Bargaining and Arbitration in Strategic Games with Private Information


July 8, 2009


Ehud Kalai


Decision and Game Sciences, Kellogg School of Management, Northwestern


Asymmetric private information amplifies the difficulty for players to cooperate and achieve efficiency in strategic games. We give a new cooperative solution for two-player *Bayesian* strategic games, which takes into account both elements of cooperation and competition.

Under a revealed payoff assumption, we give a simple incentive-compatible, efficient mechanism that implements this solution. We argue that this solution gives the unique “fair” value using the axiomatic approach.

Based on joint works with Adam Tauman Kalai and Ehud Kalai


Ehud Kalai

Ehud Kalai’s research is in game theory and its interface with economics, social choice, operations research and computer science. His work opened and expanded the areas of bargaining and arbitration, strategic complexity, strategic learning, large games and related subjects.
Holding an AB in mathematics (U. of Calif. Berkeley, 1967), MS and PhD in statistics and mathematics (Cornell, 1971, 72), Kalai has served as the James J. O’Connor Distinguished Professor of Decision and Game Sciences in the Kellogg School of Management and (courtesy) Professor of Mathematics in the College of Arts and Sciences of Northwestern University. He is the director of the Center for Strategic Decision Making, the founding organizer of the prestigious Nancy L. Schwartz Memorial Lecture series, and repeated winner of Outstanding Teacher awards in Kellogg’s Executive Programs.
Kalai is the founding Editor of Games and Economic Behavior (the leading game theory journal), past President of the international Game Theory Society, and a Fellow of the Econometric Society. He was a Sherman Fairchild Distinguished Scholar at the California Institute of Technology, the Oskar Morgenstern Research Professor at New York University, and his consulting activities include Baxter Health Care Systems, Kaiser Permanente, Arthur Anderson, First Chicago, Sonnenschein Nath and Rosenthal, and Israel Defense Forces among others.


  • Portrait of Ehud Kalai

    Ehud Kalai