Bargaining with stochastic disagreement payoffs

Bargaining with stochastic disagreement payoffs

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Article ID: iaor20051503
Country: Germany
Volume: 31
Issue: 4
Start Page Number: 571
End Page Number: 591
Publication Date: Jan 2002
Journal: International Journal of Game Theory
Authors: ,
Abstract:

We study a bargaining model where (i) players' interim disagreement payoffs are stochastic and (ii) in any period, the proposer may postpone making an offer without losing the right to propose in the following period. This bargaining model has a generically unique perfect equilibrium payoff for each player, and the equilibrium outcome is inefficient in some cases, featuring a stochastically delayed agreement. We show that both the variation of players' interim disagreement payoffs and the proposer's ability to postpone making an offer without losing the right to propose are necessary for the existence of such a unique and inefficient perfect equilibrium outcome.

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