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Evolutionary Stability in Bargaining with an Asymmetric Breakdown Point

  • Torstensson, Pär

    (Department of Economics, Lund University)

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    We study an asymmetric two-player bargaining game with risk of breakdown and no discounting. We characterize the modified evolutionarily stable strategies (MESS) by modelling strategies as automata. Payoff and complexity considerations are taken in the automata-selection process. We show that a MESS exists in the bargaining game and that agreement is reached immediately. It turns out that in the search for evolutionary foundation, we find support for all partitions that assigns the positive breakdown utility x or more to the player with the higher breakdown utility, given that it exceeds half the surplus.

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    Paper provided by Lund University, Department of Economics in its series Working Papers with number 2005:38.

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    Length: 34 pages
    Date of creation: 15 Jun 2005
    Date of revision:
    Handle: RePEc:hhs:lunewp:2005_038
    Contact details of provider: Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
    Phone: +46 +46 222 0000
    Fax: +46 +46 2224613
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    1. repec:cup:cbooks:9780521576475 is not listed on IDEAS
    2. Kandori, M. & Mailath, G.J., 1991. "Learning, Mutation, And Long Run Equilibria In Games," Papers 71, Princeton, Woodrow Wilson School - John M. Olin Program.
    3. Binmore, K. & Samuelson, L., 1991. "Evolutionary Stability in Repeated games Played by Finite Automata," Papers 90-17, Michigan - Center for Research on Economic & Social Theory.
    4. repec:att:wimass:9603 is not listed on IDEAS
    5. Abreu, Dilip & Rubinstein, Ariel, 1988. "The Structure of Nash Equilibrium in Repeated Games with Finite Automata," Econometrica, Econometric Society, vol. 56(6), pages 1259-81, November.
    6. Young H. P., 1993. "An Evolutionary Model of Bargaining," Journal of Economic Theory, Elsevier, vol. 59(1), pages 145-168, February.
    7. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    8. Banks, Jeffrey S. & Sundaram, Rangarajan K., 1990. "Repeated games, finite automata, and complexity," Games and Economic Behavior, Elsevier, vol. 2(2), pages 97-117, June.
    9. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
    10. Binmore, Kenneth G. & Samuelson, Larry, 1992. "Evolutionary stability in repeated games played by finite automata," Journal of Economic Theory, Elsevier, vol. 57(2), pages 278-305, August.
    11. Kalyan Chatterjee & Hamid Sabourian, 2000. "Multiperson Bargaining and Strategic Complexity," Econometrica, Econometric Society, vol. 68(6), pages 1491-1510, November.
    12. Bolton, Gary E., 1997. "The rationality of splitting equally," Journal of Economic Behavior & Organization, Elsevier, vol. 32(3), pages 365-381, March.
    13. Binmore, K. & Piccione, M. & Samuelson, L., 1996. "Evolutionary Stability in Alternating-Offers Bargaining Games," Working papers 9603r, Wisconsin Madison - Social Systems.
    14. Kalyan Chatterjee & Hamid Sabourian, 2000. "N-Person Bargaining and Strategic Complexity," Econometric Society World Congress 2000 Contributed Papers 0517, Econometric Society.
    15. Binmore, Ken & Piccione, Michele & Samuelson, Larry, 1998. "Evolutionary Stability in Alternating-Offers Bargaining Games," Journal of Economic Theory, Elsevier, vol. 80(2), pages 257-291, June.
    16. Giovanni Ponti & Robert M. Seymour, . "Conventions and Social Mobility in Bargaining Situations," ELSE working papers 034, ESRC Centre on Economics Learning and Social Evolution.
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