On the Sensitivity Matrix of the Nash Bargaining Solution
CentER Discussion Paper No. 2006-107
13 Pages Posted: 21 Apr 2005
Date Written: October 2006
In this note we provide a characterization of a subclass of bargaining problems for which the Nash solution has the property of disagreement point monotonicity.While the original d-monotonicity axiom and its stronger notion, strong d-monotonicity, were introduced and discussed by Thomson , this paper introduces local strong d-monotonicity and derives a necessary and sufficient condition for the Nash solution to be locally strong d-monotonic.This characterization is given by using the sensitivity matrix of the Nash bargaining solution w.r.t. the disagreement point d.Moverover, we present a sufficient condition for the Nash solution to be strong d-monotonic.
Keywords: Nash bargaining solution; d-monotonicity; diagonally dominant Stieltjes matrix
JEL Classification: C61, C62, C71, C78
Suggested Citation: Suggested Citation