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Self-control and bargaining

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  • Lu, Shih En

Abstract

This paper examines a bargaining game with alternating proposals where sophisticated quasi-hyperbolic discounters negotiate over an infinite stream of payoffs. In Markov perfect equilibrium, payoffs are almost always unique, and a small advantage in self-control can result in a large advantage in payoff. In subgame-perfect equilibrium, a multiplicity of payoffs and delay can arise, despite the complete information setting. Markov perfect equilibria are the best subgame-perfect equilibria for the agent with more self-control, and the worst for the agent with less self-control. Naïveté can help a player by increasing their reservation value.

Suggested Citation

  • Lu, Shih En, 2016. "Self-control and bargaining," Journal of Economic Theory, Elsevier, vol. 165(C), pages 390-413.
    • Handle: RePEc:eee:jetheo:v:165:y:2016:i:c:p:390-413
    DOI: 10.1016/j.jet.2016.05.003
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    References listed on IDEAS

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    Cited by:

    1. Vincent Martinet & Pedro Gajardo & Michel De Lara & Héctor Ramírez Cabrera, 2011. "Bargaining with intertemporal maximin payoffs," EconomiX Working Papers 2011-7, University of Paris Nanterre, EconomiX.
    2. Claudia Cerrone, 2021. "Doing It When Others Do: A Strategic Model Of Procrastination," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 315-328, January.
    3. Gans, Joshua S. & Landry, Peter, 2022. "I’m not sure what to think about them: Confronting naive present bias in a dynamic threshold public goods game," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 195-204.
    4. Manuel A. Utset, 2023. "Time-Inconsistent Bargaining and Cross-Commitments," Games, MDPI, vol. 14(3), pages 1-21, April.
    5. Yixuan Shi, 2022. "Dynamic Volunteer's Dilemma with Procrastinators," Working Papers tax-mpg-rps-2022-17, Max Planck Institute for Tax Law and Public Finance.
    6. Marco A. Haan & Dominic Hauck, 2023. "Games with possibly naive present-biased players," Theory and Decision, Springer, vol. 95(2), pages 173-203, August.
    7. Aramendia, Miguel & Wen, Quan, 2020. "Myopic perception in repeated games," Games and Economic Behavior, Elsevier, vol. 119(C), pages 1-14.
    8. Lu, Shih En, 2016. "Models of limited self-control: Comparison and implications for bargaining," Economics Letters, Elsevier, vol. 145(C), pages 186-191.

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    More about this item

    Keywords

    Self-control; Bargaining; Time inconsistency; Quasi-hyperbolic discounting;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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