A Fictitious-Play Model of Bargaining To Implement the Nash Solution
AbstractWe present a fictitious-play model of bargaining, where two bargainers play the Nash demand game repeatedly. The bargainers make a deliberate decision on their demands in the initial period and then follow a fictitious play process subsequently. If the bargainers are patient, the set of epsilon -equilibria of the initial-demand game is in a neighborhood of the division corresponding to the Nash bargaining solution. As the bargainers make a more accurate comparison of payoffs and become more patient accordingly, the set of epsilon-equilibria shrinks and the only equilibrium left is the division of the Nash bargaining solution.
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Bibliographic InfoPaper provided by National University of Singapore, Department of Economics in its series Departmental Working Papers with number wp0509.
Date of creation: Jan 2005
Date of revision:
fictitious play; Nash demand game; epsilon-equilibrium; Nash bargaining solution; Nash program.;
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
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
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