Differential Bargaining Games as Microfoundations for Production Function

In the present paper the game theory is applied to an important open question in economics: providing microfoundations for often-used types of production function. Simple differential games of bargaining are proposed to model a behavior of workers and capital-owners in processes of formation of possible factor prices and participants' weights (moral-ethical assessments). These games result, correspondingly, in a factor price curve and a weight curve — structures dual to a production function. Ultimately, under constant bargaining powers of the participants, the Cobb–Douglas form of the production function is received.