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Rubinstein bargaining with two-sided outside options

Author

Listed:
  • JÕzsef SÂkovics

    (Institut d'AnÁlisi EconÔmica , Campus UAB, E-08193 Bellaterra, SPAIN)

  • Clara PonsatÎ

    (CODE and Dept. d'Econ. i Hist. Econ., Universitat AutÔnoma de Barcelona, E-08193 Bellaterra, SPAIN)

Abstract

In this note we show that if in the standard Rubinstein model both players are allowed to leave the negotiation after a rejection, in which case they obtain a payoff of zero, then there exist a continuum of subgame-perfect equilibrium outcomes, including some which involve significant delay. We also fully characterize the case in which, upon quitting, the players can take an outside option of positive value.

Suggested Citation

  • JÕzsef SÂkovics & Clara PonsatÎ, 1998. "Rubinstein bargaining with two-sided outside options," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(3), pages 667-672.
    • Handle: RePEc:spr:joecth:v:11:y:1998:i:3:p:667-672
    Note: Received: February 27, 1996; revised version: March 28, 1997
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