Noncooperative Foundations of the Area Monotonic Solutions
Given a finite set of alternatives, players alternate making offers. Player one offers some alternative that player two can accept or veto. If player two accepts, it is enforced and the game ends. Otherwise, player two makes a counteroffer among the remaining alternatives and so on. If all alternatives are vetoed, a disagreement alternative is enforced. First, the author characterizes the unique outcome of any subgame perfect equilibrium of this game. Then, the author shows tha t this outcome converges to the area monotonic solution if the alternatives are uniformly distributed over the bargaining set and a s the number of alternatives tends to infinity. Copyright 1993, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Volume (Year): 108 (1993)
Issue (Month): 1 (February)
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