Two-person Bargaining with Lexicographic Altruistic Preferences

Abstract

In bargaining theory a usual assumption is either that of von Neumann-Morgenstern utility functions or that of continuous preferences. Recently we considered in Glycopantis a bargaining model which breaks away from this traditional treatment by employing lexicographic preferences of a antagonistic type. In the present note we consider a bargaining model with lexicographic but altruistic preferences for the two players. We show that the Rubinstein et al., definition can again be used to obtain a Nash solution. This is of a different type from that of the antagonistic model. We also look briefly again at the alternating offers approach.