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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. Chatterjee, K. & Sabourian, H., 1997. "Multiperson Bargaining and Strategic Complexity," Cambridge Working Papers in Economics 9733, Faculty of Economics, University of Cambridge.
  2. William Thomson, 2011. "Consistency and its converse: an introduction," Review of Economic Design, Springer, vol. 15(4), pages 257-291, December.
  3. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
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  5. Cai, Hongbin, 2000. "Delay in Multilateral Bargaining under Complete Information," Journal of Economic Theory, Elsevier, vol. 93(2), pages 260-276, August.
  6. repec:cup:cbooks:9780521027038 is not listed on IDEAS
  7. Sang-Chul Suh & Quan Wen, 2003. "Multi-Agent Bilateral Bargaining with Endogenous Protocol," Vanderbilt University Department of Economics Working Papers 0305, Vanderbilt University Department of Economics.
  8. Chen-Ying Huang, 2002. "Multilateral bargaining: conditional and unconditional offers," Economic Theory, Springer, vol. 20(2), pages 401-412.
  9. Yang, Jeong-Ae, 1992. "Another n-person bargaining game with a unique perfect equilibrium," Economics Letters, Elsevier, vol. 38(3), pages 275-277, March.
  10. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
  11. Asheim, G.B., 1989. "A Unique Solution To N-Person Sequential Bargaining," Papers 11-89, Norwegian School of Economics and Business Administration-.
  12. Krishna, Vijay & Serrano, Roberto, 1996. "Multilateral Bargaining," Review of Economic Studies, Wiley Blackwell, vol. 63(1), pages 61-80, January.
  13. Lensberg, Terje, 1988. "Stability and the Nash solution," Journal of Economic Theory, Elsevier, vol. 45(2), pages 330-341, August.
  14. Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics.
  15. 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.
  16. 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.
  17. Houba, H., 1993. "An alternative proof of uniqueness in non-cooperative bargaining," Serie Research Memoranda 0015, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
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  19. Sutton, John, 1986. "Non-cooperative Bargaining Theory: An Introduction," Review of Economic Studies, Wiley Blackwell, vol. 53(5), pages 709-24, October.
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