Abstract
"Randomized dictatorship," one of the simplest ways to solve bargaining situations, works as follows: a fair coin toss determines the "dictator" - the player to be given his first-best payoff. The two major bargaining solutions, that of Nash (Econometrica 18:155-162, 1950) and that of Kalai and Smorodinsky (Econometrica, 43:513-518, 1975), Pareto-dominate this process (in the ex ante sense). However, whereas the existing literature offers axiomatizations of the Nash solution in which this ex ante domination plays a central role (Moulin, Le choix social utilitariste, Ecole Polytechnique Discussion Paper, 1983; de Clippel, Social Choice and Welfare, 29:201-210, 2007), it does not provide an analogous result for Kalai-Smorodinsky. This paper fills in this gap: a characterization of the latter is obtained by combining the aforementioned domination with three additional axioms: Pareto optimality, individual monotonicity, and a weakened version of the Perles-Maschler (International Journal of Game Theory, 10:163-193, 1981) super additivity axiom.
| Original language | English |
|---|---|
| Pages (from-to) | 173-177 |
| Number of pages | 5 |
| Journal | Theory and Decision |
| Volume | 76 |
| Issue number | 2 |
| DOIs | |
| State | Published - Feb 2014 |
Keywords
- Bargaining
- Kalai-Smorodinsky solution
- Randomized dictatorship
ASJC Scopus subject areas
- Decision Sciences (all)
- Developmental and Educational Psychology
- Arts and Humanities (miscellaneous)
- Applied Psychology
- Social Sciences (all)
- Economics, Econometrics and Finance (all)
- Computer Science Applications