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Simultaneous-offers bargaining with a mediator

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  • Hanato, Shunsuke

Abstract

An arbitrator is often introduced into bargaining to avoid disagreement. The arbitrator's role is to impose some agreement when negotiators cannot reach an agreement. However, in models with an arbitrator, a fair agreement for negotiators is eliminated from equilibrium outcomes if the arbitrator is biased. To avoid disagreement without eliminating the achievability of a fair agreement in equilibrium, we consider introducing a mediator. While an arbitrator imposes an agreement, a mediator can only give advice. We analyze a simultaneous-offers bargaining model with a mediator and obtain the following desirable results. First, disagreement is not supported as an outcome of a stationary subgame perfect equilibrium (SSPE). Second, even if a mediator is biased, the fair agreement in the sense of the Nash bargaining solution (NBS) is always one of the SSPE agreements. Finally, if a mediator is fair, negotiators always reach an agreement with the NBS in SSPE.

Suggested Citation

  • Hanato, Shunsuke, 2019. "Simultaneous-offers bargaining with a mediator," Games and Economic Behavior, Elsevier, vol. 117(C), pages 361-379.
    • Handle: RePEc:eee:gamebe:v:117:y:2019:i:c:p:361-379
    DOI: 10.1016/j.geb.2019.07.008
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    References listed on IDEAS

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    More about this item

    Keywords

    Simultaneous-offers bargaining; Mediator; Bias; Nash bargaining solution; Disagreement;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • 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
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

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