TY - JOUR
AB - We analyse the two-dimensional Nash bargaining solution (NBS) by deploying
the standard labour market negotiations model of McDonald and Solow (1981).
We show that the two-dimensional bargaining problem can be decomposed into two
one-dimensional problems, such that the two solutions together replicate the solution
of the two-dimensional problem if the NBS is applied. The axiom of
Independence of Irrelevant Alternatives is shown to be crucial for this type
of decomposability. This result has significant implications for actual
negotiations because it allows for the decomposition of a multi-dimensional bargaining
problem into one-dimensional problems---and thus helps to facilitate real-world
negotiations.
AU - Haake, Claus-Jochen
AU - Upmann, Thorsten
AU - Duman, Papatya
ID - 30940
JF - Scandinavian Journal of Economics
KW - Labour market negotiations
KW - efficient bargains
KW - Nash bargaining solution
KW - sequential bargaining
KW - restricted bargaining games
TI - Wage Bargaining and Employment Revisited: Separability and Efficiency in Collective Bargaining
ER -
TY - GEN
AB - In this paper, we analyze the two-dimensional Nash bargaining solution (NBS) deploying a standard labor market negotiations model (see McDonald and Solow, 1981; Creedy and McDonald, 1991). We show that the two-dimensional bargaining problem can be decomposed into two one-dimensional problems such that the (Cartesian) product of the solutions of these problems replicates the solution of the two-dimensional problem, if the NBS is applied. However, this decomposition fails for any solution concept that does not satisfy the axiom of Independence of Irrelevant Alternatives (IIA axiom). Our decomposition result has significant implications for actual negotiations, as it allows for the decomposition of a multi-issue bargaining problem into a set of simpler problems, in particular a set of single-issue bargaining problems. In this way, the decomposition may help facilitate negotiations in labor markets and also in other environments.
AU - Haake, Claus-Jochen
AU - Upmann, Thorsten
AU - Duman, Papatya
ID - 15202
KW - Labor market negotiations
KW - Efficient bargains
KW - Nash bargaining solution
KW - Sequential bargaining
KW - Restricted bargaining games
TI - The Decomposability of the Nash Bargaining Solution in Labor Markets
VL - 128
ER -