Finite Bargaining Problems

Bargaining is a process to decide how to divide shared resources between two or more players. And axiomatic bargaining specifies desirable and simple properties the outcome of the bargaining should satisfy and identifies the solution that produces this outcome. This approach was first developed by John Nash in his seminal work(Nash 1950). Since then, numerous studies have been done on bargaining problems with convex feasible set or with non-convex but comprehensive feasible set. There is, however, little work on finite bargaining problems. In this dissertation, we study finite bargaining problems systematically by extending the standard bargaining model to the one consisting of all finite bargaining problems. For our bargaining problems, we first propose the Nash, Maximin, Leximin, Maxiproportionalmin, Lexiproportianlmin solutions, which are the counterparts of those that have been studied extensively in both convex and non-convex but comprehensive problems. We then axiomatically characterize these solutions in our context. We next introduce two new solutions, the maximin-utilitarian solution and the utilitarian-maximin solution, each of which combines the maximin solution and utilitarian solution in different ways. The maximin-utilitarian solution selects the alternatives from the maximin solution that have the greatest sum of individuals’ utilities, and the utilitarian-maximin solution selects the maximin alternatives from the utilitarian solution. These two solutions attempt to combine two important but very different ethical principles to produce compromised solutions to bargaining problems. Finally, we discuss several variants of the egalitarian solution. The egalitarian solution in finite bargaining problems is more complicated than its counterpart in either convex or non-convex but comprehensive bargaining problems. Given its complexity in our context, we start our inquiry by investigating two-person, finite bargaining problems, and then extend some of the analysis to n-person, finite bargaining problems. Our analysis of finite bargaining problems and axiomatic characterizations of the extensions of various standard solutions of convex/non-convex but comprehensive bargaining problems to finite bargaining problems will shed new light on the behavior of these solutions. Our new solutions will expand our understanding of the bargaining theory and distributive justice from a different perspective