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Nash bargaining solution under externalities

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  • Kawamori, Tomohiko
  • Miyakawa, Toshiji

Abstract

We define a Nash bargaining solution (NBS) of partition function games. Based on a partition function game, we define an extensive game, which is a propose–respond sequential bargaining game where the rejecter of a proposal exits from the game with some positive probability. We show that the NBS is supported as the expected payoff profile of any stationary subgame perfect equilibrium (SSPE) of the extensive game such that in any subgame, a coalition of all active players forms immediately. We provide a necessary and sufficient condition for such an SSPE to exist. Moreover, we consider extensions to the cases of nontransferable utilities, time discounting and multiple-coalition formation.

Suggested Citation

  • Kawamori, Tomohiko & Miyakawa, Toshiji, 2016. "Nash bargaining solution under externalities," Mathematical Social Sciences, Elsevier, vol. 84(C), pages 1-7.
    • Handle: RePEc:eee:matsoc:v:84:y:2016:i:c:p:1-7
    DOI: 10.1016/j.mathsocsci.2016.08.001
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    References listed on IDEAS

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    7. Geoffroy de Clippel & Roberto Serrano, 2008. "Marginal Contributions and Externalities in the Value," Econometrica, Econometric Society, vol. 76(6), pages 1413-1436, November.
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    Cited by:

    1. Maria Montero, 2023. "Coalition Formation in Games with Externalities," Dynamic Games and Applications, Springer, vol. 13(2), pages 525-548, June.
    2. Yang, Guangjing & Sun, Hao & Hou, Dongshuang & Xu, Genjiu, 2020. "A noncooperative bargaining game with endogenous protocol and partial breakdown," Mathematical Social Sciences, Elsevier, vol. 105(C), pages 34-40.
    3. Kawamori, Tomohiko & Miyakawa, Toshiji, 2019. "Bargaining delay under partial breakdowns and externalities," Economics Letters, Elsevier, vol. 183(C), pages 1-1.

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