An exact non-cooperative support for the sequential Raiffa solution

This article provides an exact non-cooperative foundation of the sequential Raiffa solution for two-person bargaining games. Based on an approximate foundation due to Myerson (1991) for any two-person bargaining game (S, d) an extensive form game G(s,d) is defined that has an infinity of weakly subgame perfect equilibria whose payoff vectors coincide with that of the sequential Raiffa solution of (S, d). Moreover all those equilibria share the same equilibrium path consisting of proposing the Raiffa solution and accepting it in the first stage of the game. By a modification of G(s,d) the analogous result is provided for subgame perfect equilibria. These results immediately extend to implementation of a sequential Raiffa (solution based) social choice rule in subgame perfect equilibrium. (C) 2010 Elsevier B.V. All rights reserved.