Two-person Bargaining with Lexicographic Preferences

Abstract

In bargaining theory a usual assumption is either that of von Neumann–Morgenstern utility functions or that of continuous preferences. In this note, we consider a bargaining model with lexicographic preferences for the two players. We show that the Rubinstein et al. (1992), definition can still be used to obtain a Nash solution. We also look briefly at the alternating offers approach.