ABSTRACT
The assumption of a noncooperation in the tariff game also implies that players do not communicate and cooperate with each other in adopting a joint strategy even if it may yield strictly higher payoffs to each of the players. This change in the rules allows us to transform the tariff game into a standard bargaining problem, where players bargain over a tariff rate. Since the bargaining problem in the tariff game is essentially the same as any other abstract bargaining problem studied by game theorists, people can obtain insights into the underlying bargaining process from their studies as well. The property of the Nash bargaining solution, however, as discovered by R. J. Aumann and M. Kurz, that in equilibrium the players should be equally fearful of ruin holds, as in the case of the original Nash solution, only with the equal bargaining power.
