Threat bargaining problems with correlated beliefs (Q1184751)

This paper considers a two-person bargaining problem where each player \(i\) chooses and reveals a disagreement point \(d_ i\) from the interval [0,1], the arbitrator chooses a Pareto optimal outcome and each player \(i\) has a belief function \(G_ i\) of acceptance of the final outcome. The author restricts his attention to a bargaining region forming a compact convex subset of the unit square containing (0,0), (1,0) and (0,1). The main result of the paper is: Under a certain specification of belief functions \(G_ i\), (0,0) is a Nash equilibrium in the disagreement revelation game if and only if the arbitrator's bargaining scheme is the Kalai-Smorodinsky solution.