Econometrica: Mar 1984, Volume 52, Issue 2

Two-Person Bargaining Problems with Incomplete Information<461:TBPWII>2.0.CO;2-G
p. 461-488

Roger B. Myerson

A generalization of the Nash bargaining solution is defined for two-person bargaining problems with incomplete information. These solutions form the smallest set satisfying three axioms: a probability-invariance axiom, an extension (or independence of irrelevant alternatives) axiom, and a random-dictatorship axiom. A bargaining solution can also be characterized as an incentive-compatible mechanism that is both equitable and efficient in terms of some virtual utility scales for the two players.

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