A Noncooperative Foundation of the Neutral Bargaining Solution

28 Pages Posted: 14 Jul 2015 Last revised: 5 May 2017

See all articles by Jin Yeub Kim

Jin Yeub Kim

Yonsei University - School of Economics

Date Written: May 4, 2017

Abstract

This paper studies Myerson's neutral bargaining solution for a class of Bayesian bargaining problems in which the solution is unique. For this class of examples, I consider a noncooperative mechanism-selection game. I find that all of the interim incentive efficient mechanisms can be supported as sequential equilibria. Further, standard refinement concepts and selection criteria do not restrict the large set of interim Pareto-undominated sequential equilibria. I provide a noncooperative foundation of the neutral bargaining solution by characterizing the solution as a unique coherent equilibrium allocation.

Keywords: Neutral bargaining solution, mechanism-selection game, equilibrium refinement, equilibrium selection criterion, credibility, coherent plan

JEL Classification: C71, C72, C78, D82

Suggested Citation

Kim, Jin Yeub, A Noncooperative Foundation of the Neutral Bargaining Solution (May 4, 2017). Available at SSRN: https://ssrn.com/abstract=2630040 or http://dx.doi.org/10.2139/ssrn.2630040

Jin Yeub Kim (Contact Author)

Yonsei University - School of Economics ( email )

Seoul
Korea, Republic of (South Korea)

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