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Consistent Bargaining

Author

Listed:
  • Oz Shy

    (Federal Reserve Bank of Boston)

Abstract

This short paper demonstrates that the equilibrium payoffs of an alternating-offers bargaining game over a unit of surplus converge to equal division provided that the parties are allowed to bargain over all the surpluses generated by the "right" to be the first to make offers. The result obtained in the present paper may provide some "justification" for other division procedures such as the divide-and-choose or the moving-knife mechanisms.

Suggested Citation

  • Oz Shy, 2010. "Consistent Bargaining," Economics Bulletin, AccessEcon, vol. 30(2), pages 1425-1432.
    • Handle: RePEc:ebl:ecbull:eb-10-00141
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I2-P132.pdf
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    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. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
    3. Rubinstein, Ariel, 1991. "Comments on the Interpretation of Game Theory," Econometrica, Econometric Society, vol. 59(4), pages 909-924, July.
    4. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475.
    5. Fershtman, Chaim, 1990. "The importance of the agenda in bargaining," Games and Economic Behavior, Elsevier, vol. 2(3), pages 224-238, September.
    6. Perry Motty & Reny Philip J., 1993. "A Non-cooperative Bargaining Model with Strategically Timed Offers," Journal of Economic Theory, Elsevier, vol. 59(1), pages 50-77, February.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bargaining theory; Alternating offers; First-mover advantage; Equal division.;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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