A note on the conventional wisdom in bargaining

Abstract

We study a version of the Nash demand game, in which each player demands a portion of the pie of size 1 simultaneously and receives a share proportional to his demand if such an allocation is feasible or receives zero otherwise. The main purpose of this paper is to show how an equal split emerges as a convention in a bargaining situation, and explain why it has survival value. In this paper, the equal split in the Nash demand game emerges in the long run through imitation and mistakes.