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Stochastic Orders of Proposing Players in Bargaining

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Author Info
Harold Houba () (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)

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Abstract

The bargaining model with stochastic order of proposing players is properly embedded in continuous time and it is strategically equivalent to the alternating offers model. For all parameter values, the pair of equilibrium proposals corresponds to the Nash bargaining solution of a modified bargaining problem and the Maximum Theorem implies convergence to the Nash bargaining solution when time between proposals vanishes. The model unifies alternating offers, one-sided offers and random proposers. Only continuous-time Markov processes are firmly rooted in probability theory and offer fundamentally different limit results.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 05-063/1.

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Handle: RePEc:dgr:uvatin:20050063

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Related research
Keywords: Bargaining; Negotiation; Alternating offers; Markov process; subgame perfect equilibrium; Nash bargaining solution; Maximum Theorem;

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Find related papers by 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

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-64, November. [Downloadable!] (restricted)
  2. Antonio Merlo & Charles Wilson, 1997. "Efficient delays in a stochastic model of bargaining," Economic Theory, Springer, vol. 11(1), pages 39-55. [Downloadable!] (restricted)
  3. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January. [Downloadable!] (restricted)
  4. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April. [Downloadable!] (restricted)
  5. Houba, Harold, 1993. "An alternative proof of uniqueness in non-cooperative bargaining," Economics Letters, Elsevier, vol. 41(3), pages 253-256. [Downloadable!] (restricted)
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  6. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer. [Downloadable!] (restricted)
  7. Merlo, Antonio & Wilson, Charles A, 1995. "A Stochastic Model of Sequential Bargaining with Complete Information," Econometrica, Econometric Society, vol. 63(2), pages 371-99, March. [Downloadable!] (restricted)
  8. Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Harold Houba, . "Alternating Offers in Economic Environments," Tinbergen Institute Discussion Papers 05-064/1, Tinbergen Institute. [Downloadable!]
    Other versions:
  2. Harold Houba, . "Computing Alternating Offers and Water Prices in Bilateral River Basin Management," Tinbergen Institute Discussion Papers 06-095/1, Tinbergen Institute. [Downloadable!]
    Other versions:
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