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Title:Nash's bargaining formula revisited: A note on self-referential logic PDF Logo
Authors:Gander, James P.
Issue Date:2008
Series/Report no.:Working Paper, University of Utah, Department of Economics 2008-10
Abstract:The note focuses on the marginal rates of substitution (MRS) in Nash's product formula solution to bargaining and why the formula works. Two simple examples from duopoly and bilateral monopoly are used to demonstrate that the MRS's for both players are implicitly in the contract curve and the product formula. They are equal in the former by design. They become equal in the latter in equilibrium. The self-referential logic is evident. The bargaining model or system is self-contained and circular and is analogous to the proposition given by x = F(x).
Subjects:Bargaining
Pareto Optimum
Self-Referential Logic
JEL:C71
C78
C65
Document Type:Working Paper
Appears in Collections:Department of Economics Working Paper Series, University of Utah

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