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Strategic bargaining with destructive power

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  • Manzini, Paola

Abstract

This paper studies a two-player alternating offers bargaining model in which one of the agents has the ability to damage permanently the ``pie'' bargained over. I show how this feature can result in an increase of the cost of rejecting an offer for the ``non-harming player''. Beside the ``Rubinstenian'' bilateral monopoly outcome, I show that it is possible to select a ``harming'' equilibrium in which the sequence of damages to the pie is endogenously determined and payoffs do not vary monotonically with the discount factor.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 65 (1999)
Issue (Month): 3 (December)
Pages: 315-322

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Handle: RePEc:eee:ecolet:v:65:y:1999:i:3:p:315-322

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References

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  1. repec:fth:harver:1432 is not listed on IDEAS
  2. Manzini, P., 1996. "Strategic Wage Bargaining with Destructive Power : The Role of Commitment," Discussion Papers 9617, Exeter University, Department of Economics.
  3. Eric Maskin & Jean Tirole, 2010. "A Theory of Dynamic Oligopoly, 1: Overview and Quantity Competition with Large Fixed Costs," Levine's Working Paper Archive 397, David K. Levine.
  4. Abhinay Muthoo, . "Bargaining in a Long-Term Relationbship with Endogenous Termination," Economics Discussion Papers 422, University of Essex, Department of Economics.
  5. Fernandez, Raquel & Glazer, Jacob, 1991. "Striking for a Bargain between Two Completely Informed Agents," American Economic Review, American Economic Association, vol. 81(1), pages 240-52, March.
  6. Busch, L-A. & Wen, Q., 1991. "Perfect Equilibria in a Negotiation Model," University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers 9108, University of Western Ontario, The Centre for the Study of International Economic Relations.
  7. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 252, David K. Levine.
  8. Sakovics Jozsef, 1993. "Delay in Bargaining Games with Complete Information," Journal of Economic Theory, Elsevier, vol. 59(1), pages 78-95, February.
  9. Haller, Hans & Holden, Steinar, 1990. "A letter to the editor on wage bargaining," Journal of Economic Theory, Elsevier, vol. 52(1), pages 232-236, October.
  10. Perry Motty & Reny Philip J., 1993. "A Non-cooperative Bargaining Model with Strategically Timed Offers," Journal of Economic Theory, Elsevier, vol. 59(1), pages 50-77, February.
  11. Lutz-Alexander Bush & Shouyong Shi & Quan Wen, 1998. "Bargaining with Surplus Destruction," Canadian Journal of Economics, Canadian Economics Association, vol. 31(4), pages 915-932, November.
  12. repec:fth:exetec:96/17 is not listed on IDEAS
  13. Avery Christopher & Zemsky Peter B., 1994. "Money Burning and Multiple Equilibria in Bargaining," Games and Economic Behavior, Elsevier, vol. 7(2), pages 154-168, September.
  14. Holden, S., 1989. "Non-Cooperative Wage Bargaining," Memorandum 12/1989, Oslo University, Department of Economics.
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Cited by:
  1. Mehrdad Vahabi, 2009. "A Critical Review of Strategic Conflict Theory and Socio-political Instability Models," Revue d'économie politique, Dalloz, vol. 0(6), pages 817-858.
  2. Juan Vidal-Puga, 2008. "Delay in the alternating-offers model of bargaining," International Journal of Game Theory, Springer, vol. 37(4), pages 457-474, December.
  3. Manzini, Paola & Mariotti, Marco, 2001. "Perfect Equilibria in a Model of Bargaining with Arbitration," Games and Economic Behavior, Elsevier, vol. 37(1), pages 170-195, October.
  4. Juan J. Vidal Puga, 2006. "Reinterpreting The Meaning Of Breakdown," Working Papers. Serie AD 2006-22, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  5. Paola Manzini & Marco Mariotti, 1997. "A Model of Bargaining with the Possibility of Arbitration," Game Theory and Information 9710001, EconWPA.

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