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A Continuous Model of Multilateral Bargaining with Random Arrival Times

Author

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  • Attila Ambrus

    (Department of Economics, Harvard University)

  • Shih En Lu

    (Department of Economics, Harvard University)

Abstract

This paper proposes a continuous-time model framework of bargaining, which is analytically tractable even in complex situations like coalitional bargaining. The main ingredients of the model are: (i) players get to make offers according to a random arrival process; (ii) there is a deadline that ends negotiations. In the case of n-player group bargaining, there is a unique subgame-perfect Nash equilibrium, and the share of the surplus a player can expect is proportional to her arrival rate. In general coalitional bargaining, existence and uniqueness of Markov perfect equilibrium is established. In convex games, the set of limit payoffs as the deadline gets infinitely far away exactly corresponds to the core. The limit allocation selected from the core is determined by the relative arrival rates. As an application of the model, legislative bargaining with deadline is investigated.

Suggested Citation

  • Attila Ambrus & Shih En Lu, 2008. "A Continuous Model of Multilateral Bargaining with Random Arrival Times," Economics Working Papers 0082, Institute for Advanced Study, School of Social Science.
    • Handle: RePEc:ads:wpaper:0082
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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. Dong Hao & Qi Shi & Jinyan Su & Bo An, 2021. "Cooperation, Retaliation and Forgiveness in Revision Games," Papers 2112.02271, arXiv.org, revised Oct 2022.
    4. Sofia Moroni, 2015. "Existence of trembling hand equilibrium in revision games with imperfect information," Working Paper 5874, Department of Economics, University of Pittsburgh.
    5. Roy, Nilanjan, 2023. "Fostering collusion through action revision in duopolies," Journal of Economic Theory, Elsevier, vol. 208(C).
    6. 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.
    7. Ortner, Juan, 2019. "A continuous-time model of bilateral bargaining," Games and Economic Behavior, Elsevier, vol. 113(C), pages 720-733.
    8. 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.
    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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    JEL classification:

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

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