Alternating-offer games with final-offer arbitration
AbstractI analyze an alternating-offer model that integrates the common practice of having an arbitrator determine the outcomes if both playersʼ offers are rejected. I assume that the arbitrator uses final-offer arbitration (as in professional baseball). I find that if the arbitrator does not excessively favor one player, then the unique subgame-perfect equilibrium always coincides with the subgame-perfect equilibrium outcome in Rubinsteinʼs infinite-horizon alternating-offer game. However, if the arbitrator sufficiently favors the player making the initial offer, then delay occurs in equilibrium.
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Bibliographic InfoArticle provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 76 (2012)
Issue (Month): 2 ()
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Web page: http://www.elsevier.com/locate/inca/622836
Alternating-offer game; Final-offer arbitration; Rubinstein equilibrium; Delay in bargaining;
Find related papers by JEL classification:
- 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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