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Bargaining and rent seeking: Asymmetric equilibria with two investment levels

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  • Imai, Haruo

Abstract

We consider a Baron–Ferejon-type bargaining model with recognition probabilities determined by a Tullock contest. The contest is conducted once-and-for-all before bargaining a la Yildirim (2010). It is known that for ex-ante symmetric players, there are no symmetric stationary subgame perfect equilibria (SSPE) in pure investment strategies. Here, we show the existence of an asymmetric SSPE, when players are sufficiently patient.

Suggested Citation

  • Imai, Haruo, 2024. "Bargaining and rent seeking: Asymmetric equilibria with two investment levels," Economics Letters, Elsevier, vol. 240(C).
    • Handle: RePEc:eee:ecolet:v:240:y:2024:i:c:s016517652400260x
    DOI: 10.1016/j.econlet.2024.111776
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    References listed on IDEAS

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    1. Baron, David P. & Ferejohn, John A., 1989. "Bargaining in Legislatures," American Political Science Review, Cambridge University Press, vol. 83(4), pages 1181-1206, December.
    2. Yildirim, Huseyin, 2007. "Proposal power and majority rule in multilateral bargaining with costly recognition," Journal of Economic Theory, Elsevier, vol. 136(1), pages 167-196, September.
    3. Hülya Eraslan & Kirill S. Evdokimov, 2019. "Legislative and Multilateral Bargaining," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 443-472, August.
    4. Huseyin Yildirim, 2010. "Distribution of Surplus in Sequential Bargaining with Endogenous Recognition," Working Papers 10-17, Duke University, Department of Economics.
    5. Eraslan, Hülya & McLennan, Andrew, 2013. "Uniqueness of stationary equilibrium payoffs in coalitional bargaining," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2195-2222.
    6. Baron David & Kalai Ehud, 1993. "The Simplest Equilibrium of a Majority-Rule Division Game," Journal of Economic Theory, Elsevier, vol. 61(2), pages 290-301, December.
    7. Eraslan, Hulya & Evdokimov, Kirill S., 2019. "Legislative and Multilateral Bargaining," Working Papers 19-007, Rice University, Department of Economics.
    8. Huseyin Yildirim, 2010. "Distribution of surplus in sequential bargaining with endogenous recognition," Public Choice, Springer, vol. 142(1), pages 41-57, January.
    9. Andrzej Baranski & Ernesto Reuben, 2023. "Competing for Proposal Rights: Theory and Experimental Evidence," Working Papers 20220085, New York University Abu Dhabi, Department of Social Science, revised Mar 2023.
    10. Kalandrakis, Tasos, 2015. "Computation of equilibrium values in the Baron and Ferejohn bargaining model," Games and Economic Behavior, Elsevier, vol. 94(C), pages 29-38.
    11. Haruo Imai & Hannu Salonen (corresponding author), 2012. "Bargaining and Rent Seeking," Discussion Papers 80, Aboa Centre for Economics.
    12. Eraslan, Hulya, 2002. "Uniqueness of Stationary Equilibrium Payoffs in the Baron-Ferejohn Model," Journal of Economic Theory, Elsevier, vol. 103(1), pages 11-30, March.
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    More about this item

    Keywords

    Bargaining; Rent-seeking; SSPE;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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