Bargaining with Surplus Destruction
AbstractIn a two-player alternating-offer bargaining model, if one player can destroy the surplus to be allocated, then the value to bargain for is endogenous, except at the beginning. Even with complete information, the model has perfect equilibria with delayed agreement and/or surplus destruction. The model, therefore, explains inefficiency and destruction that may appear irrational. The authors characterize the set of equilibrium payoffs and its limiting behavior as the time between offers vanishes. Real time delay remains possible even in the limit. The authors also consider the case of surplus destruction that is exogenously limited by the time between offers.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 31 (1998)
Issue (Month): 4 (November)
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Find related papers by JEL classification:
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
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