Bargaining in changing environments

The Rubinstein’s strategic bargaining model is extended to situations in which the players’ concern the performance of a dynamic system. The model is developed in two stages: first, when the system evolves independently of the players and second, when players control the evolution of the system. The differences in comparison with the ‘partition of a shrinking pie’ illustration are emphasized, together with the strategic differences between the two analyzed situations. Subgame perfect equilibria for the extended case are derived, and the specific problems, not arising in simpler situations, are put forward.