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Finite Horizon Negotiation Games

Author

Listed:
  • Lutz-Alexander Busch

    (Department of Economics, University of Waterloo)

  • Quan Wen

    (Department of Economics, University of Windsor)

Abstract

This paper studies the finite horizon version of the negotiation model of Busch and Wen (1995). Two players bargain over the division of a certain surplus in finitely many periods. In the absence of an agreement, players¡¯ payoffs in a period are determined by a disagreement game. The set of equilibrium payoffs is determined by backward induction. If at least one player has distinct Nash payoffs in the disagreement game, the set of subgame perfect equilibrium payoffs converges to that of the corresponding infinite horizon negotiation game as the game horizon increases to infinity. Otherwise, the finite horizon negotiation game will have a unique subgame perfect equilibrium outcome.

Suggested Citation

  • Lutz-Alexander Busch & Quan Wen, 2001. "Finite Horizon Negotiation Games," Annals of Economics and Finance, Society for AEF, vol. 2(2), pages 415-435, November.
    • Handle: RePEc:cuf:journl:y:2001:v:2:i:2:p:415-435
    as

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    References listed on IDEAS

    as
    1. Benoit, Jean-Pierre & Krishna, Vijay, 1993. "Renegotiation in Finitely Repeated Games," Econometrica, Econometric Society, vol. 61(2), pages 303-323, March.
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    More about this item

    Keywords

    Non-cooperative bargaining; Negotiation model; Finitely repeated games;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General

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