A Continuous Model of Multilateral Bargaining with Random Arrival Times
This paper proposes a continuous-time model framework of bargaining, which is analytically tractable even in complex situations like coalitional bargaining. The main ingredients of the model are: (i) players get to make offers according to a random arrival process; (ii) there is a deadline that ends negotiations. In the case of n-player group bargaining, there is a unique subgame-perfect Nash equilibrium, and the share of the surplus a player can expect is proportional to her arrival rate. In general coalitional bargaining, existence and uniqueness of Markov perfect equilibrium is established. In convex games, the set of limit payoffs as the deadline gets infinitely far away exactly corresponds to the core. The limit allocation selected from the core is determined by the relative arrival rates. As an application of the model, legislative bargaining with deadline is investigated.
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