Multiself Bargaining

I propose a dual-self model in which two selves have conflicting preferences over the action to be taken by an agent. Departing from existing dual-self models, the two selves are treated symmetrically. They have identical instantaneous utility, and only differ in their time preference. The default action of the agent is modelled as the outcome of a Tullock contest among the selves, where the self who wins chooses their preferred action. Viewing the outcome of this contest as the point of disagreement, the selves are allowed to negotiate to a mutually preferred outcome, and this negotiation is modelled as a Nash bargaining problem. I show that multiple well documented ‘behavioural’ deviations from standard utility maximizing behaviour can be generated from this model, including time inconsistent behaviour such as diminishing impatience, as well as violations of independence of irrelevant alternatives in choice problems. Notably the preference reversals from time inconsistency are ‘smooth’, as opposed to the singular reversal in quasi-hyperbolic discounting, the standard model used in the literature. Further, the model implies correlation of these deviations due to their dependence on the same parameters. Finally, this approach provides insight on evaluating the welfare effects of various interventions.

LEARNING BARGAINING CONVENTIONS

I examine from a conventionalist perspective the Nash bargaining problem that philosophers use as a tool for analyzing fair division. From this perspective, the solutions to bargaining problems are conventions that can emerge from inductive learning and focal point effects. I contrast the conventionalist approach to analyzing the bargaining problem with the better-known rational choice approach, which I criticize for having overly demanding epistemic presuppositions and for producing disappointing results. I apply a simple model of inductive learning to specific bargaining problems to show that agents can learn from repeated experience to follow a variety of bargaining conventions in a given problem. I conclude that such agents can come to regard two such conventions as focal for the bargaining problem, one that assigns claimants equal shares of a good and another egalitarian solution of equal payoff gains, and that the egalitarian solution tends to prevail when these two solutions differ. I conclude further that the above analysis lends support for admitting interpersonal utility comparisons into the analysis of fair division problems, and also suggests a focal point explanation of the wide acceptance of the Aristotelian proportionality principle of distributive justice.

Can Game Theory Help to Mitigate Water Conflicts in the Syrdarya Basin?

This paper focuses on methods to resolve the ongoing conflict between countries in the Syrdarya Basin, namely Kyrgyzstan and Uzbekistan, over water allocation. It addresses the problem by using the cooperative games framework. It identifies difficulties of choosing the most suitable solution to the Nash bargaining problem under the current circumstances and also reveals complications that may obstruct negotiations on water allocation. The latter is done by using a simplified model from a different subject field which explains why the negotiations have sequential character. The Kalai‑Smorodinsky solution is recommended as optimal in the concrete situation because it takes into account efficiency of water use of the involved parties and its sequential use leads to a Pareto‑optimal outcome. Also a compromise between the Kalai‑Smorodinsky and dictator solutions can be considered for the current case.