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Multi-agent bilateral bargaining and the Nash bargaining solution

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  • Suh, Sang-Chul
  • Wen, Quan
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Abstract

This paper studies a bargaining model where n players play a sequence of (n-1) bilateral bargaining sessions. In each bilateral bargaining session, two players follow the same bargaining process as in Rubinstein's (1982). A partial agreement between two players is reached in the session and one player effectively leaves the game with a share agreed upon in the partial agreement and the other moves on to the next session. Such a (multi-agent) bilateral bargaining model admits a unique subgame perfect equilibrium. Depending on who exits and who stays, we consider two bargaining procedures. The equilibrium outcomes under the two bargaining procedures converge to the Nash (1950) bargaining solution of the corresponding bargaining problem as the players' discount factor goes to one. Thus, the bilateral bargaining model studied in this paper provides a non-cooperative foundation for the Nash cooperative bargaining solution in the multilateral case.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Mathematical Economics.

Volume (Year): 42 (2006)
Issue (Month): 1 (February)
Pages: 61-73

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Handle: RePEc:eee:mateco:v:42:y:2006:i:1:p:61-73

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Web page: http://www.elsevier.com/locate/jmateco

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Citations

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Cited by:
  1. Yi-Chun Chen & Xiao Luo, 2008. "Delay in a bargaining game with contracts," Theory and Decision, Springer, Springer, vol. 65(4), pages 339-353, December.
  2. Herings, P. Jean-Jacques & Predtetchinski, Arkadi, 2007. "Sequential Share Bargaining," Research Memorandum, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) 005, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  3. BRITZ, Volker & HERINGS, Jean-Jacques & PREDTETCHINSKI, Arkadi, 2013. "On the Convergence to the Nash bargaining solution for action-dependent bargaining protocols," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2013044, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Herings P. Jean-Jacques & Britz Volker & Predtetchinski Arkadi, 2012. "On the Convergence to Nash Bargaining Solution for Endogenous Bargaining Protocols," Research Memorandum, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) 030, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  5. Sang-Chul Suh & Quan Wen, 2009. "A multi-agent bilateral bargaining model with endogenous protocol," Economic Theory, Springer, Springer, vol. 40(2), pages 203-226, August.
  6. Edwin L.-C. Lai, 2008. "The most-favored nation rule in club enlargement negotiation," Working Papers, Federal Reserve Bank of Dallas 0815, Federal Reserve Bank of Dallas.
  7. Klaus Kultti & Hannu Vartiainen, 2010. "Multilateral non-cooperative bargaining in a general utility space," International Journal of Game Theory, Springer, Springer, vol. 39(4), pages 677-689, October.

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