Reaching consensus through approval bargaining

In the Approval Bargaining game, two players bargain over a finite set of alternatives. To this end, each one simultaneously submits a utility function u jointly with a real number α by doing so she approves the lotteries whose expected utility according to u is at least α. The lottery to be implemented is randomly selected among the most approved ones. We first prove that there is an equilibrium where players truthfully reveal their utility function. We also show that, in any equilibrium, the equilibrium outcome is approved by both players. Finally, every equilibrium is sincere and Pareto efficient as long as both players are partially honest.