Strategic bargaining with destructive power
AbstractThis paper studies a two-player alternating offers bargaining model in which one of the agents has the ability to damage permanently the ``pie'' bargained over. I show how this feature can result in an increase of the cost of rejecting an offer for the ``non-harming player''. Beside the ``Rubinstenian'' bilateral monopoly outcome, I show that it is possible to select a ``harming'' equilibrium in which the sequence of damages to the pie is endogenously determined and payoffs do not vary monotonically with the discount factor.
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Bibliographic InfoPaper provided by Exeter University, Department of Economics in its series Discussion Papers with number 9619.
Date of creation: 1996
Date of revision:
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Other versions of this item:
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
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