A non-welfarist solution for two-person bargaining situations.

Abstract

In this paper we present a non-welfarist solution which is applicable to a broad spectrum of twoagent bargaining problems, such as exchange economies, location problems and division problems. In contrast to welfarist bargaining solutions, it depends only on the agents' preferences. not on their specific utility representation, and takes explicitly into account the underlying space of alternatives. We offer a simple sequential move mechanism, without chance moves, that implements our solution in subgame perfect equilibrium. Moreover, an axiomatic characterization of the solution is provided. It is shown that the solution coincides with the Kalai-Rosenthal bargaining solution after choosing a suitable utility representation of the preferences. When applied to exchange economies with equal initial endowments for both agents, the solution generates envy-free, Pare to efficient egalitarian equivalent allocations.Bargaining; Nash program; Welfarism; Non-welfarism; Exchange economies; Location problems; Implementation;