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Multi-agent bilateral bargaining and the Nash bargaining solution

  • Suh, Sang-Chul
  • Wen, Quan

This paper studies a bargaining model where n players play a sequence of (n-1) bilateral bargaining sessions. In each bilateral bargaining session, two players follow the same bargaining process as in Rubinstein's (1982). A partial agreement between two players is reached in the session and one player effectively leaves the game with a share agreed upon in the partial agreement and the other moves on to the next session. Such a (multi-agent) bilateral bargaining model admits a unique subgame perfect equilibrium. Depending on who exits and who stays, we consider two bargaining procedures. The equilibrium outcomes under the two bargaining procedures converge to the Nash (1950) bargaining solution of the corresponding bargaining problem as the players' discount factor goes to one. Thus, the bilateral bargaining model studied in this paper provides a non-cooperative foundation for the Nash cooperative bargaining solution in the multilateral case.

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Article provided by Elsevier in its journal Journal of Mathematical Economics.

Volume (Year): 42 (2006)
Issue (Month): 1 (February)
Pages: 61-73

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Handle: RePEc:eee:mateco:v:42:y:2006:i:1:p:61-73
Contact details of provider: Web page: http://www.elsevier.com/locate/jmateco

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  1. Yang, Jeong-Ae, 1992. "Another n-person bargaining game with a unique perfect equilibrium," Economics Letters, Elsevier, vol. 38(3), pages 275-277, March.
  2. Quan Wen & Sang-Chul Suh, 2004. "Multi-Agent Bilateral Bargaining with Endogenous Protocol," Econometric Society 2004 Far Eastern Meetings 405, Econometric Society.
  3. Houba, Harold, 1993. "An alternative proof of uniqueness in non-cooperative bargaining," Economics Letters, Elsevier, vol. 41(3), pages 253-256.
  4. Chae, Suchan & Yang, Jeong-Ae, 1988. "The unique perfect equilibrium of an n-person bargaining game," Economics Letters, Elsevier, vol. 28(3), pages 221-223.
  5. Thomson, W., 1998. "Consistency and its Converse: an Introduction," RCER Working Papers 448, University of Rochester - Center for Economic Research (RCER).
  6. Cai, Hongbin, 2000. "Delay in Multilateral Bargaining under Complete Information," Journal of Economic Theory, Elsevier, vol. 93(2), pages 260-276, August.
  7. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 661465000000000387, David K. Levine.
  8. Lensberg, Terje, 1988. "Stability and the Nash solution," Journal of Economic Theory, Elsevier, vol. 45(2), pages 330-341, August.
  9. Krishna, Vijay & Serrano, Roberto, 1996. "Multilateral Bargaining," Review of Economic Studies, Wiley Blackwell, vol. 63(1), pages 61-80, January.
  10. repec:cup:cbooks:9780521576475 is not listed on IDEAS
  11. Asheim, Geir B., 1992. "A unique solution to n-person sequential bargaining," Games and Economic Behavior, Elsevier, vol. 4(2), pages 169-181, April.
  12. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-64, November.
  13. Kalyan Chatterjee & Hamid Sabourian, 1998. "Multiperson Bargaining and Strategic Complexity," CRIEFF Discussion Papers 9808, Centre for Research into Industry, Enterprise, Finance and the Firm.
  14. Sutton, John, 1986. "Non-cooperative Bargaining Theory: An Introduction," Review of Economic Studies, Wiley Blackwell, vol. 53(5), pages 709-24, October.
  15. Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics.
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  17. Chen-Ying Huang, 2002. "Multilateral bargaining: conditional and unconditional offers," Economic Theory, Springer, vol. 20(2), pages 401-412.
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  19. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
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