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Bargaining power in stationary parallelogram games

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  • Bart Taub
  • Özgür Kibris

Abstract

A stationary variant of the repeated prisoners’ dilemma in which the game frontier is a parallelogram is analyzed. By using the probabilistic cheap talk concept of [3], the discount factor becomes fungible, and for a critical value of the discount factor a unique Pareto-optimal and Pareto-dominant solution can be found. The relative bargaining power of the players can be quantified in terms of the shape of the parallelogram. If the parallelogram is asymmetric, the solution results in an asymmetric allocation of payoffs. Players with more bargaining power receive a greater share of the allocation. The solution satisfies some standard bargaining axioms within the class of parallelogram games. A characterization is provided in terms of these axioms and one new axiom, weak-monotonicity, which is in the spirit of, but different from, the Kalai-Smorodinsky restricted-monotonicity axiom. Copyright Springer-Verlag Berlin/Heidelberg 2004

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  • Bart Taub & Özgür Kibris, 2004. "Bargaining power in stationary parallelogram games," Review of Economic Design, Springer;Society for Economic Design, vol. 8(4), pages 449-464, April.
    • Handle: RePEc:spr:reecde:v:8:y:2004:i:4:p:449-464
    DOI: 10.1007/s10058-004-0114-6
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    Cited by:

    1. H. Moulin & A. Seth & B. Taub, 2020. "Self-enforcing cooperation via strategic investment," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(1), pages 1-11, April.

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