Relative Benefit Equilibrating Bargaining Solution and the Ordinal Interpretation of Gauthier's Arbitration Scheme
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In 1986 David Gauthier proposed an arbitration scheme for two player cardinal bargaining games based on interpersonal comparisons of players’ relative concessions. In Gauthier’s original arbitration scheme, players’ relative concessions are defined in terms of Raiffa-normalized cardinal utility gains, and so it cannot be directly applied to ordinal bargaining problems. In this paper I propose a relative benefit equilibrating bargaining solution (RBEBS) for two and n-player ordinal and quasiconvex ordinal bargaining problems with finite sets of feasible basic agreements based on the measure of players’ ordinal relative individual advantage gains. I provide an axiomatic characterization of this bargaining solution and discuss the conceptual relationship between RBEBS and ordinal egalitarian bargaining solution (OEBS) proposed by Conley and Wilkie (2012). I show the relationship between the measurement procedure for ordinal relative individual advantage gains and the measurement procedure for players’ ordinal relative concessions, and argue that the proposed arbitration scheme for ordinal games can be interpreted as an ordinal version of Gauthier’s arbitration scheme.