Commitment and Conflict in Bilateral Bargaining
Building on previous work by Schelling and Crawford, we study a model of bilateral bargaining in which negotiators can make binding commitments at a low positive cost c. Most of our results concern outcomes that survive iterated strict dominance. If commitment attempts never fail, there are three such outcomes. In two of them, all the surplus goes to one player. In the third, there is a high probability of conflict. If commitment attempts succeed with probability q
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Volume (Year): 98 (2008)
Issue (Month): 4 (September)
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- John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, July.
- Muthoo, Abhinay, 1996. "A Bargaining Model Based on the Commitment Tactic," Journal of Economic Theory, Elsevier, vol. 69(1), pages 134-152, April.