A theory of agreements in the shadow of conflict: The genesis of bargaining power (Q1025634)

In the article, a new approach to the theory of negotiation is presented and the corresponding agreement concept is introduced. The idea consists in the more efficient use of the description of the non-cooperative resolution of conflict. The authors consider \(N\)-person bargaining, and the agreement reached in a negotiation is determined by how the direct conflict resulting from disagreement would be resolved. The presented approach is based on the disagreement function, which maps each set of feasible outcomes into a disagreement point. Adding this function to the description of a bargaining problem, a weak axiom based on individual rationality leads to a unique solution: the agreement in the shadow of conflict (ASC). This agreement may be construed as the limit of a sequence of partial agreements, each of which is reached as a function of the parties' relative power in the disagreement scenario. As a result, a link between the circumstances of bargaining and the bargaining powers within it is identified. The considerations end with an interesting comparison of the authors results to those presented in the most related literature.