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Asymmetric Bargaining

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    In this paper I explore asymmetric coalitional bargaining. Players are possibly different in preferences and in probability to place threats; the agreements emerge randomly during negotiations. As a result, players negotiate with different degree of enthusiasm. I compute a solution that I call random type value. The random type value is the Shapley value when players have the same ability to place threats, the agreements are equally likely, and, either players have the same (possibly non-linear) preferences, or players like “in the same way” different agreements. In a pure bargaining game the random type value coincides with the Nash bargaining solution when the threat points and the agreements are uniformly distributed. This suggests that the random type value is well suited to model a broad range of bargaining games in a rich way. I provide two applications: the first one, to political games, where players are distinguishable by their “ideological profiles”; the second one, to incomplete contracts, where, ex-ante, a player can integrate with a partner in order to acquire a bargaining advantage over future trading parties.

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    File URL: ftp://ftp.unibocconi.it/pub/RePEc/slp/papers/islawp26.pdf
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    Paper provided by ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy in its series ISLA Working Papers with number 26.

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    Length: 41 pages
    Date of creation: Jan 2007
    Date of revision: Jan 2007
    Handle: RePEc:slp:islawp:islawp26
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    1. Aumann, Robert J., 1973. "Disadvantageous monopolies," Journal of Economic Theory, Elsevier, vol. 6(1), pages 1-11, February.
    2. Ori Haimanko, 2000. "Value theory without symmetry," International Journal of Game Theory, Springer, vol. 29(3), pages 451-468.
    3. Francesco Passarelli & Jason Barr, 2007. "Preferences, the Agenda Setter, and the Distribution of Power in the EU," Social Choice and Welfare, Springer, vol. 28(1), pages 41-60, January.
    4. James M. Snyder Jr. & Michael M. Ting & Stephen Ansolabehere, 2005. "Legislative Bargaining under Weighted Voting," American Economic Review, American Economic Association, vol. 95(4), pages 981-1004, September.
    5. Tasneem Chipty & Christopher M. Snyder, 1999. "The Role Of Firm Size In Bilateral Bargaining: A Study Of The Cable Television Industry," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 326-340, May.
    6. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 661465000000000387, David K. Levine.
    7. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
    8. Stole, Lars A & Zwiebel, Jeffrey, 1996. "Organizational Design and Technology Choice under Intrafirm Bargaining," American Economic Review, American Economic Association, vol. 86(1), pages 195-222, March.
    9. Guesnerie Roger, 1976. "Monopoly, syndicate and shapley value : about some conjectures," CEPREMAP Working Papers (Couverture Orange) 7604, CEPREMAP.
    10. Monderer, Dov, 1988. "Values and Semivalues on Subspaces of Finite Games," International Journal of Game Theory, Springer, vol. 17(4), pages 301-10.
    11. Horn, Henrik & Wolinsky, Asher, 1988. "Worker Substitutability and Patterns of Unionisation," Economic Journal, Royal Economic Society, vol. 98(391), pages 484-97, June.
    12. Patrick Legros, 1987. "Disadvantageous syndicates and stable cartels: the case of the nucleolus," ULB Institutional Repository 2013/7046, ULB -- Universite Libre de Bruxelles.
    13. Ilya Segal, 2003. "Collusion, Exclusion, and Inclusion in Random-Order Bargaining," Review of Economic Studies, Wiley Blackwell, vol. 70(2), pages 439-460, 04.
    14. Robert J. Weber, 1977. "Probabilistic Values for Games," Cowles Foundation Discussion Papers 471R, Cowles Foundation for Research in Economics, Yale University.
    15. Gul, Faruk, 1989. "Bargaining Foundations of Shapley Value," Econometrica, Econometric Society, vol. 57(1), pages 81-95, January.
    16. Gardner, Roy, 1977. "Shapley value and disadvantageous monopolies," Journal of Economic Theory, Elsevier, vol. 16(2), pages 513-517, December.
    17. Sergiu Hart & Andreu Mas-Colell, 1994. "Bargaining and value," Economics Working Papers 114, Department of Economics and Business, Universitat Pompeu Fabra, revised Feb 1995.
    18. Straffin, Philip Jr., 1994. "Power and stability in politics," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 32, pages 1127-1151 Elsevier.
    19. Owen, G & Shapley, L S, 1989. "Optimal Location of Candidates in Ideological Space," International Journal of Game Theory, Springer, vol. 18(3), pages 339-56.
    20. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
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