Extreme Equilibria in a General Negotiation Model
Tinbergen Institute Discussion Paper No. 07-070/1
33 Pages Posted: 15 Sep 2007
Date Written: September 2007
Abstract
We study a bargaining model with a disagreement game between offers and counteroffers. In order to characterize the set of its subgame perfect equilibrium payoffs, we provide a recursive technique that relies on the Pareto frontier of equilibrium payoffs. When players have different time preferences, reaching an immediate agreement may not be Pareto efficient. The recursive technique developed in this paper generalizes that of Shaked and Sutton (1984) by incorporating the possibility of making unacceptable proposals into the backward induction analysis. Results from this paper extend all the previous findings and resolve some open issues in the current literature.
Keywords: bargaining, negotiation, time preference, endogenous threats
JEL Classification: C72, C73, C78
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
By Henry S. Farber and Max H. Bazerman
-
Striking for a Bargain between Two Completely Informed Agents
By Raquel Fernández and Jacob Glazer
-
A Model of Bargaining with the Possibility of Arbitration
By Paola Manzini and Marco Mariotti
-
Stakeholders, Bargaining and Strikes
By Paola Manzini and Clara Ponsati
-
The Role of Mediation in Peamaking and Peacekeeping Negotiations
By Ester Camina and Nicolas Porteiro
-
Perfect Equilibria in a Negotiation Model with Different Time Preferences
By Harold Houba and Quan Wen
-
Breakdown in Multilateral Negotiations
By Daniel Göller and Michael Hewer