On Arbitration for the Bayesian Collective Choice Problem

Abstract

This paper deals with arbitration for the Bayesian collective choice problem. A similar problem is discussed in Myerson (1979) under the assumption that the arbitrator chooses a bargaining solution, derived from the generalized Nash product of Harsanyi and Selten (1972). This paper, however, asserts that arbitration differs from pure bargaining, because an arbitrator behaves so that the fairness-utility function evaluated by himself is maximized. We argue that the functional form of the fairness-utility function is uniquely determined if the arbitrator acts according to some plausible criteria.