Journal
JOURNAL OF ECONOMIC THEORY
Volume 136, Issue 1, Pages 695-708Publisher
ACADEMIC PRESS INC ELSEVIER SCIENCE
DOI: 10.1016/j.jet.2006.10.004
Keywords
bargaining; history-dependence; delay; gradualism
Categories
Ask authors/readers for more resources
Two impatient players bargain over a pie of size one according to the infinite alternating-offers procedure. Players' payoffs depend not only on the outcome but also on the process of the bargaining. Specifically, they prefer impasse to any agreement that gives them lower discounted utility than would have been derived from accepting earlier offers. We characterize the essentially unique subgame perfect equilibrium path, which consists of gradual concessions. The more patient players are, the longer it takes them to reach an agreement. When players become infinitely patient, the efficiency loss is substantial, yet the equilibrium division converges to the Nash solution. (C) 2006 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