IDEAS home Printed from https://ideas.repec.org/p/van/wpaper/0121.html
   My bibliography  Save this paper

Unique Inneficient Perfect Equilibrium in a Stochastic Model of Bargaining with Complete Information

Author

Listed:
  • Taiji Furusawa

    () (Department of Economics, Boston University)

  • Quan Wen

    () (Department of Economics, Vanderbilt University)

Abstract

We consider a two-player strategic bargaining model with discounting in which (i) the interim disagreement point in each period is stochastically determined at the beginning of the period, and (ii) the proposing player can delay in making an offer. Unlike many other bargaining models of complete information, in which inefficient perfect equilibrium outcomes are caused by the multiplicity of perfect equilibrium outcomes, our model has a unique perfect equilibrium payoff in most of the cases. For some parameter values, the perfect equilibrium is inefficient since it has a stochastically delayed agreement. We show that both (i) and (ii) are also necessary for the unique inefficient equilibrium outcome in our model.

Suggested Citation

  • Taiji Furusawa & Quan Wen, 2001. "Unique Inneficient Perfect Equilibrium in a Stochastic Model of Bargaining with Complete Information," Vanderbilt University Department of Economics Working Papers 0121, Vanderbilt University Department of Economics.
  • Handle: RePEc:van:wpaper:0121
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/VUECON/vu01-w21.pdf
    File Function: First version, 2001
    Download Restriction: no

    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. Jehiel, Philippe & Moldovanu, Benny, 1995. "Negative Externalities May Cause Delay in Negotiation," Econometrica, Econometric Society, vol. 63(6), pages 1321-1335, November.
    3. Riddell, W Craig, 1981. "Bargaining under Uncertainty," American Economic Review, American Economic Association, vol. 71(4), pages 579-590, September.
    4. Busch, Lutz-Alexander & Wen, Quan, 1995. "Perfect Equilibria in Negotiation Model," Econometrica, Econometric Society, vol. 63(3), pages 545-565, May.
    5. Bossert, Walter & Nosal, Ed & Sadanand, Venkatraman, 1996. "Bargaining under Uncertainty and the Monotone Path Solutions," Games and Economic Behavior, Elsevier, vol. 14(2), pages 173-189, June.
    6. Lutz-Alexander Bush & Shouyong Shi & Quan Wen, 1998. "Bargaining with Surplus Destruction," Canadian Journal of Economics, Canadian Economics Association, vol. 31(4), pages 915-932, November.
    7. Fernandez, Raquel & Glazer, Jacob, 1991. "Striking for a Bargain between Two Completely Informed Agents," American Economic Review, American Economic Association, vol. 81(1), pages 240-252, March.
    8. Merlo, Antonio & Wilson, Charles A, 1995. "A Stochastic Model of Sequential Bargaining with Complete Information," Econometrica, Econometric Society, vol. 63(2), pages 371-399, March.
    9. Perry Motty & Reny Philip J., 1993. "A Non-cooperative Bargaining Model with Strategically Timed Offers," Journal of Economic Theory, Elsevier, vol. 59(1), pages 50-77, February.
    10. Chun, Youngsub & Thomson, William, 1990. "Nash solution and uncertain disagreement points," Games and Economic Behavior, Elsevier, vol. 2(3), pages 213-223, September.
    11. Manzini, Paola, 1999. "Strategic bargaining with destructive power," Economics Letters, Elsevier, vol. 65(3), pages 315-322, December.
    12. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-1364, November.
    13. Chatterjee, Kalyan & Samuelson, Larry, 1990. "Perfect Equilibria in Simultaneous-Offers Bargaining," International Journal of Game Theory, Springer;Game Theory Society, vol. 19(3), pages 237-267.
    14. Haller, Hans & Holden, Steinar, 1990. "A letter to the editor on wage bargaining," Journal of Economic Theory, Elsevier, vol. 52(1), pages 232-236, October.
    15. Chun, Youngsub & Thomson, William, 1990. "Bargaining with Uncertain Disagreement Points," Econometrica, Econometric Society, vol. 58(4), pages 951-959, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Negotiation; stochastic interim disagreement point; delay;

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:van:wpaper:0121. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley). General contact details of provider: http://www.vanderbilt.edu/econ/wparchive/index.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.