4.2 Article

Reject and renegotiate: The Shapley value in multilateral bargaining

Journal

JOURNAL OF MATHEMATICAL ECONOMICS
Volume 48, Issue 6, Pages 431-436

Publisher

ELSEVIER SCIENCE SA
DOI: 10.1016/j.jmateco.2012.08.009

Keywords

Bargaining; Subgame perfect equilibrium; Shapley value; Renegotiation

Funding

  1. University of York

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This paper investigates three distinctive and intuitive renegotiation bargaining protocols that all yield the Shapley value as the unique subgame perfect equilibrium outcome. These protocols, built on the multi-bidding procedure of Perez-Castrillo and Wettstein (2001), allow more freedom in multilateral bargaining where rejected players can further negotiate and form coalitions. The self-duality of the Shapley value plays a key role in the second and third results. Moreover, these renegotiation protocols allow an actual play along the equilibrium path to restore the Shapley value in case of a 'mistake' made before. (C) 2012 Elsevier B.V. All rights reserved.

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