SFB 303 Discussion Paper No. A - 117

Author: Peters, Hans, and Eric van Damme
Title: A Characterization of the Nash Bargaining Solution Not Using IIA
Abstract: We provide a new axiomatization of the 2-person Nash bargaining solution which does not involve Nash`s controversial Independence of Irrelvant Alternatives axiom. Our characterization is obtained by strengthening the usual individual rationality axiom (to: the solution should depend only on individually rational outcomes) and by requiring that the solution be well-behaved with respect to changes in the threat point (the solution should vary continuously and a convex combination of a threat point and its solution should rise to the same solution). The latter axiom, which is our main innovation, is extensively discussed
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Creation-Date: March 1987
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