Nash bargaining assumes that players are perfectly rational. However, the perfect rationality assumption does not hold for real-life bargaining scenarios with human as players. Therefore, is it possible to introduce bounded rationality theory into Nash bargaining problem? If it is possible, how to introduce?
Of course, the evolutionary model of bargaining in game theory drops the perfect rationality assumption, but it is based on large population of individuals as players and repeated interaction among players, not applicable to one shot bargaining scenarios with only two or three players. So I'm looking for methods of introducing bounded rationality into Nash bargaining problem.
Yes. There is a clear possibility to introduce bounded rationality into Nash bargaining problem.
How about incomplete information games with the rationality of the players as the disclosed information?
In this paper https://mpra.ub.uni-muenchen.de/57960/ we model dynamic bargaining of time inconsistent agents. We show that bargaining may break down if players are naive about the time inconsistency. The Nash bargaining solution can be derived from dynamic (Rubinstein) bargaining when players are rational. Maybe this is also possible for agents that are time inconsistent.
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