Question

Prove by constructing an example that the Nash bargaining solution (Nash,1950) violates the individual monotonicity axiom.

Answer 1

Nash bargaining solution determines the of scale invariance, symmetry, efficiency, and independence of irrelevant alternatives and it is a two person bargaining system and it also studies about the surplus and the deficit in the economic theory.A new treatment is presented as classical economic problems which exist in many forms and also it cncludes bargaining and bilaternal monoply and here general assumptions are made concerning the behaviour of single individual or group of two individuals in certain economic environment In this solution of classic problems can be obtained and in terms of game theory values are found for the game.

A two person bargaining solution involves two individuals who has the opportunity to collabarate for mutual benefit is more than one way and no action can be taken by one individial without consent of another individial and this policy is there for well being of other person.The economic situations of monopoly versus monopsony of state trading between two nations and negotiations between employer and labour union may be regarded as bargaining problems .It is the paper to give theroretical value of problems and also to give practical solutions.