The representative Nash solution for two-sided bargaining problems

An n-person bargaining situation is two-sided when participants of bargaining are divided into two groups and their preferences over bargained outcomes are exactly opposite to each other. This is so when the issue on the bargaining table is represented by a one dimensional set and people's preferences are monotonically increasing in one group and monotonically decreasing in the other group. In this paper a solution for two-sided problems called the Representative Nash solution is introduced and axiomatized. A strategic bargaining model is constructed such that the unique stationary subgame perfect equilibrium outcome corresponds to the Representative Nash solution. (C) 2000 Elsevier Science B.V. All rights reserved.