The balanced threat agreement for individual externality negotiation problems

Peter Borm, Yukihiko Funaki, Yuan Ju

Research output: Contribution to journalArticleScientificpeer-review


This paper introduces a model to analyze individual externalities and the associated negotiation problem, which has been largely neglected in the game theoretic literature. Following an axiomatic perspective, we propose a solution, as a payoff sharing scheme, called the balanced threat agreement, for such problems. It highlights an agent’s potential influences on all agents by threatening to enter or quit. We further study the solution by investigating its consistency. We also offer a discussion on the related stability issue.
Original languageEnglish
Pages (from-to)67-85
JournalHomo Oeconomicus-Journal of Behavioral and Institutional Economics
Publication statusPublished - Nov 2020


  • individual externalities
  • negotiation
  • balanced threat
  • characterization
  • consistency

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