NOW OR LATER? - An Analysis of the Timing of Threats in Bargaining
AbstractThe variable threat-bargaining model of Nash (1953) assumes that threats in the sense of binding commitments as to what one will do if bargaining ends in conflict, are chosen before bargaining. By comparision, late threats to be chosen after bargaining end in conflict, appear more natural and would be self-enforcing, i.e., require no commitment power. Instead of exogenously imposing the timing of threats, they are derived endogenously as in indirect evolution or endogenous timing. Based on a duopoly market, we first derive the equilibrium for all possible constellations regarding the timing of threats. From these results we can show that the evolutionary analysis surprisingly justifies the early timing of threats as suggested by Nash (1953).
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Bibliographic InfoPaper provided by Max Planck Institute of Economics, Strategic Interaction Group in its series Papers on Strategic Interaction with number 2002-38.
Length: 22 pages
Date of creation: Aug 2002
Date of revision:
Find related papers by JEL classification:
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
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