Multi-Agent Bilateral Bargaining and the Nash Bargaining Solution
AbstractThis paper studies a bargaining model where n players play a sequence of (n-1) bilateral bargaining sessions. In each bilateral bargaining session, two players follow the same bargaining process as in Rubinstein's (1982). A partial agreement between two players is reached in the session and one player effectively leaves the game with a share agreed upon in the partial agreement and the other moves on to the next session. Such a (multi-agent) bilateral bargaining model admits a unique subgame perfect equilibrium. Depending on who exits and who stays, we consider two bargaining procedures. The equilibrium outcomes under the two bargaining procedures converge to the Nash (1950) bargaining solution of the corresponding bargaining problem as the players' discount factor goes to one. Thus, the bilateral bargaining model studied in this paper provides a non-cooperative foundation for the Nash cooperative bargaining solution in the multilateral case.
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Bibliographic InfoPaper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0306.
Date of creation: Mar 2003
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Multilateral bargaining; subgame perfect equilibrium; Nash bargaining solution;
Other versions of this item:
- Suh, Sang-Chul & Wen, Quan, 2006. "Multi-agent bilateral bargaining and the Nash bargaining solution," Journal of Mathematical Economics, Elsevier, vol. 42(1), pages 61-73, February.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-12-12 (All new papers)
- NEP-GTH-2004-12-12 (Game Theory)
- NEP-GTH-2005-07-27 (Game Theory)
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