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Self-control and bargaining

Listed author(s):
  • Lu, Shih En

This paper examines a bargaining game with alternating proposals where sophisticated quasi-hyperbolic discounters negotiate over an infinite stream of payoffs. In Markov perfect equilibrium, payoffs are almost always unique, and a small advantage in self-control can result in a large advantage in payoff. In subgame-perfect equilibrium, a multiplicity of payoffs and delay can arise, despite the complete information setting. Markov perfect equilibria are the best subgame-perfect equilibria for the agent with more self-control, and the worst for the agent with less self-control. Naïveté can help a player by increasing their reservation value.

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File URL: http://www.sciencedirect.com/science/article/pii/S0022053116300369
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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 165 (2016)
Issue (Month): C ()
Pages: 390-413

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Handle: RePEc:eee:jetheo:v:165:y:2016:i:c:p:390-413
DOI: 10.1016/j.jet.2016.05.003
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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