ABSTRACT
The tariff formation process in the political sphere, however, was generally portrayed as a noncooperative game in which the policy maker as well as the private interest groups behaved strategically to further their own self-interests. A disagreement payoff is the payoff that a player will receive if players fail to reach an agreement. A natural candidate for this is the payoff at a non-cooperative Nash equilibrium of the tariff game. But, there are two problems which make the use of payoffs at a non-cooperative Nash equilibrium less attractive. Thomson has argued that the disagreement point in a bargaining problem simply serves as a reference point to which players find it natural to compare any proposed compromise. He has suggested several possible candidates for such a reference point. However, requiring that the point satisfy some desirable properties can considerably shorten the list of reference points.
