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A theory of agreements in the shadow of conflict

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  • Joan Esteban
  • Jozsef Sakovics

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Abstract

We present a novel approach to N-person bargaining based on the idea that the agreement reached in a negotiation is determined by how the direct conflict resulting from disagreement would be resolved. Our basic building block is the disagreement function, which maps each set of feasible outcomes into a disagreement point. Adding this function to the description of the bargaining problem, a weak axiom based on individual rationality leads to a unique solution: the agreement in the shadow of conclift, ASC. This agreement must be constructed as a sequence of partial agreements, each of which is reached as a function of the parties' relative power in the disagreement scenario. We also provide non-cooperative implementation.

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Bibliographic Info

Paper provided by Edinburgh School of Economics, University of Edinburgh in its series ESE Discussion Papers with number 139.

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Length: 32
Date of creation: Dec 2005
Date of revision:
Handle: RePEc:edn:esedps:139

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Keywords: bargaining; conflict; disagreement.;

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References

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Citations

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Cited by:
  1. Garfinkel, Michelle R. & Skaperdas, Stergios, 2007. "Economics of Conflict: An Overview," Handbook of Defense Economics, Elsevier.
  2. Erik O. Kimbrough & Roman M. Sheremeta, 2012. "Why Can’t We Be Friends? Entitlements, bargaining, and conflict," Working Papers 12-16, Chapman University, Economic Science Institute.
  3. Erik O. Kimbrough & Roman Sheremeta, 2010. "Make Him an Offer He Can’t Refuse: Avoiding Conflicts through Side Payments," Working Papers 10-23, Chapman University, Economic Science Institute.
  4. Pelosse, Yohan, 2009. "Mediated Contests and Strategic Foundations for Contest Success Functions," MPRA Paper 18664, University Library of Munich, Germany.

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