In this paper I explore asymmetric coalitional bargaining. Players are possibly different in preferences and in probability to place threats; the agreements emerge randomly during negotiations. As a result, players negotiate with different degree of enthusiasm. I compute a solution that I call random type value. The random type value is the Shapley value when players have the same ability to place threats, the agreements are equally likely, and, either players have the same (possibly non-linear) preferences, or players like “in the same way” different agreements. In a pure bargaining game the random type value coincides with the Nash bargaining solution when the threat points and the agreements are uniformly distributed. This suggests that the random type value is well suited to model a broad range of bargaining games in a rich way. I provide two applications: the first one, to political games, where players are distinguishable by their “ideological profiles”; the second one, to incomplete contracts, where, ex-ante, a player can integrate with a partner in order to acquire a bargaining advantage over future trading parties.
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Paper provided by ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy in its series ISLA Working Papers with number
26.
Length: 41 pages Date of creation: Jan 2007 Date of revision:
Jan 2007 Handle: RePEc:slp:islawp:islawp26
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Find related papers by JEL classification: C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
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References listed on IDEAS 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.:
Sergiu Hart & Andreu Mas-Colell, 1994.
"Bargaining and Value,"
Economics Working Papers
114, Department of Economics and Business, Universitat Pompeu Fabra, revised Feb 1995.
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