Endogenously Proportional Bargaining Solutions

Abstract

This paper introduces a class of endogenously proportional bargaining solutions. These solutions are inside the class of Directional solutions, which Chun and Thomson (1987) proposed to generalize (exogenously) proportional solutions of Kalai (1977). Endogenously proportional solutions are characterized by weak Pareto optimality arid continuity together with two new axioms that depend on the total payoff asymmetry of the bargaining problem. Each of these solutions satisfies the basic symmetry axiom and also a stronger axiom called total payoff symmetry.