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Bargaining with stochastic disagreement payoffs

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  • Taiji Furusawa
  • Quan Wen

Abstract

We study a bargaining model where (i) players’ interim disagreement payoffs are stochastic and (ii) in any period, the proposer may postpone making an offer without losing the right to propose in the following period. This bargaining model has a generically unique perfect equilibrium payoff for each player, and the equilibrium outcome is inefficient in some cases, featuring a stochastically delayed agreement. We show that both the variation of players’ interim disagreement payoffs and the proposer’s ability to postpone making an offer without losing the right to propose are necessary for the existence of such a unique and inefficient perfect equilibrium outcome. Copyright Springer-Verlag Heidelberg 2003

Suggested Citation

  • Taiji Furusawa & Quan Wen, 2003. "Bargaining with stochastic disagreement payoffs," International Journal of Game Theory, Springer;Game Theory Society, vol. 31(4), pages 571-591, September.
    • Handle: RePEc:spr:jogath:v:31:y:2003:i:4:p:571-591
    DOI: 10.1007/s001820300140
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    Cited by:

    1. Houba, Harold & Wen, Quan, 2014. "Backward induction and unacceptable offers," Journal of Mathematical Economics, Elsevier, vol. 54(C), pages 151-156.
    2. Harold Houba, 2005. "Stochastic Orders of Proposing Players in Bargaining," Tinbergen Institute Discussion Papers 05-063/1, Tinbergen Institute.

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