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Veto Bargaining with Incomplete Information and Risk Preference: An Analysis of Brinkmanship

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  • Hwang Joongsan

    (1877 University of Colorado Boulder , Boulder, CO, USA)

Abstract

This paper explains brinkmanship with infinitely repeated veto bargaining games, where players have private information. In the basic model, the paper solves for two types of Perfect Bayesian Equilibria. First, in Risk-Taking Equilibria (RTE), the proposer is more risk-seeking and engages in brinkmanship. Secondly, in Risk-Avoiding Equilibria (RAE), the proposer is more risk-averse and does not engage in it. Brinkmanship is likely to fail because the vetoer knows that once she succumbs to brinkmanship, the proposer will learn her weakness and make her worse offers. In the extended model, thresholds represent preconditions for negotiation. In the Threshold Pooling Equilibria (TPE) for the extended model, the vetoer sets a threshold and sticks to it. This way, the vetoer may increase her expected utility.

Suggested Citation

  • Hwang Joongsan, 2025. "Veto Bargaining with Incomplete Information and Risk Preference: An Analysis of Brinkmanship," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 31(3), pages 259-303.
    • Handle: RePEc:bpj:pepspp:v:31:y:2025:i:3:p:259-303:n:1003
    DOI: 10.1515/peps-2025-0020
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    References listed on IDEAS

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    More about this item

    Keywords

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    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

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