Folk Theorem For Bilateral Bargaining with Vector Endowments
AbstractWe analyse a bargaining game of two players on the division of the sum of their vector endowments, with alternating proposals and discounting of single period utilities. The pair of endowments is not weakly Pareto-efficient. Until they reach an agreement, each of the parties can withdraw from bargaining and keep their endowments. Any strictly individually rational division of the sum of endowments can emerge in some subgame perfect equilibrium if discount factors are close enough to one. Each subgame perfect equilibrium, in which the parties' decisions do not depend on past rejected proposals, leads to a weakly Pareto-efficient agreement in the first period. Copyright Blackwell Publishers Ltd and the Board of Trustees of the Bulletin of Economic Research, 2004.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Bulletin of Economic Research.
Volume (Year): 56 (2004)
Issue (Month): 3 (07)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0307-3378
Find related papers by JEL classification:
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
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