Journal
JOURNAL OF ECONOMIC THEORY
Volume 189, Issue -, Pages -Publisher
ACADEMIC PRESS INC ELSEVIER SCIENCE
DOI: 10.1016/j.jet.2020.105098
Keywords
Bargaining with an agenda; Nash program; Bargaining solution
Categories
Ask authors/readers for more resources
We provide unified strategic foundations for the Nash (1950) and Kalai (1977) solutions in the context of negotiations under liquidity constraints. We propose an N-round game where in each round a seller and a buyer with limited payment capacity negotiate a bundle of divisible goods, where bundle sizes can vary across rounds, according to Rubinstein's (1982) alternating-offer game. The game implements the Nash solution if N = 1 and the Kalai solution if N = +infinity and bundle sizes are infinitesimal. If N is set by one player ex ante, the buyer chooses N = 1 while the seller chooses N = +infinity. We endogenize liquidity constraints and show they bind for all N < +infinity, even when there is no cost in holding liquidity. (c) 2020 Elsevier Inc. All rights reserved.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available