Minimax Regret and Efficient Bargaining under Uncertainty

Bargaining under uncertainty is modeled by the assumption that there are several possible states of nature, each of which is identified with a bargaining problem. We characterize bargaining solutions which generate ex ante efficient combinations of outcomes under the assumption that the bargainers h...

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Bibliographic Details
Published in:Games and economic behavior 2001, Vol.34 (1), p.1-10
Main Authors: Bossert, Walter, Peters, Hans
Format: Article
Language:English
Subjects:
Bargaining
Game theory
Preferences
Uncertainty
Utility functions
Utility theory
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Summary:Bargaining under uncertainty is modeled by the assumption that there are several possible states of nature, each of which is identified with a bargaining problem. We characterize bargaining solutions which generate ex ante efficient combinations of outcomes under the assumption that the bargainers have minimax regret preferences. For the case of two bargainers a class of monotone utopia-path solutions is characterized by the efficiency criterion, but for more than two bargainers only dictatorial solutions are efficient. By incorporating scale covariance into the minimax regret preferences a possibility result is obtained for the general case. Journal of Economic Literature Classification Numbers: C78, D81, D71.
ISSN:0899-8256
1090-2473
DOI:10.1006/game.2000.0793