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A Continuous-Time Model of Multilateral Bargaining

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  • Attila Ambrus
  • Shih En Lu

Abstract

We propose a finite-horizon continuous-time framework for coalitional bargaining, in which players can make offers at random discrete times. In our model: (i) expected payoffs in Markov perfect equilibrium (MPE) are unique, generating sharp predictions and facilitating comparative statics; and (ii) MPE are the only subgame perfect Nash equilibria (SPNE) that can be approximated by SPNE of nearby discrete-time bargaining models. We investigate the limit MPE payoffs as the time horizon goes to infinity and players get infinitely patient. In convex games, we establish that the set of these limit payoffs achievable by varying recognition rates is exactly the core of the characteristic function. (JEL C78)

Suggested Citation

  • Attila Ambrus & Shih En Lu, 2015. "A Continuous-Time Model of Multilateral Bargaining," American Economic Journal: Microeconomics, American Economic Association, vol. 7(1), pages 208-249, February.
    • Handle: RePEc:aea:aejmic:v:7:y:2015:i:1:p:208-49
    Note: DOI: 10.1257/mic.20100029
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    References listed on IDEAS

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    Cited by:

    1. Alp Simsek & Muhamet Yildiz, 2016. "Durability, Deadline, and Election Effects in Bargaining," NBER Working Papers 22284, National Bureau of Economic Research, Inc.
    2. , & , & , & ,, 2014. "Asynchronicity and coordination in common and opposing interest games," Theoretical Economics, Econometric Society, vol. 9(2), May.
    3. Marco Guerrazzi, 2021. "Wage bargaining as an optimal control problem: a dynamic version of the efficient bargaining model," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 44(1), pages 359-374, June.
    4. Dong Hao & Qi Shi & Jinyan Su & Bo An, 2021. "Cooperation, Retaliation and Forgiveness in Revision Games," Papers 2112.02271, arXiv.org, revised Oct 2022.
    5. Sofia Moroni, 2015. "Existence of trembling hand equilibrium in revision games with imperfect information," Working Paper 5874, Department of Economics, University of Pittsburgh.
    6. Ambrus, Attila & Greiner, Ben & Pathak, Parag A., 2015. "How individual preferences are aggregated in groups: An experimental study," Journal of Public Economics, Elsevier, vol. 129(C), pages 1-13.
    7. Roy, Nilanjan, 2023. "Fostering collusion through action revision in duopolies," Journal of Economic Theory, Elsevier, vol. 208(C).
    8. Ortner, Juan, 2019. "A continuous-time model of bilateral bargaining," Games and Economic Behavior, Elsevier, vol. 113(C), pages 720-733.
    9. Bram Driesen & Peter Eccles & Nora Wegner, 2017. "A non-cooperative foundation for the continuous Raiffa solution," International Journal of Game Theory, Springer;Game Theory Society, vol. 46(4), pages 1115-1135, November.
    10. Lu, Shih En, 2016. "Self-control and bargaining," Journal of Economic Theory, Elsevier, vol. 165(C), pages 390-413.

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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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