The Nash Bargaining Solution is a solution concept in game theory that describes how two parties can negotiate an agreement that maximizes their collective benefit while ensuring that each party receives at least a minimum payoff. It builds on the idea of cooperative game theory, focusing on how players can reach an efficient outcome by considering both their individual preferences and the potential gains from cooperation. This solution emphasizes fairness and balance in negotiations, making it crucial for understanding strategic interactions in various economic and social contexts.
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