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An Axiomatic Approach to Arbitration and its Application in Bargaining Games
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Kang Rong
Veröffentlicht/Copyright:
1. September 2012
Abstract
We define an arbitration problem as the triplet of a bargaining set and the offers submitted by two players. We characterize the solution to a class of arbitration problems using the axiomatic approach. The axioms we impose on the arbitration solution are "Symmetry in Offers,'' "Invariance'' and "Pareto Optimality.'' The key axiom, "Symmetry in Offers,'' requires that whenever players' offers are symmetric, the arbitrated outcome should also be symmetric. We find that there exists a unique arbitration solution, called the symmetric arbitration solution, that satisfies all three axioms. We then analyze a simultaneous-offer game and an alternating-offer game. In both games, the symmetric arbitration solution is used to decide the outcome whenever players cannot reach agreement by themselves. We find that in both games, if the discount factor of players is close to 1, then the unique subgame perfect equilibrium outcome coincides with the Kalai-Smorodinsky solution outcome.
Keywords: arbitration problem; simultaneous-offer game; alternating-offer game; Kalai- Smorodinsky solution
Published Online: 2012-9-1
©2012 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Schlagwörter für diesen Artikel
arbitration problem;
simultaneous-offer game;
alternating-offer game;
Kalai- Smorodinsky solution
Artikel in diesem Heft
- Advances Article
- Seller Cheap Talk in Almost Common Value Auction
- Strategic Effects of Renegotiation-Proof Contracts
- Contributions Article
- Uniquely Representing "A Preference for Uniformity"
- An Experimental Comparison of Sequential First- and Second-Price Auctions with Synergies
- Transparency, Career Concerns, and Incentives for Acquiring Expertise
- Career Concerns and Performance Reporting in Optimal Incentive Contracts
- Two Notes on the Blotto Game
- The Tennis Coach Problem: A Game-Theoretic and Experimental Study
- Multidimensional Product Differentiation with Discrete Characteristics
- Screening and Financial Contracting in the Face of Outside Competition
- On Rationalizability and Beliefs in Discrete Private-Value First-Price Auctions
- Commitment versus Flexibility in Enforcement Games
- Endogenous Preferences and Dynamic Contract Design
- Intergenerational Interactions in Human Capital Accumulation
- Behavior-Based Price Discrimination by a Patient Seller
- Altruism and Local Interaction
- Education Signaling with Uncertain Returns
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- Topics Article
- Preference for Variety
- Information Theory and Observational Limitations in Decision Making
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- A Folk Theorem for Games when Frequent Monitoring Decreases Noise
- Characterizing Welfare-egalitarian Mechanisms with Solidarity When Valuations are Private Information
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- On a Notion of Similarity with Endowments in Public Economics
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- On Communication and the Weak Sequential Core
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- Revealing Private Information in Bargaining
