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Delegation Games with Full Commitment

Author

Listed:
  • Paolo Balduzzi

    (Edinburgh School of Economics and Department of Economics, University of Milan-Bicocca)

Abstract

In this paper we present and solve some bargaining games a la Rubinstein, where the subjects can delegate the negotiating process to agents. Delegation is a possible commitment tactic. Its aim is to provide the delegating party with a higher bargaining power. When both the parties delegate, uncertainty arises about the final distribution of the payoffs and multiple equilibria are possible. The seller loses his usual first mover's advantage. When we allow for delegation costs, the range of multiple equilibria shrinks. The final outcome of the game may be now inefficient for the principals and a prisoners' dilemma may arise

Suggested Citation

  • Paolo Balduzzi, 2004. "Delegation Games with Full Commitment," Working Papers 70, University of Milano-Bicocca, Department of Economics, revised Apr 2004.
    • Handle: RePEc:mib:wpaper:70
    as

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    File URL: http://repec.dems.unimib.it/repec/pdf/mibwpaper70.pdf
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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.
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    More about this item

    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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