Nash Equilibrium is Not a Theory of Bargaining

Nash did not resolve the bargaining problem, brilliant as his 1950 paper was and remains. He engineered the outcome of bargaining– not the process of bargaining – into neo-classical equilibrium. It is pure homo economicus (Beinhocker does not appear to have noticed this at all). He has bought right into the notion that Nash demonstrated the pay-offs from co-operation – yes, but only by Nash assuming they were not bargaining at all! He writes:...more>>