Transfer Paradox and Bargaining Solutions

Abstract

We investigate whether bargaining solutions are immune to the transfer paradox for n-person bargaining problems. We show that two families of bargaining solutions, one generalizing the Nash solution and another generalizing the Kalai-Smorodinsky solution, are immune to the strong transfer paradox requiring the donor gains and the recipient loses. Also, we present examples demonstrating that the Nash and the Kalai-Smorodinsky solutions are subject to the weak transfer paradox so that the donor and the recipient could gain together or lose together.