Sustainable Solutions for Dynamic Bargaining Problems

By refering to the Bargaining Problem the economic literature means a situation in which a group of individuals seek to reach an agreement on a partition of a pie. Following Nash (1950) the two players bargaining problem is described using only two components (S, d) when d is a point in the plane which can be interpreted as the outcome when no agreement is reached and S is a compact convex subset of the plane which contains d and describes the set of all feasible utility payoffs that can be achieved by cooperation. Consequently two different bargaining problems that can be characterized by the same (S, d) will yield the same solution [see for example Nash (1950), Kalai and Smorodinsky (1975), and Kalai (1977)]. One approach to solve the bargaining problem is the axiomatic approach [for survey see Roth (1979)] in which the bargaining process is not specified and the assumptions are directly made on the solution itself. A different way of discussing the bargaining problem is the strategic approach in which the bargaining process itself is discussed [see Rubinstein (1982)]. In daily bargaining we deal quite often with a situation in which the