The Decomposability of the Nash Bargaining Solution in Labor Markets

C.-J. Haake, T. Upmann, P. Duman, The Decomposability of the Nash Bargaining Solution in Labor Markets, CIE Working Paper Series, Paderborn University, 2019.

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Abstract
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.
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128
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Haake C-J, Upmann T, Duman P. The Decomposability of the Nash Bargaining Solution in Labor Markets. Vol 128. CIE Working Paper Series, Paderborn University; 2019.
Haake, C.-J., Upmann, T., & Duman, P. (2019). The Decomposability of the Nash Bargaining Solution in Labor Markets (Vol. 128). CIE Working Paper Series, Paderborn University.
@book{Haake_Upmann_Duman_2019, series={Working Papers CIE}, title={The Decomposability of the Nash Bargaining Solution in Labor Markets}, volume={128}, publisher={CIE Working Paper Series, Paderborn University}, author={Haake, Claus-Jochen and Upmann, Thorsten and Duman, Papatya}, year={2019}, collection={Working Papers CIE} }
Haake, Claus-Jochen, Thorsten Upmann, and Papatya Duman. The Decomposability of the Nash Bargaining Solution in Labor Markets. Vol. 128. Working Papers CIE. CIE Working Paper Series, Paderborn University, 2019.
C.-J. Haake, T. Upmann, and P. Duman, The Decomposability of the Nash Bargaining Solution in Labor Markets, vol. 128. CIE Working Paper Series, Paderborn University, 2019.
Haake, Claus-Jochen, et al. The Decomposability of the Nash Bargaining Solution in Labor Markets. Vol. 128, CIE Working Paper Series, Paderborn University, 2019.
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