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A classification of bargaining solutions by evolutionary origin

  • Hwang, Sung-Ha
  • Newton, Jonathan

For games of contracting under perturbed best response dynamics, varying the perturbations along two dimensions (uniform vs. logit, directed vs. undirected) gives four possibilities. Three of these select differing major bargaining solutions as stochastically stable. The fourth possibility yields a new bargaining solution which exhibits significant nonmonotonicities and demonstrates the interplay of two key drivers of evolutionary selection: (i) the ease of making errors; (ii) the ease of responding to errors.

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Paper provided by University of Sydney, School of Economics in its series Working Papers with number 2014-02.

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Date of creation: Jan 2014
Date of revision: Apr 2014
Handle: RePEc:syd:wpaper:2123/9993
Contact details of provider: Postal: Sydney, NSW 2006
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Web page: http://sydney.edu.au/arts/economics
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  1. Binmore, Ken & Samuelson, Larry & Young, Peyton, 2003. "Equilibrium selection in bargaining models," Games and Economic Behavior, Elsevier, vol. 45(2), pages 296-328, November.
  2. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
  3. Newton, Jonathan, 2012. "Recontracting and stochastic stability in cooperative games," Journal of Economic Theory, Elsevier, vol. 147(1), pages 364-381.
  4. Naidu, Suresh & Hwang, Sung-Ha & Bowles, Samuel, 2010. "Evolutionary bargaining with intentional idiosyncratic play," Economics Letters, Elsevier, vol. 109(1), pages 31-33, October.
  5. Kalai, Ehud & Smorodinsky, Meir, 1975. "Other Solutions to Nash's Bargaining Problem," Econometrica, Econometric Society, vol. 43(3), pages 513-18, May.
  6. Blume Lawrence E., 1993. "The Statistical Mechanics of Strategic Interaction," Games and Economic Behavior, Elsevier, vol. 5(3), pages 387-424, July.
  7. Young H. P., 1993. "An Evolutionary Model of Bargaining," Journal of Economic Theory, Elsevier, vol. 59(1), pages 145-168, February.
  8. M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
  9. Alan Beggs, 2003. "Waiting Times and Equilibrium Selection," Economics Series Working Papers 142, University of Oxford, Department of Economics.
  10. van Damme, E.E.C. & Weibull, J., 2002. "Evolution in games with endogenous mistake probabilities," Other publications TiSEM 1c779ce9-9daa-4893-9ddb-e, Tilburg University, School of Economics and Management.
  11. Newton, Jonathan, 2012. "Coalitional stochastic stability," Games and Economic Behavior, Elsevier, vol. 75(2), pages 842-854.
  12. Young, H Peyton, 1998. "Conventional Contracts," Review of Economic Studies, Wiley Blackwell, vol. 65(4), pages 773-92, October.
  13. BERGIN, James & LIPMAN, Bart, 1994. "Evolution with State-Dependent Mutations," CORE Discussion Papers 1994055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. Ken Binmore & Larry Samuelson & Petyon Young, 2003. "Equilibrium Selection in Bargaining Models," Levine's Bibliography 506439000000000466, UCLA Department of Economics.
  15. Marianna Belloc & Samuel Bowles, 2013. "The Persistence of Inferior Cultural-Institutional Conventions," American Economic Review, American Economic Association, vol. 103(3), pages 93-98, May.
  16. Kalai, Ehud, 1977. "Proportional Solutions to Bargaining Situations: Interpersonal Utility Comparisons," Econometrica, Econometric Society, vol. 45(7), pages 1623-30, October.
  17. Agastya, Murali, 1999. "Perturbed Adaptive Dynamics in Coalition Form Games," Journal of Economic Theory, Elsevier, vol. 89(2), pages 207-233, December.
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