Differential Bargaining Games as Microfoundations for Production Function
Abstract
In the present paper the game theory is applied to an important open question in economics: providing microfoundations for often-used types of production function. Simple differential games of bargaining are proposed to model a behavior of workers and capital-owners in processes of formation of possible factor prices and participants' weights (moral-ethical assessments). These games result, correspondingly, in a factor price curve and a weight curve – structures dual to a production function. Ultimately, under constant bargaining powers of the participants, the Cobb-Douglas form of the production function is received.
Keywords:
bargaining, differential games, production factors, choice of technology, duality, production function
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Articles of "Contributions to Game Theory and Management" are open access distributed under the terms of the License Agreement with Saint Petersburg State University, which permits to the authors unrestricted distribution and self-archiving free of charge.
