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Time Inconsistency And Learning In Bargaining Games

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  • Zafer Akin

    (Pennsylvania State University)

Abstract

The literature on time-inconsistent preferences introduced naive, partially naive and sophisticated as types of agents that represent different levels of unawareness of agents' self-control problems. This paper incorporates time-inconsistent players in a sequential bargaining model. We first consider 'naive' agents who never learn about their types and show that bargaining between such a player and a standard exponential agent ends in immediate agreement. The more naive a player, the higher his share. If naive agents can learn their type over time, we show that there is a critical date such that there is no agreement before that date. Hence, existence of time-inconsistent players who can learn as they play the game can be another explanation for delays in bargaining.

Suggested Citation

  • Zafer Akin, 2005. "Time Inconsistency And Learning In Bargaining Games," Game Theory and Information 0507003, EconWPA.
  • Handle: RePEc:wpa:wuwpga:0507003
    Note: Type of Document - pdf; pages: 40
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    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. E. S. Phelps & R. A. Pollak, 1968. "On Second-Best National Saving and Game-Equilibrium Growth," Review of Economic Studies, Oxford University Press, vol. 35(2), pages 185-199.
    3. Ted O'Donoghue & Matthew Rabin, 1999. "Incentives for Procrastinators," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 769-816.
    4. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
    5. Dan Lovallo & Colin Camerer, 1999. "Overconfidence and Excess Entry: An Experimental Approach," American Economic Review, American Economic Association, vol. 89(1), pages 306-318, March.
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    Cited by:

    1. Fabian Herweg & Daniel Müller, 2011. "Performance of procrastinators: on the value of deadlines," Theory and Decision, Springer, vol. 70(3), pages 329-366, March.
    2. Jinrui Pan & Craig Webb & Horst Zank, 2013. "Discounting the Subjective Present and Future," The School of Economics Discussion Paper Series 1305, Economics, The University of Manchester.
    3. Claudia Cerrone, 2016. "Doing it when others do: a strategic model of procrastination," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2016_10, Max Planck Institute for Research on Collective Goods.
    4. Akin, Zafer, 2012. "Intertemporal decision making with present biased preferences," Journal of Economic Psychology, Elsevier, vol. 33(1), pages 30-47.
    5. Akin, Zafer, 2009. "Imperfect information processing in sequential bargaining games with present biased preferences," Journal of Economic Psychology, Elsevier, vol. 30(4), pages 642-650, August.
    6. Pan, Jinrui & Webb, Craig S. & Zank, Horst, 2015. "An extension of quasi-hyperbolic discounting to continuous time," Games and Economic Behavior, Elsevier, vol. 89(C), pages 43-55.
    7. Sebastian Schweighofer-Kodritsch, 2015. "Time Preferences and Bargaining," STICERD - Theoretical Economics Paper Series /2015/568, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    8. Joshua S. Gans & Peter Landry, 2016. "Procrastination in Teams," NBER Working Papers 21891, National Bureau of Economic Research, Inc.
    9. Haan, Marco & Hauck, Dominic, 2014. "Games With Possibly Naive Hyperbolic Discounters," MPRA Paper 57960, University Library of Munich, Germany.
    10. Lu, Shih En, 2016. "Self-control and bargaining," Journal of Economic Theory, Elsevier, vol. 165(C), pages 390-413.

    More about this item

    Keywords

    Hyperbolic discounting; learning; bargaining; delay;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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