Reject and renegotiate: The Shapley value in multilateral bargaining

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.