Bargaining
Named by 2 essays across one field — each of them below, with the objects they name alongside it.
Haggling that ends at the largest product
Two people split a sum by making offers in turn, each refusal costing both of them a little time. Rubinstein proved in 1982 that the game has exactly one sensible outcome, reached at once — and as the delay between offers shrinks, it is the split that maximises the product of what each gets, the rule Nash had laid down as an axiom thirty years before.
Some good trades cannot be made
A seller who values a car at s meets a buyer who values it at b, and neither knows the other's number. Whenever b is larger, a sale would make both better off. Myerson and Satterthwaite proved in 1983 that no way of haggling, auctioning or brokering can guarantee it: some sales worth making are always lost. With values spread evenly the best possible procedure trades only when the buyer's value beats the seller's by a quarter, loses five thirty-seconds of the surplus — and is reached by two people who simply name prices and split the difference.
Named alongside it
The objects these essays reach for when they reach for this one.
AuctionBackward inductionDiscountingExpectationFair divisionNash equilibriumNash welfareOutside optionPrivate informationRevenue equivalenceRisk aversionStrategy-proofness