Can someone explain this to me? I cant find references from the internet. Detailed explanation would be highly appreciated.

Non-strategic view (cont.) . Nash's axiomatic approach: [ S,(z) - D, ] x I (S2(z) - D2], where: . z is the agreement . S, (z) is the value of the agreement to player 1 (sub 2 for player two) . D, is "disagreement value," or pay-off if no agreement is reached, for player 1 (sub 2 for player two) . So player 1's gain from agreement is (S, (z) - D1) Non-strategic view (cont.) . For example, two brothers are bargaining over a dollar. . If no agreement is reached, neither participant gains. . If they reach an agreement (z) . Player one, the older brother, has a surplus of z . Player two, the younger brother, has a surplus of 1 - z . Nash's solution is for them to "split" the gains from trade, i.e., {1/2, 1/2) is the axiomatic solution. . But, now the older brother receives a $0.50 bonus for "sharing nicely," and the total gain rises from $1.00 to $1.50 . The Nash bargaining outcome is for the brothers to split to total gains - each receiving $0.75, meaning the older brother effectively shares half of his bonus. . By increasing the first player's gain to reaching agreement, he becomes more eager to reach agreement, and "shares" his gain with his brother