the result of a rational bargain. The goal is to show that the rules of justice are consistent with rationality. The two most important bargaining theories of justice are David Gauthier’s and those that use the Nash’s bargaining solution. I argue that both of these approaches are fatally undermined by their reliance on a symmetry condition. Symmetry is a substantive constraint, not an implication of rationality. I argue that using symmetry to generate uniqueness undermines (...) the goal of bargaining theories of justice. (shrink)

Conventionalism as a distinct approach to the social contract received significant attention in the game-theoretic literature on social contract theory. Peter Vanderschraaf’s sophisticated and innovative theory of conventional justice represents the most recent contribution to this tradition and, in many ways, can be viewed as a culmination of this tradition. In this article, I focus primarily on Vanderschraaf’s defense of the egalitarian bargaining solution as a principle of justice. I argue that one particular formal feature of this (...) bargaining solution, the baseline consistency requirement, may stand in tension with other features of conventionalism as an approach to the social contract and limit the scope of Vanderschraaf’s theory to societies in which de facto an egalitarian sense of justice evolves. It limits the scope of Vanderschraaf’s theory in the face of moral diversity. A similar limitation applies to Vanderschraaf’s theory of democratic political authority. Despite these minor limitations, Vanderschraaf’s theory can only be seen as a major success and significant contribution to social contract theory. (shrink)

Classical bargaining theory attempts to solve a bargaining problem using only the information about the problem contained in the representation of its possible outcomes in utility space. However, this information usually underdetermines the solution. I use additional information about interpersonal comparisons of utility and bargaining power. The solution is then the outcome that maximizes the sum of power-weighted utilities. I use these results to advance a contractarian argument for a utilitarian form of social cooperation. As the (...) original position, I propose a hypothetical situation in which the members of society are rational, fully informed, free, and equal. I argue that in this original position they would adopt a utilitarian form of social cooperation. I conclude that utilitarian cooperation constitutes a moral ideal toward which society ought to aspire. (shrink)

Classical bargaining theory attempts to solve a bargaining problem using only the information about the problem contained in the representation of its possible outcomes in utility space. However, this information usually underdetermines the solution. I use additional information about interpersonal comparisons of utility and bargaining power. The solution is then the outcome that maximizes the sum of power-weighted utilities. I use these results to advance a contractarian argument for a utilitarian form of social cooperation. As the (...) original position, I propose a hypothetical situation in which the members of society are rational, fully informed, free, and equal. I argue that in this original position they would adopt a utilitarian form of social cooperation. I conclude that utilitarian cooperation constitutes a moral ideal toward which society ought to aspire. (shrink)

From a traditional moral point of view, business practitioners often seem overly concerned about the behavior of their peers in deciding how they ought to act. We propose to account for this concern by introducing a mutual trust perspective, where moral obligations are grounded in a sense of trust that others will abide by the same rules. when grounds for trust are absent, the obligation is weakened. We illustrate this perspective by examining the widespread ambivalence with regard to deception about (...) one's settlement preferences in negotiation. On an abstract level, such deception generally seems undesirable, though in many individual cases it is condoned, even admired as shrewd bargaining. Because of the difficulty in verifying someone's settlement preferences, it is hard to establish a basis for trusting the revelations of the other party, especially in competitive negotiations with relative strangers. (shrink)

This article makes two arguments: first, it argues that theories connecting ethnic group mobilization with democratic bargaining are based, often unwittingly, on primordialist assumptions that bias them toward overestimating the intractability of ethnic group demands. Second, it proposes a synthesis of constructivist approaches to ethnic identity and social choice theory to show how we who study ethnic mobilization might build theories that rely on the more realistic and more powerful assumption of instability in ethnic group boundaries and preferences. (...) It illustrates the promise of this approach through a study of the language bargain struck in India's constituent assembly between 1947 and 1949. (shrink)

Collaboration is increasingly popular across academia. Collaborative work raises certain ethical questions, however. How will the fruits of collaboration be divided? How will the work for the collaborative project be split? In this paper, we consider the following question in particular. Are there ways in which these divisions systematically disadvantage certain groups? -/- We use evolutionary game theoretic models to address this question. First, we discuss results from O'Connor and Bruner (unpublished). In this paper, we show that underrepresented groups in (...) academia can be disadvantaged in such situations by dint of their small numbers. Second, we present novel results exploring how the hierarchical structure of academia can lead to bargaining disadvantage. We investigate models where one actor has a higher baseline of academic success, less to lose if collaboration goes south, or greater rewards for non-collaborative work. We show that in these situations, the less powerful partner is disadvantaged in bargaining over collaboration. (shrink)

We present a novel approach to N-person bargaining, based on the idea that the agreement reached in a negotiation is determined by how the direct conflict resulting from disagreement would be resolved. Our basic building block is the disagreement function, which maps each set of feasible outcomes into a disagreement point. Adding this function to the description of a bargaining problem, a weak axiom based on individual rationality leads to a unique solution: the agreement in the shadow of (...) conflict, ASC. This agreement may be construed as the limit of a sequence of partial agreements, each of which is reached as a function of the parties’ relative power in the disagreement scenario. As a result, we identify a link between the circumstances of bargaining and the bargaining powers within it. The rich get the law passed by means of force and arms or get it accepted by fear to their might, aren’t things this way? Plato, Republic. (shrink)

Recently, philosophers have investigated the emergence and evolution of the social contract. Yet extant work is limited as it focuses on the use of simple behavioral norms in rather rigid strategic settings. Drawing on axiomatic bargaining theory, we explore the dynamics of more sophisticated norms capable of guiding behavior in a wide range of scenarios. Overall, our investigation suggests the utilitarian bargaining solution has a privileged status as it has certain stability properties other social arrangements lack.

Nick Bostrom and others have suggested treating decision-making under moral uncertainty as analogous to parliamentary decision-making. The core suggestion of this “parliamentary approach” is that the competing moral theories function like delegates to the parliament, and that these delegates then make decisions by some combination of bargaining and voting. There seems some reason to hope that such an approach might avoid standard objections to existing approaches (for example, the “maximise expected choiceworthiness” (MEC) and “my favourite theory” approaches). However, (...) the parliamentary approach is so far extremely underspecified, making it largely indeterminate how such a model will in fact behave in the respects that those concerned with moral uncertainty care about. This paper explores one way of making it precise. We treat predicaments of moral uncertainty as analogous to bargaining situations alone (setting aside voting), and apply a version of the Nash solution that is standard in bargaining theory. The resulting model does indeed perform in many of the hoped-for ways. However, so also does a version of MEC that employs a structural approach to intertheoretic comparisons. It seems to us an open question which, regarding this version of MEC and the bargaining-theoretic approach, is superior to the other. We identify the key points on which the two differ. (shrink)

Virtual bargaining theory suggests that social agents aim to resolve non-cooperative games by identifying the strategy profile which they would agree to play if they could openly bargain. The theory thus offers an explanation of how social agents resolve games with multiple Nash equilibria. One of the main questions pertaining to this theory is how the principles of the bargaining theory could be applied in the analysis of hypothetical bargaining in non-cooperative games. I (...) propose a bargaining model based on the benefit-equilibrating bargaining solution concept for non-cooperative games, broadly in line with the principles underlying Conley and Wilkie's ordinal egalitarian solution for Pareto optimal point selection problems with finite choice sets. I provide formal characterizations of the ordinal and the cardinal versions of BES, discuss their application to n-player games, and compare model's theoretical predictions with the data available from several experiments involving `pie games'. (shrink)

The question of what a group of rational agents would agree on were they to deliberate on how to organise society is central to all hypothetical social contract theories. If morality is to be based on a social contract, we need to know the terms of this contract. One type of social contract theory, contractarianism, aims to derive morality from rationality alone. Contractarians need to show, amongst other things, that rational and self-interested individuals would agree on an impartial division (...) of a cooperative surplus. But it is often claimed that contractarians cannot show this without introducing moral assumptions. This paper argues that on the right understanding of the question contractarians are asking, these worries can be answered. Without relying on moral assumptions, the paper offers a novel derivation of symmetry, which is the axiom responsible for the impartiality of the most famous economic bargaining solutions appealed to by contractarians. (shrink)

Climate negotiations under the United Nations Framework Convention on Climate Change have so far failed to achieve a robust international agreement to reduce greenhouse gas emissions. Game theory has been used to investigate possible climate negotiation solutions and strategies for accomplishing them. Negotiations have been primarily modelled as public goods games such as the Prisoner’s Dilemma, though coordination games or games of conflict have also been used. Many of these models have solutions, in the form of equilibria, corresponding to (...) possible positive outcomes—that is, agreements with the requisite emissions reduction commitments. Other work on large-scale social dilemmas suggests that it should be possible to resolve the climate problem. It therefore seems that equilibrium selection may be a barrier to successful negotiations. Here we use an N-player bargaining game in an agent-based model with learning dynamics to examine the past failures of and future prospects for a robust international climate agreement. The model suggests reasons why the desirable solutions identified in previous game-theoretic models have not yet been accomplished in practice and what mechanisms might be used to achieve these solutions. (shrink)

David Gauthier's Morals by Agreement presents a partial theory of distributive justice. It is partial because it applies only to the distribution of gains from joint endeavors, or what we may call the ‘social surplus’ from cooperation. This surplus is the benefit we receive from cooperation insofar as this is greater than what we might have produced through individual efforts without interaction with others. The central core of Gauthier's theory of distributive justice is his bargaining theory (...) of ‘minimax relative concession’ or MRC. Whether his theory is compelling turns essentially on whether MRC is workable and compelling. It is this issue that I wish to address. (shrink)

This article argues that systematic comparative analyses of women's strategies and coping mechanisms lead to a more culturally and temporally grounded understanding of patriarchal systems than the unqualified, abstract notion of patriarchy encountered in contemporary feminist theory. Women strategize within a set of concrete constraints, which I identify as patriarchal bargains. Different forms of patriarchy present women with distinct “rules of the game” and call for different strategies to maximize security and optimize life options with varying potential for active (...) or passive resistance in the face of oppression. Two systems of male dominance are contrasted: the sub-Saharan African pattern, in which the insecurities of polygyny are matched with areas of relative autonomy for women, and classic patriarchy, which is characteristic of South and East Asia as well as the Muslim Middle East. The article ends with an analysis of the conditions leading to the breakdown and transformation of patriarchal bargains and their implications for women's consciousness and struggles. (shrink)

A bargaining solution is a social compromise if it is metrically rationalizable, i.e., if it has an optimum (depending on the situation, smallest or largest) distance from some reference point. We explore the workability and the limits of metric rationalization in bargaining theory where compromising is a core issue. We demonstrate that many well-known bargaining solutions are social compromises with respect to reasonable metrics. In the metric approach, bargaining solutions can be grounded in axioms on (...) how society measures differences between utility allocations. Using this approach, we provide an axiomatic characterization for the class of social compromises that are based on p-norms and for the attending bargaining solutions. We further show that bargaining solutions which satisfy Pareto Optimality and Individual Rationality can always be metrically rationalized. (shrink)

Applying the solutions defined in the axiomatic bargaining theory to actual bargaining problems is a challenge when the problem is not described by its Utility Possibility Set (UPS) but as a social choice environment specifying the set of alternatives and utility profile underlying the UPS. It requires computing the UPS, which is an operational challenge, and then identifying at least one alternative that actually achieves the bargained solution’s outcome. We introduce the axioms of Independence of Non-Strongly-Efficient Alternatives (...) (resp. Weakly) and Independence of Redundant Alternatives. A solution satisfying these axioms can be applied to a simplified problem based on any reduced set of alternatives generating the strong (resp. weak) Pareto frontier of the initial problem, without changing the outcome, making the application of bargaining solutions to actual problems easier. We compare our axioms to usual independence axioms, and discuss their consistency with usual bargaining solutions. Then, we introduce monotonicity conditions corresponding to the existence of an interest group, i.e., agents ranking the alternatives in the same order. For such monotonic social choice environments, we provide a parameterized family of alternatives that generates the Pareto frontier of the bargaining problem, in line with our previous results. Our analysis illustrates that an axiomatic approach can be useful to foster the application of bargaining solutions, in complement to usual computational methods. (shrink)

As well as disagreeing about how much one should donate to charity, moral theories also disagree about where one should donate. In light of this disagreement, how should the morally uncertain philanthropist allocate her donations? In many cases, one intuitively attractive option is for the philanthropist to split her donations across all of the charities that are recommended by moral views in which she has positive credence, with each charity’s share being proportional to her credence in the moral theories that (...) recommend that particular charity. Despite the fact that something like this approach is already being used by real-world philanthropists to distribute billions of dollars of donations, it is not supported by any of the approaches to moral uncertainty that have been proposed thus-far in the philosophical literature. In this paper, we will develop a bargaining-based approach to moral uncertainty that honors the proportionality intuition in favor of splitting one’s donations. We also show how this bargaining-based approach has several further advantages over the best alternative proposals. (shrink)

Mutualistic theory explains convincingly the prevalence of fairness norms in small societies of foragers and in large contemporary democratic societies. However, it cannot explain the U-shaped curve of egalitarianism in human history. A theory based on bargaining power is able to provide a more general account and to explain mutualism as a special case. According to this approach, social norms may be more variable and malleable than Baumard et al. suggest.

Men and women have always bargained for sex. In Hard Bargains, philosopher-lawyer Linda Hirshman and legal historian Jane Larson provide the first complete analysis of power in heterosexual relationships, combining an eye-opening legal history of sexual regulation with thought-provoking predictions of what the future might bring. Hirshman and Larson tell a riveting tale that spans the centuries--from early accounts of adulterers hanging from the gibbet, to the impact of the Kinsey Reports and Hugh Hefner's playboy philosophy, to the 1960s judge (...) who argued in favor of sex with eleven-year-olds. The book examines the factors that have shaped our notions of sex, from Catholic teaching to the theories of Sigmund Freud, and it explores the Supreme Court decisions of the last few decades that revolutionized the politics of sex. And Hard Bargains not only provides a deep understanding of historical and current disputes, it also offers striking predictions of what sexual bargaining will look like in the future--rape laws replaced by laws of sexual autonomy, adultery subjected to breach of contract action, fornicators responsible for each other's rent, prostitution considered an unfair labor practice. These are a few of the surprising--and surprisingly workable--solutions the authors foresee in the 21st century. Hard Bargains takes a forthright and level-headed look at all aspects of one of the biggest controversies in contemporary American society--heterosexual sex--and delivers a radically new perspective on the sexual lives of women and men. (shrink)

We study a multilateral bargaining problem, where the buyer intends to purchase a subset of available items, each owned by a seller. The subset purchased must satisfy a notion of contiguity, which is modeled using graphs. The graph theoretic approach allows us to study different degrees of complementarity and substitutability between items. It also allows us to examine how degrees of complementarity and substitutability affect the share of surplus obtained by the buyer in the equilibrium of the bargaining (...) game. We characterize necessary and sufficient conditions on the graphs for the buyer to extract full surplus in subgame perfect equilibrium. When the conditions are not met, we provide upper bounds on the equilibrium surplus share of the buyer. (shrink)

My concern in this paper is with the illumination that the theory of rational bargaining sheds on the formulation of principles of justice. I shall first set out the bargaining problem, as treated in the theory of games, and the Nash solution, or solution F. I shall then argue against the axiom, labeled “independence of irrelevant alternatives,” which distinguished solution F, and also against the Zeuthen model of the bargaining process which F formalizes.

On occasion, in multilateral negotiations, interested parties make unilateral demands. Certain agreements need unanimity. However, a lesser degree of consensus may be feasible. In this paper, an alternating demand bargaining game among n players is proposed, which envisages varying consensus requirements and commitment, both crucial in generating a unique and efficient outcome of the bargaining process.

I argue in this paper that there are two considerations which govern the dynamics of a two-person bargaining game, viz. relative proportionate utility loss from conceding to one's opponent's proposal and relative non-proportionate utility loss from not conceding to one's opponent's proposal, if she were not to concede as well. The first consideration can adequately be captured by the information contained in vNM utilities. The second requires measures of utility which allow for an interpersonal comparison of utility differences. These (...) considerations respectively provide for a justification of the Nash solution and the Kalai egalitarian solution. However, none of these solutions taken by themselves can provide for a full story of bargaining, since, if within a context of bargaining one such consideration is overriding, the solution which does not match this consideration will yield unreasonable results. I systematically present arguments to the effect that each justification from self-interest for respectively the Nash and the Kalai egalitarian solution is vulnerable to this kind of objection. I suggest that the search for an integrative model may be a promising line of research. (shrink)

This second Cambridge University Press collection of papers by Vernon L. Smith, a creator of the field of experimental economics, includes many of his primary authored and coauthored contributions on bargaining and market behavior between 1990 and 1998. The essays explore the use of laboratory experiments to test propositions derived from economics and game theory. They also investigate the relationship between experimental economics and psychology, particularly the field of evolutionary psychology, using the latter to broaden the perspective in (...) which experimental results are interpreted. The volume complements Professor Smith's earlier work by demonstrating the importance of institutional features of markets in understanding behavior and market performance. Specific themes investigated include rational choice, the notion of fairness, game theory and extensive form experimental interactions, institutions and market behavior, and the study of laboratory stock markets. (shrink)

The notion of a defendant submitting a false guilty plea due to the penal incentive offered is not an uncommon phenomenon. While the practice has been legitimised based on the defendant’s voluntary informed consent, it has often been argued that the structure of the plea-bargaining practice is coercive. Such can be the case whenever the plea offer entails a significant sentence differential, discrepancy in the form of punishment (a non-custodial sentence relative to a custodial one), or when the alternative (...) of pleading guilty includes the risk of capital punishment. Having said that, plea-bargains have often been classified as a “non-coercive offer”, whether due to their advantageous mutual character according to a baseline conception of coercion or being an offer that one can overcome according to an irresistible psychological account. While many scholars have struggled with the ambiguous notion of “coercive offers,” the paper offers an alternative approach, arguing that it is the type of reasons to be considered within the offer that renders the bargain less than fully autonomous. It will be argued that the plea-bargain proposition infuses irrelevant (guilt-uncorrelated) penal considerations unrelated to the question of guilt. Such considerations are the wrong kind of reason for the guilty-plea decision, and due to the defendant’s dependency on the plea offer, they distort the defendant’s intentional character of her autonomous decision. It is part of the conception of the guilty plea. Though a defendant may autonomously intend to consider irrelevant penal considerations, such a decision cannot be genuinely considered a decision regarding the admission of guilt. (shrink)

We consider a spatial bargaining model where players collectively choose a facility location on a two-dimensional rectilinear distance space through bargaining using the unanimity rule. We show that as players become infinitely patient, their stationary subgame perfect equilibrium utilities converge to the utilities that satisfy the lexicographic maximin utility criterion introduced by Sen.

Part I of this essay will be devoted to Gauthier's principle of minimax relative concession. Part II will focus, more generally, on the variety of possible strategies available to liberal theory. In Part I, I will argue that the principle of minimax relative concession does not define “essential justice” as Gauthier claims. In Part II, I will argue that the difficulties facing Gauthier's strategy are common to other strategies of die same general kind. I will close by suggesting what (...) I think may prove to be a more promising approach. (shrink)

In a multilateral bargaining game where a proposer and responders can set up a “principal–agent” relationship by means of binding cash-offer contracts, we show that there is a Markov SPE with a delay in reaching an agreement. We also show that all the individually rational and efficient payoffs can be supported by SPE.

Within this paper we consider a model of Nash bargaining with incomplete information. In particular, we focus on fee games, which are a natural generalization of side payment games in the context of incomplete information. For a specific class of fee games we provide two axiomatic approaches in order to establish the Expected Contract Value, which is a version of the Nash bargaining solution.

This is a paperback edition of a major contribution to the field, first published in hard covers in 1977. The book outlines a general theory of rational behaviour consisting of individual decision theory, ethics, and game theory as its main branches. Decision theory deals with a rational pursuit of individual utility; ethics with a rational pursuit of the common interests of society; and game theory with an interaction of two or more rational individuals, each pursuing (...) his own interests in a rational manner. (shrink)

Game-Theoretic Models of Bargaining provides a comprehensive picture of the new developments in bargaining theory. It especially shows the way the use of axiomatic models has been complemented by the new results derived from strategic models. The papers in this volume are edited versions of those given at a conference on Game Theoretic Models of Bargaining held at the University of Pittsburgh. There are two distinct reasons why the study of bargaining is of fundamental importance (...) in economics. The first is that many aspects of economic activity are directly influenced by bargaining between and among individuals, firms, and nations. The second is that bargaining occupies an important place in economic theory, since the 'pure bargaining problem' is at the opposite pole of economic phenomena from the case of 'perfect competition'. This volume is an outgrowth of the renewed interest in the strategic approach to the theory of bargaining and to the general theory of non-cooperative games. (shrink)

One of the conceptual limitations of the orthodox game theory is its inability to offer definitive theoretical predictions concerning the outcomes of noncooperative games with multiple rationalizable outcomes. This prompted the emergence of goal-directed theories of reasoning – the team reasoning theory and the theory of hypothetical bargaining. Both theories suggest that people resolve non-cooperative games by using a reasoning algorithm which allows them to identify mutually advantageous solutions of non-cooperative games. The primary aim of this (...) thesis is to enrich the current debate on goaldirected reasoning theories by studying the extent to which the principles of the bargaining theory can be used to formally characterize the concept of mutual advantage in a way which is compatible with some of the conceptually compelling principles of orthodox game theory, such as individual rationality, incentive compatibility, and non-comparability of decision-makers’ personal payoffs. I discuss two formal characterizations of the concept of mutual advantage derived from the aforementioned goal-directed reasoning theories: A measure of mutual advantage developed in collaboration with Jurgis Karpus, which is broadly in line with the notion of mutual advantage suggested by Sugden, and the benefit-equilibrating bargaining solution function, which is broadly in line with the principles underlying Conley and Wilkie’s solution for Pareto optimal point selection problems with finite choice sets. I discuss the formal properties of each solution, as well as its theoretical predictions in a number of games. I also explore each solution concept’s compatibility with orthodox game theory. I also discuss the limitations of the aforementioned goal-directed reasoning theories. I argue that each theory offers a compelling explanation of how a certain type of decision-maker identifies the mutually advantageous solutions of non-cooperative games, but neither of them offers a definitive answer to the question of how people coordinate their actions in non-cooperative social interactions. (shrink)

This article addresses a theoretical gap in the literature by highlighting the significance of nonbargaining nonmarket strategies of firms. Relying on neo-statist political theory, we propose a theoretical model that hypothesizes a reliance on nonbargaining nonmarket strategies in situations marked by historically and situationally conditioned weakness of societal forces relevant to a firm (including the firm itself) as well as when relevant state institutions display high degrees of professional, structural, and ideological bureaucratic insularity. We survey 165 managers (each representing (...) a separate firm) from 14 countries in Eastern Europe and Central Asia about the strategic importance of the nonmarket strategic initiatives. Our novel survey instrument captures a broader range of nonmarket strategic initiatives than previous empirical research has examined. The survey results provide preliminary support for our model, although the findings suggest the need for more research in different regional contexts. (shrink)

Advocates have sought to prove that underdetermination obtains because all theories have empirical equivalents. But algorithms for generating empirical equivalents simply exchange underdetermination for familiar philosophical chestnuts, while the few convincing examples of empirical equivalents will not support the desired sweeping conclusions. Nonetheless, underdetermination does not depend on empirical equivalents: our warrant for current theories is equally undermined by presently unconceived alternatives as well-confirmed merely by the existing evidence, so long as this transient predicament recurs for each theory and (...) body of evidence we consider. The historical record supports the claim that this recurrent, transient underdetermination predicament is our own. (shrink)

This paper examines the notion that delay in reaching agreement in bargaining may be caused by learning that is independent of the bargaining procedure. In particular, learning is not due to inference from the observed offers and responses of the opponent, but derives from observation of an exogenous, costly signal – we call this 'investigation'. First we observe that even if learning is costless and perfectly informative, investigation may not occur in equilibrium. Under more general conditions, however, uninformed (...) agents typically have an incentive to try to manipulate their prior beliefs through investigation. The main result is that investigation by an uninformed agent may result in significant delay occurring before agreement is reached. We show that this delay may be sustained in the limit as the length of time period vanishes, and that this result depends crucially on the properties of the information production technology underlying investigation. Also, the delay we observe is shown to be robust to changes in the bargaining procedure. (shrink)

Advocates have sought to prove that underdetermination obtains because all theories have empirical equivalents. But algorithms for generating empirical equivalents simply exchange underdetermination for familiar philosophical chestnuts, while the few convincing examples of empirical equivalents will not support the desired sweeping conclusions. Nonetheless, underdetermination does not depend on empirical equivalents: our warrant for current theories is equally undermined by presently unconceived alternatives as well-confirmed merely by the existing evidence, so long as this transient predicament recurs for each theory and (...) body of evidence we consider. The historical record supports the claim that this recurrent, transient underdetermination predicament is our own. (shrink)

We consider bargaining situations where two players evaluate outcomes with reference-dependent utility functions, analyzing the effect of differing levels of loss aversion on bargaining outcomes. We find that as with risk aversion, increasing loss aversion for a player leads to worse outcomes for that player in bargaining situations. An extension of Nash's axioms is used to define a solution for bargaining problems with exogenous reference points. Using this solution concept we endogenize the reference points into the (...) model and find a unique solution giving reference points and outcomes that satisfy two reasonable properties, which we predict would be observed in a steady state. The resulting solution also emerges in two other approaches, a strategic (non-cooperative) approach using Rubinstein's (1982) alternating offers model and a dynamic approach in which we find that even under weak assumptions, outcomes and reference points converge to the steady state solution from any non-equilibrium state. (shrink)

Empirical research has discovered that experimental subjects in ultimatum bargaining situations generally fail to play the decision-theoretic optimum strategy, and instead play something between that strategy and a fair split. In evolutionary dynamics, fair division and nearly fair division strategies often go to fixation and weakly dominated strategies can do quite well. Computer simulations were done using three different ultimatum bargaining games as determinates of fitness. (1) No tendency toward the elimination of weakly dominated strategies was observed, with (...) or without mutation. (2) Strategies making fair demands had sizable basins of attraction. (3) In a system where five different demands can be made, demands closest to (approximately) 91% had the largest basins of attraction. (4) If the strategies have thresholds for acceptable demands, rather than individuated responses to each demand, the apparent optimum demand may be quite low: 64% for one set of trials. (shrink)

In this note, I provide an axiomatic characterization of the relative utilitarian bargaining solution to Nash bargaining problems. The solution is obtained when Nash’s independence of irrelevant alternatives axiom is replaced by the weak linearity axiom, while retaining the other three axioms. RU maximizes the sum of proportional gains, or, equivalently, minimizes the sum of proportional losses. RU is scale invariant and compared to the Nash and Kalai and Smorodinsky solutions, it is ex ante efficient when the (...) class='Hi'>bargaining problem is considered as a lottery of future bargaining problems. (shrink)