The representative Nash solution for two-sided bargaining problems (Q1566511)

The authors consider the class of bargaining games where the interests of the participants of bargaining are diametrically opposite and the issue on the bargaining table is represented by a one dimensional set. An \(n\) person bargaining situation is two sided when the participants of bargaining are divided in two groups and the preferences are monotonically increasing in one group and monotonically decreasing in the other group. A solution called the representative Nash solution is introduced and axiomatized. A strategic bargaining model is constructed such that the unique stationary subgame perfect equilibrium outcome corresponds to the representative Nash solution.