A Unique Bargaining Solution Based on Competitive Commitments

In this paper, a bargaining solution is defined based on the ability of bargainers to commit themselves to various minimum utility levels. The solution is descriptive rather than axiomatic. Bargainers must spend resources for commitments, and they argue about the respective merits of the various outcomes, making objections and counterobjections. The solution is based on Aumann and Maschler’s bargaining set for cooperative games in characteristic function form. Existence and uniqueness (in utilities) are shown using assumptions weak enough to be satisfied in most applications. The solution is illustrated by a simple example.