23 votes
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Why is bartering uncommon in modern countries?

The main likely reasons why barter is not more common are: The inconvenience of having to find another party who both offers what you want and wants what you offer. Even if such a party can be ...
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17 votes

Why is bartering uncommon in modern countries?

In the countries that I am familiar with (such as Canada), using barter to avoid taxes is definitely illegal. You are required to report the dollar value of the exchange as revenue. It is treated as ...
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4 votes

Why is bargaining more common in poor countries?

In first world countries, the price of a bottle of water is set by a well-established market. There are millions of prospective buyers of a bottle of water and thousands of prospective suppliers, and ...
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4 votes
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Disagreement in Strategic Bargaining

Consider: Proposer offers $0$ Receiver always rejects the offer regardless of the amount You should be able to argue that this is a pair of mutually best responding strategies for $T=1$. The $T>...
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4 votes
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Axiomatic Bargaining: Kalai-Smorodinsky and Nash solutions coincide

Another sufficient condition for the two solutions to coincide, which is not necessarily the same as symmetry, is that the feasible set $S$ be rectangular. That is, \begin{equation} S=\text{convex ...
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4 votes

Why is bartering uncommon in modern countries?

The same reason why money became popular in the first place: bartering doesn't scale well. Even if you're able to evade taxes by bartering, the inconvenience makes it difficult to take advantage of ...
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4 votes
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Is the Nash product really maximised ex post?

The Nash bargaining solution DOES maximize the Nash product. You have to separate the playing of the game from the bargaining problem. If the players negotiate a binding agreement they will realize ...
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4 votes
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Nash bargaining solution textbook treatment

Almost all textbooks on game theory include a part on cooperative game theory and therefore also treat Nash bargaining. A random sample ($n=3$) from my shelf produced this one, this one, and this one.
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3 votes
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Efficiency in a market that is both a monopoly and a monopsony

Efficiency in general means that the item being traded should be given to the party that values it the most. In a competitive market, this means trade should continue as long as a consumer's value of ...
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3 votes

Setting up the model for a pie-sharing problem

With discounting, the situation is a classic Rubinstein bargaining game, in which two players make alternating offers to split a shrinking pie. Without discounting, I'm not sure an equilibrium ...
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2 votes

Setting up the model for a pie-sharing problem

Discounting does not work like that. Discounting means how much you discount the future relative to the present---e.g., receiving \$1 tomorrow is the equivalent of receiving \$0.90 today. What you are ...
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2 votes

Why is bartering uncommon in modern countries?

It doesn't save money. Keep in mind that revenue taxes are calculated after deduction of expenses. So if I sell something for 50€, and buy something for 50€, the total earnings of my company have not ...
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2 votes

Why is bargaining more common in poor countries?

Time is money When the average daily wage is 5 dollars, and many others survive on 1-2 dollars a day, it's worth it to many people to take a few minutes to try to get an extra nickel or dime out of ...
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2 votes

Why is bargaining more common in poor countries?

I think the best approach to describe this phenomenon is to see it as a change from relational-oriented economics of poor countries (developing countries) to transactional-oriented economics of ...
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2 votes

Computation of Different Axiomatic Barganing Solutions

The answer depends on the "following solution concepts", which you did not specify. I guess the Nash solution and the Kalai-Smorodinsky solution will be among them. The frontier functions you seem to ...
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  • 4,589
1 vote

How to achieve the best outcome by a single statement in this game?

Here is a proof that the response given by Schelling in Eric’s answer is (as good as) the best A can do. A can only do so much in retaliation for B and C teaming up against him. He can threaten to ...
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  • 605
1 vote

How to achieve the best outcome by a single statement in this game?

Schelling himself gave an answer for Q1 in which A can achieve a surviving probability arbitrarily close to 5/6. I quote the book below. The wording is painfully tortuous at times. But the answer ...
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