On Unification of Solutions to the Bargaining Problem

30 Pages Posted: 30 May 2018

See all articles by Claus-Jochen Haake

Claus-Jochen Haake

Paderborn University

Cheng-Zhong Qin

University of California, Santa Barbara (UCSB) - Department of Economics

Date Written: May 23, 2018

Abstract

We establish axioms under which a bargaining solution can be found by the maximization of the CES function and is unique up to specifications of the distribution and elasticity parameters. This solution is referred to as the CES solution which includes the Nash and egalitarian solutions as special cases. Next, we consider a normalization of the CES function and establish axioms, under which a bargaining solution can be found by the maximization of the normalized CES function and is unique up to specifications of the distribution and substitution parameters. We refer to this solution as the normalized CES solution which includes the Nash and Kalai-Smorodinsky solutions as special cases. Our paper contributes to bargaining theory by establishing unified characterizations of existing as well as a great variety of new bargaining solutions.

Keywords: Bargaining problem, CES Function, Normalized CES Function, Nash solution, Kalai-Smorodinsky Solution, Egalitarian Solution

JEL Classification: C78, D21

Suggested Citation

Haake, Claus-Jochen and Qin, Cheng-Zhong, On Unification of Solutions to the Bargaining Problem (May 23, 2018). Available at SSRN: https://ssrn.com/abstract=3184007 or http://dx.doi.org/10.2139/ssrn.3184007

Claus-Jochen Haake

Paderborn University ( email )

Warburger Str. 100
Paderborn, 33098
Germany

Cheng-Zhong Qin (Contact Author)

University of California, Santa Barbara (UCSB) - Department of Economics ( email )

2127 North Hall
Santa Barbara, CA 93106
United States

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