On the redundancy of the implicit welfarist axiom in bargaining theory

Nash's characterization of his famous bargaining solution has long faced the objection of being welfarist: a bargaining situation is captured by a utility possibility set and a utility vector prevailing in case of disagreement, with no further information regarding the underlying economic envir...

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Bibliographic Details
Published in:Journal of economic theory 2015-05, Vol.157, p.624-647
Main Author: de Clippel, Geoffroy
Format: Article
Language:English
Subjects:
Adaptation
Axioms
Bargaining
Economic analysis
Economic theory
Economics
Expected utility
Game theory
Kalai–Smorodinsky
Lotteries
Management science
Mathematical analysis
Mathematical problems
Nash
Nash equilibrium
Non-expected utility
Redundancy
Studies
Utilities
Utility functions
Utility theory
Vectors (mathematics)
Welfare economics
Welfarism
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Summary:Nash's characterization of his famous bargaining solution has long faced the objection of being welfarist: a bargaining situation is captured by a utility possibility set and a utility vector prevailing in case of disagreement, with no further information regarding the underlying economic environment. The present paper shows that a straightforward adaptation of Nash's axioms in a natural economic environment with lotteries does characterize his solution. A similar result holds for Kalai and Smorodinsky's [8] characterization of their solution if and only if the domain contains multiple goods. The non-welfarist characterization of the Nash solution extends to a larger class of preferences that accommodate some forms of non-expected utility.
ISSN:0022-0531
1095-7235
DOI:10.1016/j.jet.2015.01.017