THE LEXICOGRAPHIC EQUAL-LOSS SOLUTION

We introduce a new solution for Nash's bargaining problem, called the lexicographic equal-loss solution. This solution is a lexicographic extension of the equal-loss solution, which equalizes across agents the losses from the ideal point, to satisfy Pareto optimality. An axiomatic characterization is presented by using the following five axioms: Pareto optimality, anonymity, translation invariance, weak monotonicity, and independence of alternatives other than the ideal point.