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Bargaining with an Endogenous Deadline

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  • Vannetelbosch, Vincent J.

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES); UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE))

Abstract

We study a sequential bargaining game with a deadline from which the size of the cake decays. Two bargaining procedures are considered: a model with alternating-offers and a model with iterated simultaneous demands. We show that the bargaining game with alternating-offers has a unique SPE outcome, while the game with iterated demands possesses a unique Pareto robust-SPE outcome. Then, we endogenize the choice of the deadline: the bargaining game with alternating-offers is characterized by a deadline effect, whereas the other game is not. That is, once we endogenize the deadline, the occurrence of a deadline effect depends on the bargaining procedure used. But as the bargaining period goes to zero, the unique SPE outcome of the game with alternating-offers approaches the unique Pareto robust-SPE outcome of the game with iterated demands.

Suggested Citation

  • Vannetelbosch, Vincent J., 1996. "Bargaining with an Endogenous Deadline," LIDAM Discussion Papers IRES 1996011, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:1996011
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    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Vincent J. Vannetelbosch & P. Jean-Jacques Herings, 2000. "The equivalence of the Dekel-Fudenberg iterative procedure and weakly perfect rationalizability," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 15(3), pages 677-687.
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    5. Vincent J. Vannetelbosch & P. Jean-Jacques Herings, 1999. "Refinements of rationalizability for normal-form games," International Journal of Game Theory, Springer;Game Theory Society, vol. 28(1), pages 53-68.
    6. Vincent J. Vannetelbosch, 1999. "Rationalizability and equilibrium in N-person sequential bargaining," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 14(2), pages 353-371.
    7. Van Damme, Eric & Selten, Reinhard & Winter, Eyal, 1990. "Alternating bid bargaining with a smallest money unit," Games and Economic Behavior, Elsevier, vol. 2(2), pages 188-201, June.
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    More about this item

    Keywords

    Bargaining; endogenous deadline; alternating-offers; iterated demands;
    All these keywords.

    JEL classification:

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

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