The Nash bargaining solution manipulated by pre-donations is Talmudic

DOI10.1016/0165-1765(92)90243-RMaRDI QIDQ2366923zbMATH OpenOpenAlexFDO

Authors Murat R. Sertel

Publication date 30 August 1993

Published in Economics Letters (Search for Journal in Brave)

Full work available at URL https://doi.org/10.1016/0165-1765(92)90243-r

zbMATH Keywords

Nash's bargaining solutionproperty divisionTalmudic solution

Mathematics Subject Classification ID

Cooperative games (91A12)

Review text

The author considers the simple property division problem: we have an indivisible piece of property for which two parties have equal claims. This property is worth a money units to one player, and worth \(b\) units to another. Without any loss of generality, one can assume that \(a\leq b\). In this case, it makes sense to give the property to the second player (who values it the most), and require him to compensate the first one for it. This payment \(p\) cannot exceed \(b\), because then the second player will lose more than he gains. For each \(p\) from 0 to \(b\), the resulting utilities of the players are \((p,b- p)\). A natural way to choose \(p\) is to apply Nash's bargaining solution, for which \((u- u_ 0)(v- v_ 0)\to\max\), where \((u_ 0,v_ 0)\) is a status quo point (in our cases, (0,0)). This leads to a solution \((b/2,b/2)\), with \(p= b/2\). Here comes the problem. The second player knows that he will have to pay. So, before the decision is made on how much he has to pay, he voluntarily sends a certain amount \(m\) of money to the first player, and expresses readiness to send the remaining part as soon as the decision is made. This act does not seem to change the problem, but it does change the status quo point, and thus, it changes the Nash's bargaining solution. By properly choosing \(m\), the second player can decrease his total payoff. The author proves that the smallest possible payoff that the second player can get is \(a/2\). Interestingly, the resulting payoff coincides with what Talmud recommends for this situation.

Recommendations

• The \(n\)-person Kalai-Smorodinsky bargaining solution under pre-donations
• The bargaining problem
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Cites work

• Game theoretic analysis of a bankruptcy problem from the Talmud
• scientific article; zbMATH DE number 3427248 (Why is no real title available?)
• scientific article; zbMATH DE number 509225 (Why is no real title available?)
• Manipulating Lindahl equilibrium via endowments
• Other Solutions to Nash's Bargaining Problem
• Proportional Solutions to Bargaining Situations: Interpersonal Utility Comparisons
• Synopses in the Theory of Choice
• The bargaining problem
• The Nash bargaining solution manipulated by pre-donations is Talmudic
• The super-additive solution for the Nash bargaining game
• Welfare bounds in the fair division problem

Cited in

(6)

• Axiomatic and game-theoretic analysis of bankruptcy and taxation problems: a survey.
• Manipulability of the men- (women-) optimal matching rule via endowments
• Bridging bargaining theory with the regulation of a natural monopoly
• The Nash bargaining solution manipulated by pre-donations is Talmudic
• The \(n\)-person Kalai-Smorodinsky bargaining solution under pre-donations
• Two-player bargaining problems with unilateral pre-donation

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