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Subgame perfect equilibrium in a bargaining model with deterministic procedures

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  • Liang Mao

    (Shenzhen University)

Abstract

Two players, A and B, bargain to divide a perfectly divisible pie. In a bargaining model with constant discount factors, $$\delta _A$$ δ A and $$\delta _B$$ δ B , we extend Rubinstein (Econometrica 50:97–110, 1982)’s alternating offers procedure to more general deterministic procedures, so that any player in any period can be the proposer. We show that each bargaining game with a deterministic procedure has a unique subgame perfect equilibrium (SPE) payoff outcome, which is efficient. Conversely, each efficient division of the pie can be supported as an SPE outcome by some procedure if $$\delta _A+\delta _B\ge 1$$ δ A + δ B ≥ 1 , while almost no division can ever be supported in SPE if $$\delta _A+\delta _B

Suggested Citation

  • Liang Mao, 2017. "Subgame perfect equilibrium in a bargaining model with deterministic procedures," Theory and Decision, Springer, vol. 82(4), pages 485-500, April.
    • Handle: RePEc:kap:theord:v:82:y:2017:i:4:d:10.1007_s11238-016-9577-5
    DOI: 10.1007/s11238-016-9577-5
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    References listed on IDEAS

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    Cited by:

    1. Mao, Liang, 2020. "Optimal recommendation in two-player bargaining games," Mathematical Social Sciences, Elsevier, vol. 107(C), pages 41-45.
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    3. Shunsuke Hanato, 2020. "Equilibrium payoffs and proposal ratios in bargaining models," International Journal of Game Theory, Springer;Game Theory Society, vol. 49(2), pages 463-494, June.

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