Cooperative Game Models - Bargaining Games

Question 1

Nash Bargaining Solution

Answer 1

The unique solution to a two-person bargaining game
satisfying the axioms

• Scale Invariance
• Symmetry
• Independence of irrelevant alternatives
• Pareto optimality

feasible point to every bargaining problem. Such a map is called a two-person bargaining solution.

Question 2

Bargaining Problem

Answer 2

A pair (S,d) with S the feasible point and d the disagreement point,

S = convex, closed, bounded set

If the players reach an agreement the payoffs are: x1 and x2
if not they are d1 and d2.