IDEAS home Printed from https://ideas.repec.org/p/qed/wpaper/1001.html

Mysterious Bargaining

Author

Listed:
  • Dan Usher

    (Department of Economics, Queen's University)

Abstract

Economists do not understand how bargains are struck. A bargain is the sharing of a pie between two or more people who are collectively entitled to the pie but cannot appropriate it until they agree how large each person's slice is to be. We know that people do strike bargains and that civilized life could not proceed otherwise. We do not know how the required agreement is reached. Theorists have solved the bargaining problem, but only by the imposition of strong, artificial and unrealistic constraints. Trusting that the existence of some complex solution has been demonstrated, applied economists are content to postulate a simple one: that bargainers split the difference in actual disputes. This paper begins with examples of imposed bargaining solutions in politics and corporation finance. There follows a critical examination of the principal bargaining theories - based on notions of fairness or of imposed bargaining procedures - with emphasis on the fragility of their assumptions and on their susceptibility to threats and blackmail. The paper closes with a brief discussion of connections among theories of bargaining, rent-seeking and conflict.

Suggested Citation

  • Dan Usher, 2001. "Mysterious Bargaining," Working Paper 1001, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1001
    as

    Download full text from publisher

    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1001.pdf
    File Function: First version 2001
    Download Restriction: no
    ---><---

    Other versions of this item:

    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. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, January.
    3. Hirshleifer, Jack, 1991. "The Technology of Conflict as an Economic Activity," American Economic Review, American Economic Association, vol. 81(2), pages 130-134, May.
    4. Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics.
    5. Jack Hirshleifer, 1989. "Conflict and rent-seeking success functions: Ratio vs. difference models of relative success," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 251-262, Springer.
    6. John Sutton, 1986. "Non-Cooperative Bargaining Theory: An Introduction," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(5), pages 709-724.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sang-Chul Suh & Quan Wen, 2003. "Multi-Agent Bilateral Bargaining with Endogenous Protocol," Vanderbilt University Department of Economics Working Papers 0305, Vanderbilt University Department of Economics.
    2. Suh, Sang-Chul & Wen, Quan, 2006. "Multi-agent bilateral bargaining and the Nash bargaining solution," Journal of Mathematical Economics, Elsevier, vol. 42(1), pages 61-73, February.
    3. Paolo Balduzzi, 2004. "Delegation Games with Full Commitment," Working Papers 70, University of Milano-Bicocca, Department of Economics, revised Apr 2004.
    4. Dan Usher, 2012. "Bargaining unexplained," Public Choice, Springer, vol. 151(1), pages 23-41, April.
    5. Manzini, Paola & Mariotti, Marco, 2005. "Alliances and negotiations," Journal of Economic Theory, Elsevier, vol. 121(1), pages 128-141, March.
    6. Américo Mendes, 2005. "A Game Theoretical Model of Land Contract Choice," Game Theory and Information 0503001, University Library of Munich, Germany.
    7. Jack Hirshleifer & Michele Boldrin & David K Levine, 2009. "The Slippery Slope Of Concession," Economic Inquiry, Western Economic Association International, vol. 47(2), pages 197-205, April.
    8. Ansink, Erik & Weikard, Hans-Peter, 2009. "Contested water rights," European Journal of Political Economy, Elsevier, vol. 25(2), pages 247-260, June.
    9. Rudolf Vetschera & Luis C. Dias, 2024. "Confidence and Outcome Expectations in Bilateral Negotiations–A Dynamic Model," Group Decision and Negotiation, Springer, vol. 33(4), pages 775-803, August.
    10. Alejandro Caparrós & Jean-Christophe Péreau, 2017. "Multilateral versus sequential negotiations over climate change," Oxford Economic Papers, Oxford University Press, vol. 69(2), pages 365-387.
    11. Stergios Skaperdas, 2006. "Bargaining Versus Fighting," Defence and Peace Economics, Taylor & Francis Journals, vol. 17(6), pages 657-676.
    12. Antonio Merlo & Xun Tang, 2010. "Identification and Estimation of Stochastic Bargaining Models, Third Version," PIER Working Paper Archive 11-008, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 11 Mar 2011.
    13. Coles, M & Muthoo, A, 2000. "Bargaining equilibrium in a non-stationary environment," Economics Discussion Papers 4889, University of Essex, Department of Economics.
    14. Smirnov, Vladimir & Wait, Andrew, 2004. "Timing of investments, holdup and total welfare," International Journal of Industrial Organization, Elsevier, vol. 22(3), pages 413-425, March.
    15. Dávila, J. & Eeckhout, J., 2008. "Competitive bargaining equilibrium," Journal of Economic Theory, Elsevier, vol. 139(1), pages 269-294, March.
    16. Mitsutoshi M. Adachi, 1998. "A note on frictions in the Bazaar type bargaining game," Investigaciones Economicas, Fundación SEPI, vol. 22(2), pages 293-304, May.
    17. May, Frank Christian & Münster, Johannes, 2013. "Centralized Bargaining in Press Wholesale," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79984, Verein für Socialpolitik / German Economic Association.
    18. Francesca Flamini, "undated". "Strategic Effects and Incentives in Multi-issue Bargaining Games," Working Papers 2005_5, Business School - Economics, University of Glasgow.
    19. Raghuram Rajan & Henri Servaes & Luigi Zingales, 2000. "The Cost of Diversity: The Diversification Discount and Inefficient Investment," Journal of Finance, American Finance Association, vol. 55(1), pages 35-80, February.
    20. Christopher Tyson, 2010. "Dominance solvability of dynamic bargaining games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(3), pages 457-477, June.

    More about this item

    Keywords

    ;
    ;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qed:wpaper:1001. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Babcock (email available below). General contact details of provider: https://edirc.repec.org/data/qedquca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.