Axiomatic Bargaining Research Articles

Equity considerations in health care: the relevance of claims.

The general issues of equity and efficiency are central to the analysis of resource allocation problems in health care. We examine them using axiomatic bargaining theory. We study different solutions that have been proposed and relate them to previous literature on health care allocation. In particular, we focus on the solutions based on axiomatic bargaining with claims, and show that they are appealing as distributive criteria in health policy. Finally, we present the results of a survey that tries to elicit moral intuitions of people about resource allocation problems and their different solutions.

Equity Considerations in Health Care: An Axiomatic Bargaining Approach

The general issues of equity and efficiency are placed at the center of the analysis of resource allocation problems in health care. We examine them using axiomatic bargaining theory. We study different solutions that have been proposed and relate them to previous literature on health care allocation. In particular, we focus on the solutions based on axiomatic bargaining with claims and suggest that they may be particularly appealing as distributive criteria in health policy. Finally, we present the results of a survey that tries to elicit moral intuitions of people about resource allocation problems and their different solutions.

Collective choice functions on non-convex problems

Collective choice problems on sets in \({\frak R}_+^n\) arise naturally in economics. Such problems have been extensively studied both in the theory of revealed preferences (Peters and Wakker, 1991) and in axiomatic bargaining theory under the assumption of convexity. However, our knowledge of collective choice functions on non-convex problems is still patchy. In this paper I study the existence and characterisation of continuous choice functions on the domain \(\Gamma\) of comprehensive problems. The main result completely characterises rational choice functions that are continuous and satisfy Weak Pareto Optimality: they form the class of Monotone Path Choice Functions on \(\Gamma\). I also show that any discontinuous rational and weakly Pareto optimal choice function must be non- anonymous.

Revealed group preferences on non-convex choice problems

This paper studies the conditions under which the basic results of the revealed preference theory can be established on the domain of choice problems which include non-convex feasible sets; the exercise is closely related to the works of Peters and Wakker (1991) and Bossert (1994). We show that while no continuous choice function can satisfy strong Pareto optimality over the class of all compact and comprehensive choice problems, strong Pareto optimality, Arrow's choice axiom, upper hemicontinuity and a weak compromisation postulate turn out to be necessary and sufficient to represent choice correspondences by continuous, strictly increasing and quasiconcave real-valued functions. Some applications of our main findings to axiomatic bargaining theory are also studied.

Bargaining under Uncertainty and the Monotone Path Solutions

Uncertainty with respect to the feasible set of utility vectors is introduced in an axiomatic bargaining model. Given a criterion for nonprobabilistic decision-making under uncertainty, a natural efficiency requirement can be imposed on a bargaining solution. Using the maximin ordering, thestrictly monotone pathsolutions (generalizations of theegalitariansolution) to the bargaining problem are characterized as the only continuous solutions that satisfy this efficiency axiom. If the maximin criterion is replaced by the maximax ranking or a strict convex combination of the maximin and the maximax criterion, imposing our efficiency axiom and continuity leads to thedictatorialsolutions.Journal of Economic LiteratureClassification Number: C78.

An Inquiry into Well-Being and Destitution

Part 1 Well-being - theory and realization: the commodity basis of well-being political morality and the state the object of social contracts well-being - from theory to measurement appendix - political and civil rights indices. Part 2 Allocation of resources among households - the standard theory: resource allocation mechanisms public goods and common property resources decentralization and central guidance real national income as a measure of general well-being uncertainty, insurance and social norms. Part 3 The household and its setting - extensions of the standard theory: land, labour, savings and credit households and credit constraints poverty and the environmental resource base net national product in a dynamic economy food, care and work - the household as an allocation mechanism axiomatic bargaining theory fertility and resources - the household as a reproductive unit strategic complementarities in fertility decisions population and savings - normative considerations classical utilitarianism in a limited world food needs and work capacity adaptation to nourishment inequality, malnutrition and the disenfranchised analysis of allocation mechanisms when nutrition affects productivity incentives and development policies. Subject index: agrarian reform food subsidies employment guarantee schemes and rural infrastructure community participation and credit facilities health and education envoi.

Priority setting in health care: An axiomatic bargaining approach

This paper examines how axiomatic bargaining theory can be used to analyze different rules for dividing the health care budget between two patients. This approach allows an explicit statement of the assumptions underlying the division rules and also provides a general characterization of the consequences of using these rules when the opportunity set (or number of patients) changes. (JEL 118)

On the Interpretation of Nonsymmetric Bargaining Solutions and Their Extension to Nonexpected Utility Preferences

In a recent paper, Rubinstein, Safra, and Thomson reexamine the foundations of the axiomatic bargaining theory as formulated by Nash. In it they reinterpret the Nash bargaining solution and extend it to a family of nonexpected utility preferences, providing an interpretation of this solution concept and an axiomatization by means of a suitable translation of Nash axioms. This paper extends the work of these authors to the family, characterized by Kalai, of nonsymmetric solutions that appear from the Nash bargaining solution when the symmetry axiom is dropped. This extension requires an axiom relating the solution outcomes of isomorphic games. Journal of Economic Literature Classification Number: C78.

The bargaining problem without convexity: Extending the egalitarian and Kalai-Smorodinsky solutions

We relax the assumption used in axiomatic bargaining theory that the feasible set be convex. Instead we require only that it be 7 comprehensive. We show that on this domain, Kalai's (1977) characterization of the egalitarian solution remains true, as does Kalai and Smorodinsky's (1975) theorem if we use weak Pareto optimality.

A Bargaining Approach to Profit Sharing in Joint Ventures

Profit-sharing arrangements in joint ventures are analyzed as a Bayesian bargaining game between two parents with incomplete information about each other's cost function for inputs provided. Using the mathematics of mechanism design, this article explores the sensitivity of the bargaining agreement to the timing of private information about costs. A condition on demand and costs is derived under which the balanced budget constraint does not preclude the joint venture from achieving an ex post efficient level of production. The proposed mechanism is then extended to the second-best environment under the criteria of (1) ex ante optimality and (2) R. B. Myerson's axiomatic neutral bargaining solution. The direct revelation mechanisms are interpreted as corresponding indirect transfer-pricing mechanisms. A major result is that, in all cases, the outcome calls for equal allocation of realized joint venture net profit. Copyright 1989 by the University of Chicago.

Stability and the Nash solution

In an axiomatic bargaining model with a variable number of agents, a stability axiom due to Harsanyi is used to give a characterization of the Nash bargaining solution without independence of irrelevant alternatives. Our main result is that the Nash solution is the only one to satisfy Pareto optimality, anonymity, scale invariance, and stability. We also show that the stability axiom allows one to weaken Pareto optimality to what we call individual optimality and still permit a characterization of the Nash solution.

The bargaining problem with an uncertain conflict outcome

Abstract We construct an axiomatic bargaining model for a class of bargaining situations in which the conflict outcome is uncertain but information pertaining to it is available. A solution function, termed the compounded-Nash solution, is proposed for this class. This function satisfies uniquely several requirements. Interestingly, the natural extension of Nash's Independence of Irrelevant Alternatives is not satisfied by the compounded-Nash solution.

Axiomatic bargaining theory on economic environments

Axiomatic bargaining theory is reexamined by focusing upon the economic exhange environment instead of the traditional utility possibility set. It is argued that the axioms of the traditional theory impose stronger restrictions than can be supported by their motivating economic intuitions. Weaker alternative axioms, making explicit use of economic information, are used to characterize the standard bargaining solutions. A key idea is to impose consistency of the solution with respect to changes in the dimension of the commodity space. Even these weaker economic axioms, however, may be unrealistic restrictions to impose on the bargaining solution in the context of many economic bargaining problems.

Competitive advantage and collusive optima

Cost differences may often be important in real oligopolies. If side payments are impossible the standard cartel objective, total industry profits, lacks plausibility when costs differ. This essay considers plausible alternatives. Four different technologies for effecting collusion, which are essentially identical when costs are equal, define sets of possible profits. Axiomatic bargaining models are used to select unconstrained optima from among these possibilities. Simple functional forms are employed. Low-cost firms with large shares in Cournot equilibrium may have little to gain from collusion. If collusion is effective, low cost firms will have relatively low estimated conjectural variations.

Equilibrium in a Market with Sequential Bargaining

This paper considers a market where pairs of agents who are interested in carrying out a transaction are brought together by a stochastic process and, upon meeting, initiate a bargaining process over the terms of the transaction. The basic bargaining problem is treated with the strategic approach. The paper derives the steady state equilibrium agreements; analyzes their dependence on market conditions such as the relative numbers of agents of different types; and discusses their relations with the competitive equilibrium outcome and other results in the search equilibrium literature. THIS PAPER CONSIDERS a market that operates in the following way. Pairs of agents who have mutual interest in carrying out a transaction are brought together by a stochastic process. When two agents meet, they initiate a bargaining process over the terms of the transaction. If two agents reach an agreement a transaction takes place and they leave the market. Of course, the bargaining positions and hence the agreement reached in any particular meeting will be affected by the conditions prevailing in the market. These will include the chances that each of the negotiating parties have of meeting other partners in the event that the agreement in the current negotiations is delayed; also the expected length of time required to achieve an alternative transaction, and the expected behavior of alternative partners. The study of such a market mechanism is of interest for two reasons. Firstly, it captures some realistic aspects of the trade in certain specific markets (e.g., asset markets such as housing and some labor markets). Secondly, it contributes to an understanding of the micro-mechanisms of price formation and their role in shaping market outcomes. In both cases, the features studied are largely neglected in the traditional market equilibrium analyses. The related literature includes the articles by Diamond [4, 5], Diamond and Maskin [6], Mortensen [8, 9], and Zusman and Bell [13]. These articles consider markets of the type described above, in which transactions are concluded at pairwise meetings of agents. The major difference between our work and these articles is in the approach to the basic bargaining problem. In the cited articles it is assumed that a meeting is concluded with an instantaneous agreement which divides the associated surplus in an arbitrary predetermined way (when the surplus is assumed to be divided equally, the division rule is, in fact, Nash's axiomatic bargaining solution). In contrast, the present paper treats the basic bargaining problem with the strategic approach (see Rubinstein [19]) which constitutes an attempt to look into the bargaining black-box. This approach explicitly models the time dimension of the bargaining process, describes in-detail the bargaining procedure, and justifies the agreement as a perfect equilibrium in

A note on additive utility and bargaining

Necessary and sufficient conditions are given under which a decision maker's von Neumann-Morgenstern utility function on the Cartesian product of two prospect spaces can be expressed as a sum of coordinate utility functions, assuming that all preferences are given. A main motivation for this result is an application in axiomatic bargaining theory.