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Bargaining Power In The Nash Demand Game An Evolutionary Approach

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  • JUANA SANTAMARIA-GARCIA

    (NERA Economic Consulting, Paseo de la Castellana 13, 28046 Madrid, Spain)

Abstract

A population of buyers and a population of sellers meet repeatedly in order to exchange a good. The price is fixed through a variant of the Nash demand game. This paper analyzes the prices that are robust to experimentation in the sense of stochastic stability. Under some conditions only one price is selected and it gives a share of the surplus to each side of the market that corresponds to the generalized Nash bargaining solution. The bargaining power of each party depends on the division of the unclaimed surplus and the population sizes. The bargaining power of a given population will increase either with a reduction in its fraction of the unclaimed surplus or with a decrease in its own size.

Suggested Citation

  • Juana Santamaria-Garcia, 2009. "Bargaining Power In The Nash Demand Game An Evolutionary Approach," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 11(01), pages 87-97.
    • Handle: RePEc:wsi:igtrxx:v:11:y:2009:i:01:n:s0219198909002200
    DOI: 10.1142/S0219198909002200
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    References listed on IDEAS

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    1. Fudenberg, Drew & Levine, David, 1998. "Learning in games," European Economic Review, Elsevier, vol. 42(3-5), pages 631-639, May.
    2. Kirchsteiger, G. & Niederle, M. & Potters, J.J.M., 2001. "Public Versus Private Exchanges," Other publications TiSEM e3e78ecc-b81b-4fd2-b45f-d, Tilburg University, School of Economics and Management.
    3. Vega-Redondo, Fernando (ed.), 1996. "Evolution, Games, and Economic Behaviour," OUP Catalogue, Oxford University Press, number 9780198774723.
    4. Drew Fudenberg & David K. Levine, 1998. "The Theory of Learning in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061945, April.
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    Cited by:

    1. Sawa, Ryoji, 2021. "A prospect theory Nash bargaining solution and its stochastic stability," Journal of Economic Behavior & Organization, Elsevier, vol. 184(C), pages 692-711.

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    More about this item

    Keywords

    Bargaining; best response; convention; learning; stochastic stability; C63; C78; D83;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • C0 - Mathematical and Quantitative Methods - - General
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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