AbstractIn 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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Bibliographic InfoPaper 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
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cooperative bargaining; non-cooperative bargaining; asymmetric values; political power; contracts;
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 - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
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