7. Between Utilitarianism and Egalitarianism: Some Ethical Aspects of the Nash Bargaining Solution

The chapter delves into the ethical dimensions of the Nash Bargaining Solution, introduced by John Nash in 1950. It examines the model's two interpretations—strategic bargaining and arbitrator-based—and how utilitarianism and egalitarianism play crucial roles in both. Shapley's work is highlighted, showing how the Nash solution maximizes both utilitarian and egalitarian objectives. The chapter also explores bounds on the Nash solution, demonstrating its unique position between utilitarianism and egalitarianism. Additionally, it investigates the solution's properties in various models, including the allocation of indivisible goods and probabilistic bargaining. The conclusion discusses the relevance of ethical considerations in both 'thick' and 'thin' bargaining problems, making a compelling case for the importance of the Nash Bargaining Solution in distributive justice.