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Evolutionary Stability in Bargaining with an Asymmetric Breakdown Point

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  • Torstensson, Pär

    (Department of Economics, Lund University)

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    Abstract

    We study an asymmetric two-player bargaining game with risk of breakdown and no discounting. We characterize the modified evolutionarily stable strategies (MESS) by modelling strategies as automata. Payoff and complexity considerations are taken in the automata-selection process. We show that a MESS exists in the bargaining game and that agreement is reached immediately. It turns out that in the search for evolutionary foundation, we find support for all partitions that assigns the positive breakdown utility x or more to the player with the higher breakdown utility, given that it exceeds half the surplus.

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    File URL: http://project.nek.lu.se/publications/workpap/Papers/WP05_38.pdf
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    Bibliographic Info

    Paper provided by Lund University, Department of Economics in its series Working Papers with number 2005:38.

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    Length: 34 pages
    Date of creation: 15 Jun 2005
    Date of revision:
    Handle: RePEc:hhs:lunewp:2005_038

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    Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
    Phone: +46 +46 222 0000
    Fax: +46 +46 2224613
    Web page: http://www.nek.lu.se/en
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    Related research

    Keywords: Modified evolutionary stable strategies; bargaining; automata; asymmetric breakdown point.;

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    1. Binmore, Kenneth G. & Samuelson, Larry, 1992. "Evolutionary stability in repeated games played by finite automata," Journal of Economic Theory, Elsevier, vol. 57(2), pages 278-305, August.
    2. Binmore, K. & Samuelson, L., 1991. "Evolutionary Stability in Repeated Game Played by Finite Automata," Papers 9131, Tilburg - Center for Economic Research.
    3. Chatterjee, K. & Sabourian, S., 1999. "N-Person Bargaining and Strategic Complexity," Papers 5-99-1, Pennsylvania State - Department of Economics.
    4. Banks, Jeffrey S. & Sundaram, Rangarajan K., 1990. "Repeated games, finite automata, and complexity," Games and Economic Behavior, Elsevier, vol. 2(2), pages 97-117, June.
    5. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475.
    6. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
    7. repec:att:wimass:9603 is not listed on IDEAS
    8. Giovanni Ponti & Robert M. Seymour, . "Conventions and Social Mobility in Bargaining Situations," ELSE working papers 034, ESRC Centre on Economics Learning and Social Evolution.
    9. Binmore, K. & Piccione, M. & Samuelson, L., 1996. "Evolutionary Stability in Alternating-Offers Bargaining Games," Working papers 9603r, Wisconsin Madison - Social Systems.
    10. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    11. Bolton, Gary E., 1997. "The rationality of splitting equally," Journal of Economic Behavior & Organization, Elsevier, vol. 32(3), pages 365-381, March.
    12. Young H. P., 1993. "An Evolutionary Model of Bargaining," Journal of Economic Theory, Elsevier, vol. 59(1), pages 145-168, February.
    13. Binmore, Ken & Piccione, Michele & Samuelson, Larry, 1998. "Evolutionary Stability in Alternating-Offers Bargaining Games," Journal of Economic Theory, Elsevier, vol. 80(2), pages 257-291, June.
    14. 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.
    15. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
    16. Kalyan Chatterjee & Hamid Sabourian, 1998. "Multiperson Bargaining and Strategic Complexity," CRIEFF Discussion Papers 9808, Centre for Research into Industry, Enterprise, Finance and the Firm.
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