An alternative solution to bargaining problems with claims (Q2367161)

This paper provides an axiomatic characterization of a new solution for bargaining problems with claims. The author assumes interpersonal comparability of utility, and argues that there are bargaining situations in which departures from the claims point are more significant for arbitration than departures from the disagreement point or status quo. A solution concept should then depend more strongly on the first point than on the second, whereas a previous solution, the proportional solution, gives equal prominence to both. The new solution is first defined, for a restricted class of problems, as the weakly Pareto-optimal point that equalizes losses from the claims point (as opposed to a utopia point, which depends on the status quo). This solution is completely independent of the disagreement point, but it violates individual rationality for more than two agents or for an extended class of problems. The solution is therefore modified both to cover the extended class of problems and to satisfy individual rationality for an arbitrary number of agents. Although the extended solution concept depends on the disagreement point, it does so only weakly.