INSTITUTE OF MATHEMATICAL ECONOMICS

Claus-Jochen Haake

Working-Paper No. 301

October 1998

Abstract

In the existing literature the Kalai--Smorodinsky bargaining solution is implemented either by using the Nash equilibrium or the subgame--perfect equilibrium concept. In this paper we provide a setup for implementing bargaining solutions and construct a strategic mechanism for n players that implements the Kalai--Smorodinsky bargaining solution in dominant strategies. Moreover we have uniqueness of dominant strategy equilibria in each of the induced games. From this mechanism we can derive an extensive game form such that the final outcome in the unique subgame--perfect equilibrium again coincides with the Kalai--Smorodinsky bargaining solution. So we get both from the original mechanism --- dominant strategy equilibrium and also subgame--perfect implementation.

Keywords: Bargaining, Implementation, Kalai-Smorodinsky Solution