IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/20050063.html
   My bibliography  Save this paper

Stochastic Orders of Proposing Players in Bargaining

Author

Listed:
  • Harold Houba

    (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)

Abstract

The bargaining model with stochastic order of proposing players is properly embedded in continuous time and it is strategically equivalent to the alternating offers model. For all parameter values, the pair of equilibrium proposals corresponds to the Nash bargaining solution of a modified bargaining problem and the Maximum Theorem implies convergence to the Nash bargaining solution when time between proposals vanishes. The model unifies alternating offers, one-sided offers and random proposers. Only continuous-time Markov processes are firmly rooted in probability theory and offer fundamentally different limit results.

Suggested Citation

  • Harold Houba, 2005. "Stochastic Orders of Proposing Players in Bargaining," Tinbergen Institute Discussion Papers 05-063/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20050063
    as

    Download full text from publisher

    File URL: https://papers.tinbergen.nl/05063.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Houba, Harold, 1993. "An alternative proof of uniqueness in non-cooperative bargaining," Economics Letters, Elsevier, vol. 41(3), pages 253-256.
    3. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
    4. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer.
    5. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475.
    6. Merlo, Antonio & Wilson, Charles A, 1995. "A Stochastic Model of Sequential Bargaining with Complete Information," Econometrica, Econometric Society, vol. 63(2), pages 371-399, March.
    7. Hoel, Michael, 1987. "Bargaining games with a random sequence of who makes the offers," Economics Letters, Elsevier, vol. 24(1), pages 5-9.
    8. Taiji Furusawa & Quan Wen, 2003. "Bargaining with stochastic disagreement payoffs," International Journal of Game Theory, Springer;Game Theory Society, vol. 31(4), pages 571-591, September.
    9. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-1364, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Harold Houba, 2008. "Computing Alternating Offers And Water Prices In Bilateral River Basin Management," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 10(03), pages 257-278.
    2. Houba, Harold, 2007. "Alternating offers in economic environments," Economics Letters, Elsevier, vol. 96(3), pages 316-324, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. P. Jean-Jacques Herings & Harold Houba, 2022. "Costless delay in negotiations," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 74(1), pages 69-93, July.
    2. Houba, Harold, 2008. "On continuous-time Markov processes in bargaining," Economics Letters, Elsevier, vol. 100(2), pages 280-283, August.
    3. Björn Brügemann & Pieter Gautier & Guido Menzio, 2019. "Intra Firm Bargaining and Shapley Values," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(2), pages 564-592.
    4. Adriana Breccia, 2006. "Sequential Bargaining in a Stochastic Environment," Discussion Papers 06/07, Department of Economics, University of York.
    5. Houba, Harold & Wen, Quan, 2011. "Extreme equilibria in the negotiation model with different time preferences," Games and Economic Behavior, Elsevier, vol. 73(2), pages 507-516.
    6. Liang Mao, 2017. "Subgame perfect equilibrium in a bargaining model with deterministic procedures," Theory and Decision, Springer, vol. 82(4), pages 485-500, April.
    7. Harold Houba & Quan Wen, 2007. "Extreme Equilibria in a General Negotiation Model," Tinbergen Institute Discussion Papers 07-070/1, Tinbergen Institute.
    8. Mao, Liang, 2015. "Subgame Perfect Equilibrium in a Bargaining Model with Deterministic Procedures," MPRA Paper 67859, University Library of Munich, Germany.
    9. Griem, Fabian & Inderst, Roman, 2020. "Bargaining over Royalties in the Shadow of Litigation," EconStor Preprints 253661, ZBW - Leibniz Information Centre for Economics.
    10. Manzini, Paola & Mariotti, Marco, 2005. "Alliances and negotiations," Journal of Economic Theory, Elsevier, vol. 121(1), pages 128-141, March.
    11. Houba, Harold & Wen, Quan, 2014. "Backward induction and unacceptable offers," Journal of Mathematical Economics, Elsevier, vol. 54(C), pages 151-156.
    12. Haruo Imai & Hannu Salonen, 2012. "A characterization of a limit solution for finite horizon bargaining problems," International Journal of Game Theory, Springer;Game Theory Society, vol. 41(3), pages 603-622, August.
    13. Hanato, Shunsuke, 2019. "Simultaneous-offers bargaining with a mediator," Games and Economic Behavior, Elsevier, vol. 117(C), pages 361-379.
    14. Binmore, Ken & Osborne, Martin J. & Rubinstein, Ariel, 1992. "Noncooperative models of bargaining," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 7, pages 179-225, Elsevier.
    15. Roberto Serrano, 2007. "Bargaining," Working Papers 2007-06, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
    16. Allan Collard-Wexler & Gautam Gowrisankaran & Robin S. Lee, 2019. ""Nash-in-Nash" Bargaining: A Microfoundation for Applied Work," Journal of Political Economy, University of Chicago Press, vol. 127(1), pages 163-195.
    17. Haruo Imai & Hannu Salonen, 2009. "Limit Solutions for Finite Horizon Bargaining Problems," Discussion Papers 51, Aboa Centre for Economics.
    18. Daniel P. O'Brien, 2014. "The welfare effects of third-degree price discrimination in intermediate good markets: the case of bargaining," RAND Journal of Economics, RAND Corporation, vol. 45(1), pages 92-115, March.
    19. Harold Houba & Quan Wen, 2006. "Perfect Equilibria in a Negotiation Model with Different Time Preferences," Tinbergen Institute Discussion Papers 06-028/1, Tinbergen Institute.
    20. Harold Houba & Quan Wen, 2008. "On striking for a bargain between two completely informed agents," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 37(3), pages 509-519, December.

    More about this item

    Keywords

    Bargaining; Negotiation; Alternating offers; Markov process; subgame perfect equilibrium; Nash bargaining solution; Maximum Theorem;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tin:wpaper:20050063. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tinbergen Office +31 (0)10-4088900 (email available below). General contact details of provider: https://edirc.repec.org/data/tinbenl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.