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A Folk Theorem for Bargaining Games

  • Herings P.J.J.
  • Meshalkin A.
  • Predtetchinski A.


We study strategies with one–period recall in the context of a general class of multilateralbargaining games. A strategy has one–period recall if actions in a particular period are onlyconditioned on information in the previous and the current period. We show that if players aresufficiently patient, given any proposal in the space of possible agreements, there exists asubgame perfect equilibrium such that the given proposal is made and unanimously accepted inperiod zero. Our strategies are pure and have one–period recall, and we do not make use of apublic randomization device. The players’ discount factors are allowed to be heterogeneous.

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Paper provided by Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) in its series Research Memorandum with number 056.

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Date of creation: 2012
Date of revision:
Handle: RePEc:unm:umamet:2012056
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  1. Herings, P. Jean-Jacques & Predtetchinski, Arkadi, 2010. "One-dimensional bargaining with Markov recognition probabilities," Journal of Economic Theory, Elsevier, vol. 145(1), pages 189-215, January.
  2. Binmore, Ken & Osborne, Martin J. & Rubinstein, Ariel, 1992. "Noncooperative models of bargaining," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 7, pages 179-225 Elsevier.
  3. Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-54, May.
  4. Merlo, Antonio & Wilson, Charles A, 1995. "A Stochastic Model of Sequential Bargaining with Complete Information," Econometrica, Econometric Society, vol. 63(2), pages 371-99, March.
  5. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 252, David K. Levine.
  6. V. Bhaskar & George J. Mailath & Stephen Morris, 2009. "A Foundation for Markov Equilibria in Infinite Horizon Perfect Information Games," PIER Working Paper Archive 09-029, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  7. Johannes Hörnerx & Wojciech Olszewski, 2009. "How Robust Is the Folk Theorem?," The Quarterly Journal of Economics, MIT Press, vol. 124(4), pages 1773-1814, November.
  8. Rubinstein, Ariel, 1979. "Equilibrium in supergames with the overtaking criterion," Journal of Economic Theory, Elsevier, vol. 21(1), pages 1-9, August.
  9. Ehud Lehrer & Ady Pauzner, 1999. "Repeated Games with Differential Time Preferences," Econometrica, Econometric Society, vol. 67(2), pages 393-412, March.
  10. Tasos Kalandrakis, 2006. "Regularity of pure strategy equilibrium points in a class of bargaining games," Economic Theory, Springer, vol. 28(2), pages 309-329, 06.
  11. Chatterjee, Kalyan & Bhaskar Dutta & Debraj Ray & Kunal Sengupta, 1993. "A Noncooperative Theory of Coalitional Bargaining," Review of Economic Studies, Wiley Blackwell, vol. 60(2), pages 463-77, April.
  12. Fudenberg, Drew & Yamamoto, Yuichi, 2011. "The folk theorem for irreducible stochastic games with imperfect public monitoring," Journal of Economic Theory, Elsevier, vol. 146(4), pages 1664-1683, July.
  13. Friedman, James W, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Wiley Blackwell, vol. 38(113), pages 1-12, January.
  14. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, June.
  15. Chen, Bo, 2008. "On effective minimax payoffs and unequal discounting," Economics Letters, Elsevier, vol. 100(1), pages 105-107, July.
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