On bargaining partner selection when communication is restricted

On bargaining partner selection when communication is restricted

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Article ID: iaor2003684
Country: Germany
Volume: 30
Issue: 4
Start Page Number: 503
End Page Number: 515
Publication Date: Jan 2001
Journal: International Journal of Game Theory
Authors:
Keywords: bargaining
Abstract:

This paper analyzes the optimal selection of a bargaining partner when communication among players is resctricted by an exogenously given graph. If players are equally patient, bargaining agreements are immune to players' locations, and the selection of a bargaining partner is not an issue. In contrast, when players differ in their discount factors, both location and impatience matter for bilateral agreements and partner selection becomes an issue. We show that selecting the most impatient neighbor is an equilibrium strategy whenever two players having a common neighbor share their most impatient neighbor. This condition is always satisfied by stratified graphs with no more than three strata. In the absence of this condition, cyclically-stratified graphs with no more than three strata also admit this equilibrium selection rule.

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