A Theory of Ageements in the Shadow of Conflict: The Genesis of Bargaining Power

Joan Esteban, Jozsef Sakovics

Research output: Contribution to journalArticlepeer-review

Abstract

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.

Original languageEnglish
Pages (from-to)227-252
Number of pages26
JournalTheory and Decision
Volume65
Issue number3
DOIs
Publication statusPublished - Nov 2008

Keywords

  • bargaining
  • conflict
  • disagreement
  • ECONOMIC ENVIRONMENTS
  • LAND-REFORM
  • PROPERTY
  • MODEL

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