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Limit Solutions for Finite Horizon Bargaining Problems

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Author Info

  • Haruo Imai

    (Kyoto Institute of Economic Research, Kyoto University, Kyoto, Japan)

  • Hannu Salonen

    (Department of Economics and PCRC, University of Turku, 20014 Turku, Finland)

Abstract

We investigate a random proposer bargaining game with a dead line. A bounded time interval is divided into bargaining periods of equal length and we study the limit of the subgame perfect equilibrium outcome as the number of bargaining periods goes to infinity while the dead line is kept fixed. This limit is close to the Raiffa solution when the time horizon is very short. If the dead line goes to infinity the limit outcome converges to the time preference Nash solution. The limit outcome is given an axiomatic characterization as well.

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Bibliographic Info

Paper provided by Aboa Centre for Economics in its series Discussion Papers with number 51.

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Length: 19
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:tkk:dpaper:dp51

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Keywords: Nash solution; Raiffa solution; bargaining;

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  1. Volij, Oscar & Dagan, Nir & Winter, Eyal, 2002. "A Characterization of the Nash Bargaining Solution," Staff General Research Papers 5259, Iowa State University, Department of Economics.
  2. Ching-to Albert Ma & Michael Manove, 1991. "Bargaining with Deadlines and Imperfect Player Control," Papers 0007, Boston University - Industry Studies Programme.
  3. Damme, E.E.C. van & Peters, H., 1991. "Characterizing the Nash and Raiffa bargaining solutions by disagreement point axioms," Open Access publications from Tilburg University urn:nbn:nl:ui:12-154419, Tilburg University.
  4. Roth, Alvin E & Murnighan, J Keith & Schoumaker, Francoise, 1988. "The Deadline Effect in Bargaining: Some Experimental Evidence," American Economic Review, American Economic Association, vol. 78(4), pages 806-23, September.
  5. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 252, David K. Levine.
  6. Salonen, Hannu, 1988. "Decomposable solutions for N -- person bargaining games," European Journal of Political Economy, Elsevier, vol. 4(3), pages 333-347.
  7. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
  8. Fershtman Chaim & Seidmann Daniel J., 1993. "Deadline Effects and Inefficient Delay in Bargaining with Endogenous Commitment," Journal of Economic Theory, Elsevier, vol. 60(2), pages 306-321, August.
  9. Chae, Suchan, 1993. "The n-person Nash bargaining solution with time preference," Economics Letters, Elsevier, vol. 41(1), pages 21-24.
  10. Coles, Melvyn G. & Wright, Randall, 1998. "A Dynamic Equilibrium Model of Search, Bargaining, and Money," Journal of Economic Theory, Elsevier, vol. 78(1), pages 32-54, January.
  11. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-64, November.
  12. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
  13. Coles, Melvyn G. & Muthoo, Abhinay, 2003. "Bargaining in a non-stationary environment," Journal of Economic Theory, Elsevier, vol. 109(1), pages 70-89, March.
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