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A Note on Multi-Issue Bargaining with a Finite Set of Alternatives

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  • Younghwan In

    () (National University of Singapore)

Abstract

We study two bilateral multi-issue bargaining procedures with complete information and endogenous agenda, where each issue is associated with a finite set of alternatives. In both procedures, when bargaining frictions are small, we find a large multiplicity of equilibrium agreements, including ones with arbitrarily long delays. Thus, this paper extends the previous results of van Damme et al. (1990) and Muthoo (1991) for the single-issue case to multi-issue cases. Furthermore, we show that in the first procedure (issue-by-issue bargaining), the stationary subgame perfect equilibria alone may support a large multiplicity of inefficient agreements. Confronting a recent study, this implies that it is not necessary to appeal to “strictly controversial” issues in a bargaining problem in order to find multiplicity and delay in agreements.

Suggested Citation

  • Younghwan In, 2003. "A Note on Multi-Issue Bargaining with a Finite Set of Alternatives," Departmental Working Papers wp0304, National University of Singapore, Department of Economics.
  • Handle: RePEc:nus:nusewp:wp0304
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    File URL: http://www.fas.nus.edu.sg/ecs/pub/wp/wp0304.pdf
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    References listed on IDEAS

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    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics.
    3. Busch, Lutz-Alexander & Wen, Quan, 1995. "Perfect Equilibria in Negotiation Model," Econometrica, Econometric Society, vol. 63(3), pages 545-565, May.
    4. Fernandez, Raquel & Glazer, Jacob, 1991. "Striking for a Bargain between Two Completely Informed Agents," American Economic Review, American Economic Association, vol. 81(1), pages 240-252, March.
    5. Inderst, Roman, 2000. "Multi-issue Bargaining with Endogenous Agenda," Games and Economic Behavior, Elsevier, vol. 30(1), pages 64-82, January.
    6. In, Younghwan & Serrano, Roberto, 2004. "Agenda restrictions in multi-issue bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 53(3), pages 385-399, March.
    7. In, Younghwan & Serrano, Roberto, 2003. "Agenda restrictions in multi-issue bargaining (II): unrestricted agendas," Economics Letters, Elsevier, vol. 79(3), pages 325-331, June.
    8. Avery Christopher & Zemsky Peter B., 1994. "Money Burning and Multiple Equilibria in Bargaining," Games and Economic Behavior, Elsevier, vol. 7(2), pages 154-168, September.
    9. Muthoo, Abhinay, 1991. "A Note on Bargaining over a Finite Number of Feasible Agreements," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 1(3), pages 290-292, July.
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    More about this item

    Keywords

    multi-issue bargaining; finiteness of alternatives; multiple equilibria; inefficiency and delay;

    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
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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