22
votes
Accepted
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 ...
- 8,311
16
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 ...
- 9,852
5
votes
Accepted
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 ...
- 15.3k
4
votes
Accepted
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 $T>...
- 15.3k
4
votes
Why is bartering uncommon in modern countries?
The same reason why money became popular in the first place: bartering doesn't scale well. Even if you're able to evade taxes by bartering, the inconvenience makes it difficult to take advantage of ...
- 131
4
votes
Why is bargaining more common in poor countries?
In first world countries, the price of a bottle of water is set by a well-established market. There are millions of prospective buyers of a bottle of water and thousands of prospective suppliers, and ...
- 729
4
votes
Accepted
Is the Nash product really maximised ex post?
The Nash bargaining solution DOES maximize the Nash product. You have to separate the playing of the game from the bargaining problem. If the players negotiate a binding agreement they will realize ...
- 6,550
4
votes
Accepted
Nash bargaining solution textbook treatment
Almost all textbooks on game theory include a part on cooperative game theory and therefore also treat Nash bargaining. A random sample ($n=3$) from my shelf produced this one, this one, and this one.
- 6,550
3
votes
Accepted
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 ...
- 15.3k
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 ...
- 15.3k
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 ...
- 156
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 ...
- 626
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 ...
- 462
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 ...
- 6,550
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 ...
- 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 ...
- 131
1
vote
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 ...
- 145
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