SFB 303 Discussion Paper No. A - 117
Author: Peters, Hans, and Eric van Damme
Title: A Characterization of the Nash Bargaining Solution Not Using IIA
Abstract: We provide a new axiomatization of the 2-person Nash bargaining solution which does not involve Nash`s
controversial Independence of Irrelvant Alternatives axiom. Our characterization is obtained by strengthening
the usual individual rationality axiom (to: the solution should depend only on individually rational outcomes)
and by requiring that the solution be well-behaved with respect to changes in the threat point (the solution should
vary continuously and a convex combination of a threat point and its solution should rise to the same solution).
The latter axiom, which is our main innovation, is extensively discussed
Creation-Date: March 1987
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