Nash's Bargaining Theorem states that a two-person bargaining problem, given by a set of jointly feasible utility outcomes and a fixed disagreement outcome, has exactly one solution satisfying four natural conditions, Pareto efficiency, symmetry, invariance to affine transformations of utility, and independence of irrelevant alternatives, and that this unique solution is the outcome maximizing the product of each player's gain in utility over the disagreement point. Named for John Nash, it is a foundational axiomatic result of cooperative game theory.
Facts
StatementThe Nash bargaining solution is the unique solution to a two-person bargaining problem satisfying scale invariance, symmetry, efficiency and independence of irrelevant alternatives. 1 Classification
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Named After
Derived from the theorem's own name (unambiguous possessive-token match to exactly one live mathematician entity, w-bfill-g5-0924 browse backfill)
Proved By
Sources
1. Cooperative bargaining (Wikipedia)
Nash bargaining game sectionQuote, Nash bargaining game section
It is the unique solution to a two-person bargaining problem that satisfies the axioms of scale invariance, symmetry, efficiency, and independence of irrelevant alternatives.
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