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Delays and partial agreements in multi-issue bargaining

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  • Acharya, Avidit
  • Ortner, Juan

Abstract

We model a situation in which two players bargain over two pies, one of which can only be consumed starting at a future date. Suppose the players value the pies asymmetrically: one player values the existing pie more than the future one, while the other player has the opposite valuation. We show that players may consume only a fraction of the existing pie in the first period, and then consume the remainder of it, along with the second pie, at the date at which the second pie becomes available. Thus, our model features a special form of bargaining delay, in which agreements take place in multiple stages. Such partial agreements arise when players are patient enough, when they expect the second pie to become available soon, and when the asymmetry in their valuations is large enough.

Suggested Citation

  • Acharya, Avidit & Ortner, Juan, 2013. "Delays and partial agreements in multi-issue bargaining," Journal of Economic Theory, Elsevier, vol. 148(5), pages 2150-2163.
  • Handle: RePEc:eee:jetheo:v:148:y:2013:i:5:p:2150-2163
    DOI: 10.1016/j.jet.2013.07.008
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    Cited by:

    1. Bond, Eric W. & Samuelson, Larry, 2019. "Bargaining with private information and the option of a compulsory license," Games and Economic Behavior, Elsevier, vol. 114(C), pages 83-100.
    2. Ortner, Juan, 2017. "A theory of political gridlock," Theoretical Economics, Econometric Society, vol. 12(2), May.
    3. Francesca Flamini, 2020. "Divide and Invest: Bargaining in a Dynamic Framework," Homo Oeconomicus: Journal of Behavioral and Institutional Economics, Springer, vol. 37(1), pages 121-153, November.
    4. Avidit Acharya & Juan Ortner, 2017. "Policy Reform," Boston University - Department of Economics - Working Papers Series WP2017-007, Boston University - Department of Economics.

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    More about this item

    Keywords

    Bargaining; Multiple issues; Partial agreements; Delay; Inefficiency;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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