Bargaining solutions as social compromises

Pfingsten A, Wagener A


Abstract
A bargaining solution is a social compromise if it is metrically rationalizable, i.e., if it has an optimum ( depending on the situation, smallest or largest) distance from some reference point. We explore the workability and the limits of metric rationalization in bargaining theory where compromising is a core issue. We demonstrate that many well-known bargaining solutions are social compromises with respect to reasonable metrics. In the metric approach, bargaining solutions can be grounded in axioms on how society measures differences between utility allocations. Using this approach, we provide an axiomatic characterization for the class of social compromises that are based on p-norms and for the attending bargaining solutions. We further show that bargaining solutions which satisfy Pareto Optimality and Individual Rationality can always be metrically rationalized.

Keywords
bargaining solutions; metric rationalizability; social compromise; group decision problems; metric rationalization; preference proximity; choice problems; claims stability; distance rules



Publication type
Research article (journal)

Peer reviewed
Yes

Publication status
Published

Year
2003

Journal
Theory and Decision

Volume
55

Issue
4

Start page
359

End page
389

Language
English

ISSN
0040-5833

DOI