A WALRASIAN APPROACH TO BARGAINING GAMES

The paper presents and discusses an alternative approach to bargaining games. N-person bargaining gables with complete information are shown to induce in a canonical way an Arrow-Debreu economy with production and private ownership. The unique Walras stable competitive equilibriu m of this economy is shown to coincide with an asymmetric Nash bargain ing solution of the underlying game with weights corresponding to the shares in production. In the case of an economy with equal shares in p roduction, the unique competitive equilibrium coincides with the symme tric Nash bargaining solution. As this in turn represents the unique S hapley nontransferable utility (NTU) value our paper solves a problem posed by Shubik, namely to find a model in which the Shapley NTU value is a Walrasian equilibrium. ''There has been some controversy about t he interpretation of the lambda-transfer-value... no consensus has yet emerged on the significance of these concerns, which had been address ed...in numerous explorations of the lambda-transfer-value as a tool f or analysing games and markets...'' (Both, 1985).