Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/288004 
Year of Publication: 
2023
Citation: 
[Journal:] The Scandinavian Journal of Economics [ISSN:] 1467-9442 [Volume:] 125 [Issue:] 2 [Publisher:] Wiley [Place:] Hoboken, NJ [Year:] 2023 [Pages:] 403-440
Publisher: 
Wiley, Hoboken, NJ
Abstract: 
We analyse the two‐dimensional Nash bargaining solution (NBS) by deploying the standard labour market negotiations model of McDonald and Solow. 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.
Subjects: 
Efficient bargains
labour market negotiations
Nash bargaining solution
restricted bargaining games
sequential bargaining
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article
Document Version: 
Published Version

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