The computation of the Nash bargaining solution

AbstractTwo methods, a direct and an indirect one, are presented to solve the Nash bargaining problem. In the direct method the bargaining problem is dealt with in a Hilbert space setting as a constrained optimization problem. The feasible direction method is applied to find its solution. The indirect method consists of solving the Nash bargaining problem as a hierarchical decision problem, where at the top level of the hierarchy an algebraic equation is solved to obtain the bargaining solution