Evolutionary Stability in Alternatin-Offers Bargaining Games
AbstractThis paper characterizes modified evolutiona.rily stable strategies (MESSes) in Rubinstein's alternatingoffers, infinite- horizon bargaining game. The MESS concept modifies the idea of an neutrally stable strategy by favoring a simple strategy over a more complex strategy when both yield the same pay-off. Our complexity notion is weaker than the common practice of counting states in automata. If strategy A is a MESS, then the use of A by both play- ers is a Nash equilibrium in which an agreement is achieved immediately, and neither player would be willing to delay the agreement by one period in order to achieve the other player's share of the surplus. Each player's share of the surplus is then bounded between the shares received by the two players in the unique subgame-perfect equilibrium of Rubinstein's game. As the probability of a breakdown in negotiations becomes small (or discount factors become large), these bounds collapse on the subgame-perfect equilib- rium. These results continue to hold when offers must be made in multiples of a smallest monetary unit.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by ESRC Centre on Economics Learning and Social Evolution in its series ELSE working papers with number 039.
Date of creation:
Date of revision:
Bargaining; Alternating Offers; Subgame Perfect; Evolutionary Stability;
Find related papers by JEL classification:
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
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.:
- Banks, J.S. & Sundaram, R.K., 1989.
"Repeated Games, Finite Automata, And Complexity,"
RCER Working Papers
183, University of Rochester - Center for Economic Research (RCER).
- Abreu, Dilip & Rubinstein, Ariel, 1988. "The Structure of Nash Equilibrium in Repeated Games with Finite Automata," Econometrica, Econometric Society, vol. 56(6), pages 1259-81, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (s. malkani) The email address of this maintainer does not seem to be valid anymore. Please ask s. malkani to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.