Fair Bargains: Distributive Justice and Nash Bargaining Theory

the Suppes-Sen dominance relation is a weak and widely accepted criterion of distributive justice. We propose its application to Nash bargaining theory. The Nash Bargaining Solution (NBS) is characterised by replacing the controversial Independence of Irrelevant Alternatives axiom with an axiom embodying the SuppesSen principle. More precisely, maximality in the Suppes-Sen relation is shown to be equivalent to the NBS in the presence of Scale Covariance. The characterisation is far more robust than the standard one with respect to variations in the domain of bargaining problems. It is also shown that a subset of Nash’s axioms imply the Suppes-Sen relation. JEL class. number: C71, C78. I am deeply indebted, with the usual disclaimers, to Paul Madden for comments, bibliographical suggestions, encouragement, and not least for originating my interest in the Suppes-Sen relation. Useful suggestions have also come from Vincenzo Denicolò, Joseph Greenberg, Paola Manzini, Herve Moulin and Fioravante Patrone.