Patience and Ultimatum in Bargaining
AbstractThis study investigates in a two-stage two-player model how the decision to make an ultimatum and how much to demand depends on the impatience of the agents and the pie uncertainty. First, players simultaneously decide on their ultimatums. If the ultimatum(s) are compatible then the player(s) receive his (their) demand(s) in the second period and the eventually remaining player becomes residual claimant. If no ultimatums are made then there is a Rubinstein-Ståhl bargaining. Relative impatience induces ultimatums but does not affect the demanded amount. In a discrete (continuous) setting there exist no equilibrium without an ultimatum (with mutual ultimatums).
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Bibliographic InfoPaper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 461.
Length: 16 pages
Date of creation: 12 Sep 2001
Date of revision:
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More information through EDIRC
Ultimatum; Bargaining; Patience; Rubinstein-Ståhl;
Find related papers by JEL classification:
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-02-10 (All new papers)
- NEP-GTH-2002-02-15 (Game Theory)
- NEP-MIC-2002-02-15 (Microeconomics)
- NEP-PKE-2002-02-15 (Post Keynesian Economics)
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.:
- Abhinay Muthoo, .
"A Bargaining Model Based on the Commitment Tactic,"
Economics Discussion Papers
420, University of Essex, Department of Economics.
- Kambe, Shinsuke, 1999. "Bargaining with Imperfect Commitment," Games and Economic Behavior, Elsevier, vol. 28(2), pages 217-237, August.
- Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
- Crawford, Vincent P, 1982. "A Theory of Disagreement in Bargaining," Econometrica, Econometric Society, vol. 50(3), pages 607-37, May.
- Harold Houba & Wilko Bolt, 1997. "Strategic bargaining in the variable threat game," Economic Theory, Springer, vol. 11(1), pages 57-77.
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