Arbitration solutions to bargaining and game theory problems

Abstract. Decision theory includes arbitration, bargaining and game theory, whose relationships to each other are not well-understood. This paper introduces a particular weighted arbitration operator and applies it to King Solomon's dilemma and Nash's original bargaining problem. These applications allow a more meaningful comparison of the three theories and show that arbitration provides a more natural, simpler and flexible solution than the previously proposed bargaining and game theory solutions.

Key words and phrases. Arbitration, bargaining, game theory, Nash bargaining.