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A Noncooperative Theory of Coalitional Bargaining

In: Bargaining in the Shadow of the Market Selected Papers on Bilateral and Multilateral Bargaining

Author

Listed:
  • KALYAN CHATTERJEE

    (Pennsylvania State University, USA)

  • BHASKAR DUTIA

    (Indian Statistical Institute, India)

  • DEBRAJ RAY

    (Boston University and the Indian Statistical Institute, USA)

  • KUNAL SENGUPTA

    (University of California, Riverside, USA)

Abstract

We explore a sequential offers model of n-person coalitional bargaining with transferable utility and with time discounting. Our focus is on the efficiency properties of stationary equilibria of strictly superadditive games, when the discount factor δ is sufficiently large; we do, however, consider examples of other games where subgame perfectness alone is employed.It is shown that delay and the formation of inefficient subcoalitions can occur in equilibrium, the latter for some or all orders of proposer. However, efficient stationary equilibrium payoffs converge to a point in the core, as δ → 1. Strict convexity is a sufficient condition for there to exist an efficient stationary equilibrium payoff vector for sufficiently high δ. This vector converges as δ → 1 to the egalitarian allocation of Dutta and Ray (1989).

Suggested Citation

  • Kalyan Chatterjee & Bhaskar Dutia & Debraj Ray & Kunal Sengupta, 2013. "A Noncooperative Theory of Coalitional Bargaining," World Scientific Book Chapters, in: Bargaining in the Shadow of the Market Selected Papers on Bilateral and Multilateral Bargaining, chapter 5, pages 97-111, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814447577_0005
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    Keywords

    Bilateral Bargaining; Noncooperative Theory of Coalitional Bargaining; Political Negotiations; Multilateral Bargaining; Coalitional Bargaining; Arbitration; Dynamic Model of Negotiation;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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