Multiple-Issue Bargaining and Axiomatic Solutions

International Journal of Game Theory, Vol. 26, No. 4 (1997)

Posted: 2 Apr 1998

See all articles by Clara Ponsati

Clara Ponsati

Autonomous University of Barcelona - Department of Economics and Economic History

Joel Watson

University of California, San Diego (UCSD) - Department of Economics

Abstract

We study two-person, multiple-issue bargaining problems and identify four procedures by which the bargaining may take place. Drawing on some logic from non-cooperative game theory, we propose axioms which relate the outcomes of the procedures. We also promote a weak monotonicity axiom on solutions, called issue-by-issue monotonicity, which is geared toward multiple-issue bargaining. Our main result concerns the relationship between a sequential bargaining procedure--with the rule that agreements are implemented only after all issues are resolved--and global bargaining (in which all issues are negotiated simultaneously). If a bargaining solution predicts the same outcome with these two procedures, then we say that it satisfies agenda independence. We prove that a solution satisfies axioms of efficiency, symmetry, scale invariance, issue-by-issue monotonicity and agenda independence if and only if it is the Nash solution. This result provides new intuition for Nash's independence of irrelevant alternatives axiom. Among other results, we show that a solution is invariant to all four of the procedures and satisfies efficiency and symmetry if and only if it is the utilitarian solution with equal weights. We comment on the results of other authors who address multiple-issue bargaining.

JEL Classification: C78

Suggested Citation

Ponsati, Clara and Watson, Joel, Multiple-Issue Bargaining and Axiomatic Solutions. International Journal of Game Theory, Vol. 26, No. 4 (1997). Available at SSRN: https://ssrn.com/abstract=73072

Clara Ponsati

Autonomous University of Barcelona - Department of Economics and Economic History ( email )

Edifici B - Campus Bellaterra
Barcelona, 08193
Spain

Joel Watson (Contact Author)

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States
858-534-6132 (Phone)
619-534-7040 (Fax)

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