Duality, area-considerations, and the Kalai-Smorodinsky solution

We introduce a new solution concept for 2-person bargaining problems, which can be considered as the dual of the Equal-Area solution (EA) (see Anbarci and Bigelow (1994)). Hence, we call it the Dual Equal Area solution (DEA). We show that the point selected by the Kalai-Smorodinsky solution (see Kalai and Smorodinsky (1975)) lies in between those that are selected by EA and DEA. We formulate an axiom - area-based fairness - and offer three characterizations of the Kalai-Smorodinsky solution in which this axiom plays a central role. (C) 2016 Elsevier B.V. All rights reserved.