(DP 1981-08) A Lexicographic Arbitration Model

Abstract

Assuming that the parties to a conflict have lexicographic preferences, an arbitration model is formulated whose proposed solution satisfies five reasonable conditions. Four of these conditions are analogous to the four conditions that characterize the Nash solution to the bargaining problem. The fifth condition, called "nonfavoritism", is new. It turns out that if any possible solution is required to satisfy the five conditions, it can only be the proposed solution.