Bargaining and Fair Division

In this chapter surplus sharing problems are considered, i.e. it is assumed that synergetic gains can be obtained by cooperating and the question is how these gains should be divided. Although traditionally such problems belong to the realm of cooperative game theory, we will study them by non-cooperative methods. The objectives are twofold: (1) to show how concepts from cooperative game theory can be implemented by means of noncooperative methods and (2) to illustrate the strength of the subgame perfectness concept ( and the weakness of the Nash equilibrium concept ) in dynamic games with perfect information.