A Note on Multi-Issue Bargaining with a Finite Set of Alternatives
AbstractWe study two bilateral multi-issue bargaining procedures with complete information and endogenous agenda, where each issue is associated with a finite set of alternatives. In both procedures, when bargaining frictions are small, we find a large multiplicity of equilibrium agreements, including ones with arbitrarily long delays. Thus, this paper extends the previous results of van Damme et al. (1990) and Muthoo (1991) for the single-issue case to multi-issue cases. Furthermore, we show that in the first procedure (issue-by-issue bargaining), the stationary subgame perfect equilibria alone may support a large multiplicity of inefficient agreements. Confronting a recent study, this implies that it is not necessary to appeal to “strictly controversial” issues in a bargaining problem in order to find multiplicity and delay in agreements.
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Bibliographic InfoPaper provided by National University of Singapore, Department of Economics in its series Departmental Working Papers with number wp0304.
Length: 14 pages
Date of creation: May 2003
Date of revision:
multi-issue bargaining; finiteness of alternatives; multiple equilibria; inefficiency and delay;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-05-15 (All new papers)
- NEP-GTH-2003-05-15 (Game Theory)
- NEP-POL-2003-05-15 (Positive Political Economics)
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