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Dominance solvability of dynamic bargaining games

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  • Christopher Tyson

Abstract

We formulate and study a general finite-horizon bargaining game with simultaneous moves and a disagreement outcome that need not be the worst possible result for the agents. Conditions are identified under which the game is dominance solvable in the sense that iterative deletion of weakly dominated strategies selects a unique outcome. Our analysis uses a backward induction procedure to pinpoint the latest moment at which a coalition can be found with both an incentive and the authority to force one of the available alternatives. Iterative dominance then implies that the alternative characterized in this way will be agreed upon at the outset - or, if a suitable coalition is never found, that no agreement will be reached.
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  • Christopher Tyson, 2010. "Dominance solvability of dynamic bargaining games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(3), pages 457-477, June.
    • Handle: RePEc:spr:joecth:v:43:y:2010:i:3:p:457-477
    DOI: 10.1007/s00199-009-0454-0
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    More about this item

    Keywords

    Backward induction; Coalition; Core; Weak dominance; C78; D71; D74;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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