The Kalai-Smorodinsky bargaining solution with loss aversion

We consider bargaining problems under the assumption that players are loss averse, i.e., experience disutility from obtaining an outcome lower than some reference point. We follow the approach of Shalev (2002) by imposing the self-supporting condition on an outcome: an outcome z in a bargaining problem is self-supporting under a given bargaining solution, whenever transforming the problem using outcome z as a reference point, yields a transformed problem in which the solution is z.We show that n-player bargaining problems have a unique self-supporting outcome under the Kalai-Smorodinsky solution. For all possible loss aversion coefficients we determine the bargaining solutions that give exactly these outcomes, and characterize them by the standard axioms of Scale Invariance, Individual Monotonicity, and Strong Individual Rationality, and a new axiom called Proportional Concession Invariance (PCI). A bargaining solution satisfies PCI if moving the utopia point in the direction of the solution outcome does not change this outcome.     

Stationary perfect equilibria of an n-person noncooperative bargaining game and cooperative solution concepts

This paper characterizes the stationary (subgame) perfect equilibria of an n-person noncooperative bargaining model with characteristic functions, and provides strategic foundations of some cooperative solution concepts such as the core, the bargaining set and the kernel. The contribution of this paper is twofold. First, we show that a linear programming formulation successfully characterizes the stationary (subgame) perfect equilibria of our bargaining game. We suggest a linear programming formulation as an algorithm for the stationary (subgame) perfect equilibria of a class of n-person noncooperative games. Second, utilizing the linear programming formulation, we show that stationary (subgame) perfect equilibria of n-person noncooperative games provide strategic foundations for the bargaining set and the kernel.     

Computing power indices: Multilinear extensions and new characterizations

Johnston [Johnston, R.J., 1978. On the measurement of power: some reactions to Laver. Environment and Planning A 10, 907–914], Deegan and Packel [Deegan, J., Packel, E.W., 1979. A new index of power for simple n-person games. International Journal of Game Theory 7, 113–123], and Holler [Holler, M.J., 1982. Forming coalitions and measuring voting power. Political Studies 30, 262–271] proposed three power indices for simple games: Johnston index, Deegan–Packel index, and the Public Good Index. In this paper, methods to compute these indices by means of the multilinear extension of the game are presented. Furthermore, a new characterization of the Public Good Index is given. Our methods are applied to two real-world examples taken from the political field.     

The ordered field property and a finite algorithm for the Nash bargaining solution

This note proves that the two person Nash bargaining theory with polyhedral bargaining regions needs only an ordered field (which always includes the rational number field) as its scalar field. The existence of the Nash bargaining solution is the main part of this result and the axiomatic characterization can be proved in the standard way with slight modifications. We prove the existence by giving a finite algorithm to calculate the Nash solution for a polyhedral bargaining problem, whose speed is of orderBm(m-1) (m is the number of extreme points andB is determined by the extreme points).     

Independence of irrelevant expansions

Nash characterized the only bargaining solution to satisfy a well-known list of axioms. Independence of Irrelevant Alternatives states invariance of the solution outcome under certain contractions of the bargaining problem. A dual of this axiom is proposed here, stating invariance under certainexpansions of the bargaining problem andNash's solution is characerized by substituting this axiom for IIA in Nash's original list. After a transposition from the domain of bargaining solutions to the domain of choice rules, and a weakening of Invariance with respect to Positive Affine Transformations toTranslation Invariance, this new list of axioms is shown to characterizeUtilitarian rules.     

The Tempered Aspirations solution for bargaining problems with a reference point

Gupta and Livne (1988) modified Nash’s (1950) original bargaining problem through the introduction of a reference point restricted to lie in the bargaining set. Additionally, they characterized a solution concept for this augmented bargaining problem. We propose and axiomatically characterize a new solution concept for bargaining problems with a reference point: the Tempered Aspirations solution. In Kalai and Smorodinsky (1975), aspirations are given by the so called ideal or utopia point. In our setting, however, the salience of the reference point mutes or tempers the negotiators’ aspirations. Thus, our solution is defined to be the maximal feasible point on the line segment joining the modified aspirations and disagreement vectors. The Tempered Aspirations solution can be understood as a “dual” version of the Gupta–Livne solution or, alternatively, as a version of Chun and Thomson’s (1992) Proportional solution in which the claims point is endogenous. We also conduct an extensive axiomatic analysis comparing the Gupta–Livne to our Tempered Aspirations solution.     

Asymptotic stability and other properties of trajectories and transfer sequences leading to the bargaining sets

The foundation of a dynamic theory for the bargaining sets started withStearns, when he constructed transfer sequences which always converge to appropriate bargaining sets. A continuous analogue was developed byBillera, where sequences where replaced by solutions of systems of differential equations. In this paper we show that the nucleolus is locally asymptotically stable both with respect toStearns' sequences andBillera's solutions if and only if it is an isolated point of the appropriate bargaining set. No other point of the bargaining set can be locally asymptotically stable. Furthermore, it is always stable in these processes. As by-products of the study we derive the results ofBillera andStearns in a different fashion. We also show that along the non-trivial trajectories and sequences, the vector of the excesses of the payoffs, arranged in a non-increasing order, always decreases lexicographically, thus each bargaining set can be viewed as resulting from a certain monotone process operating on the payoff vectors.     

The Tempered Aspirations solution for bargaining problems with a reference point

Gupta and Livne (1988) modified Nash’s (1950) original bargaining problem through the introduction of a reference point restricted to lie in the bargaining set. Additionally, they characterized a solution concept for this augmented bargaining problem. We propose and axiomatically characterize a new solution concept for bargaining problems with a reference point: the Tempered Aspirations solution. In Kalai and Smorodinsky (1975), aspirations are given by the so called ideal or utopia point. In our setting, however, the salience of the reference point mutes or tempers the negotiators’ aspirations. Thus, our solution is defined to be the maximal feasible point on the line segment joining the modified aspirations and disagreement vectors. The Tempered Aspirations solution can be understood as a “dual” version of the Gupta-Livne solution or, alternatively, as a version of Chun and Thomson’s (1992) Proportional solution in which the claims point is endogenous. We also conduct an extensive axiomatic analysis comparing the Gupta-Livne to our Tempered Aspirations solution.     

An impossibility result concerningn-person bargaining games

In this note we show that a solution proposed byRaiffa for two-person bargaining games, which has recently been axiomatized byKalai/Smorodinsky, does not generalize in a straightforward manner to generaln-person bargaining games. Specifically, the solution is not Pareto optimal on the class of alln-person bargaining games, and no solution which is can possess the other properties which characterizeRaiffa's solution in the two-person case.     

Multiple-issue bargaining and axiomatic solutions

We study two-person, multiple-issue bargaining problems and identify four procedures by which the bargaining may take place. Drawing on some logic from non-cooperative game theory, we propose axioms which relate the outcomes of the procedures. We also promote a weak monotonicity axiom on solutions, called issue-by-issue monotonicity, which is geared toward multiple-issue bargaining. Our main result concerns the relationship between a sequential bargaining procedure — with the rule that agreements are implemented only after all issues are resolved — and global bargaining (in which all issues are negotiated simultaneously). If a bargaining solution predicts the same outcome with these two procedures, then we say that it satisfiesagenda independence. We prove that a solution satisfies axioms of efficiency, symmetry, scale invariance, issue-by-issue monotonicity, and agenda independence if and only if it is the Nash solution. This result provides new intuition for Nash's independence of irrelevant alternatives axiom. Among other results, we show that a solution is invariant to all four of the procedures and satisfies efficiency and symmetry if and only if it is the utilitarian solution with equal weights. We comment on the results of other authors who address multiple-issue bargaining.     

多人多目标资源分配协商对策

资源分配问题,一直是决策分析理论研究的核心问题之一.从对各种经济系统进行决策分析中,可得出一类多人多目标资源分配问题的数学描述如下:     

Optimal approximations with Rough Sets and similarities in measure spaces

When arbitrary sets are approximated by more structured sets, it may not be possible to obtain an exact approximation that is equivalent to a given set. Presented here, is a new proposal for a ‘metric’ approach to Rough Sets. We assume some finite measure space is defined on a given universe, and then use it to define various similarity indexes. A set of axioms and the concept of consistency for similarity indexes are also proposed. The core of the paper is a definition of the ‘optimal’ or ‘best’ approximation with respect to any particular similarity index, and an algorithm to find this optimal approximation by using the Marczewski–Steinhaus Index. This algorithm is also shown to hold for a class of similarity indexes that are consistent with the Marczewski–Steinhaus Index.     

Alliance or no alliance—Bargaining power in competing reverse supply chains

This work investigates how bargaining power affects negotiations between manufacturers and reverse logistics providers in reverse supply chains under government intervention using a novel three-stage reverse supply chain model for two scenarios, a reverse logistics provider alliance and no reverse logistics provider alliance. Utilizing the asymmetric Nash bargaining game, this work seeks equilibrium negotiation solutions. Analytical results indicate that the reverse logistics provider alliance increases the bargaining power of reverse logistics providers when negotiating with a manufacturer for a profitable recycled-component supply contract; however, manufacturer profits are often reduced. Particularly in the case of an recycled-component vender-dominated market, a reverse logistics alliance with extreme bargaining power may cause a counter-profit effect that results in the decreases of profits for all players involved, including buyers (i.e., manufacturers) and allied recycled-component venders (i.e., reverse logistics providers). Additional managerial insights are provided for discussion.     

Sensitivity studies of pollutant concentrations calculated by the UNI-DEM with respect to the input emissions

The influence of emission levels on the concentrations of four important air pollutants (ammonia, ozone, ammonium sulphate and ammonium nitrate) over three European cities (Milan, Manchester, and Edinburgh) with different geographical locations is considered. Sensitivity analysis of the output of the Unified Danish Eulerian Model according to emission levels is provided. The Sobol’ variance-based approach for global sensitivity analysis has been applied to compute the corresponding sensitivity measures. To measure the influence of the variation of emission levels over the pollutants concentrations the Sobol’ global sensitivity indices are estimated using efficient techniques for small sensitivity indices to avoid the effect of loss of accuracy. Theoretical studies, as well as, practical computations are performed in order to analyze efficiency of various variance reduction techniques for computing small indices. The importance of accurate estimation of small sensitivity indices is analyzed. It is shown that the correlated sampling technique for small sensitivity indices gives reliable results for the full set of indices. Its superior efficiency is studied in details.     

Cooperative games with imcomplete information

A bargaining solution concept which generalizes the Nash bargaining solution and the Shapley NTU value is defined for cooperative games with incomplete information. These bargaining solutions are efficient and equitable when interpersonal comparisons are made in terms of certainvirtual utility scales. A player's virtual utility differs from his real utility by exaggerating the difference from the preferences of false types that jeopardize his true type. In any incentive-efficient mechanism, the players always maximize their total virtual utility ex post. Conditionally-transferable virtual utility is the strongest possible transferability assumption for games with incomplete information.     

A cardinal bargaining set for games without side payments

A bargaining set for games without side payments, based on cardinal considerations is introduced. It is proved that it is never empty for a fairly general class of games without side payments, that it coincides with the classical bargaining set if the game has side payments and that it is a subset of an ordinal bargaining set described inAsscher [1975a].     

Uncovered bargaining solutions

An uncovered bargaining solution is a bargaining solution for which there exists a complete and asymmetric relation (tournament) such that, for each feasible set, the bargaining solution set coincides with the uncovered set of the tournament. We provide a characterization of a class of uncovered bargaining solutions.     

The collective value: a new solution for games with coalition structures

In this study, we provide a new solution for cooperative games with coalition structures. The collective value of a player is defined as the sum of the equal division of the pure surplus obtained by his coalition from the coalitional bargaining and of his Shapley value for the internal coalition. The weighted Shapley value applied to a game played by coalitions with coalition-size weights is assigned to each coalition, reflecting the size asymmetries among coalitions. We show that the collective value matches exogenous interpretations of coalition structures and provide an axiomatic foundation of this value. A noncooperative mechanism that implements the collective value is also presented.     

Bargaining among groups: an axiomatic viewpoint

We introduce a model of bargaining among groups, and characterize a family of solutions using a Consistency axiom and a few other invariance and monotonicity properties. For each solution in the family, there exists some constant α ≥ 0 such that the “bargaining power” of a group is proportional to c ^α , where c is the cardinality of the group.     

The reactive bargaining set: Structure, dynamics and extension to NTU games

The reactive bargaining set (Granot [1994]) is the set of outcomes for which no justified objection exists. Here, in a justified objection the objector first watches how the target tries to act (if he has such an option), and then reacts by making a profit and ruining the target's attempt to maintain his share. In this paper we explore properties of the reactive bargaining set, set up the system of inequalities that defines it, and construct a dynamic system in the sense of Stearns' transfer scheme that leads the players to this set. We also extend the definition of the reactive bargaining set toNTU games in a way that keeps it nonempty. To shed light on its nature and its relative ease of computation, we compute the reactive bargaining set for games that played important role in the game theory literature.