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Extreme Equilibria in a General Negotiation Model

Author

Listed:
  • Harold Houba

    (VU University Amsterdam)

  • Quan Wen

    (Vanderbilt University, Nashville)

Abstract

See also 'Extreme equilibria in the negotiation model with different time preferences', Games and Economic Behavior (2011), Vol. 73, pp.507–516. We study a bargaining model with a disagreement game between offers and counteroffers. In order to characterize the set of its subgame perfect equilibrium payoffs, we provide a recursive technique that relies on the Pareto frontier of equilibrium payoffs. When players have different time preferences, reaching an immediate agreement may not be Pareto efficient. The recursive technique developed in this paper generalizes that of Shaked and Sutton (1984) by incorporating the possibility of making unacceptable proposals into the backward induction analysis. Results from this paper extend all the previous findings and resolve some open issues in the current literature.

Suggested Citation

  • Harold Houba & Quan Wen, 2007. "Extreme Equilibria in a General Negotiation Model," Tinbergen Institute Discussion Papers 07-070/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20070070
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bargaining; negotiation; time preference; endogenous threats;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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