Bargaining is an essential element in the resolution of the conflict in many situations. The situations range in importance from a couple's decision to attend a ballet to the negotiations over nuclear disarmament. In these situations, cooperative actions can result in gains to all involved but conflicts arise over the selection of a particular action because this choice determines the distribution of these gains. Through implicit or explicit bargaining, parties often reach mutually acceptable outcomes. That these conflicts more often result in agreements rather than in deadlocks suggests that bargaining behavior is systematic. Experimental evidence on bargaining problems also suggests that bargaining behavior is systematic. This project continues to develop an original and very promising way of modelling the systematic features of bargaining behavior. The approach taken breaks each bargaining problem into a series of interrelated simple bargaining problems. A multilateral solution to the bargaining problem is derived from solving each of the simple bargaining problems in a way that captures their interrelationship. This is exciting research because only one of the traditional solution concepts for cooperative games has yielded significant insights into economic problems. The development of a second useful solution concept for cooperative bargaining games would be a major contribution. The basic theory of multilateral bargaining was developed by the investigator under her previous NSF award. This award permits her to use multilateral bargaining to analyze bargaining equilibria for marriage markets with nontransferable utility and two-sided matching markets, such as labor markets, where desirable matches may involve more than one participant on one side of the market. She also plans to show that multilateral bargaining is consistent with rational behavior by proving that the multilateral bargaining solutions of noncooperative games coincide with the set of Nash equilibria outcomes.
