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A theory of agreements in the shadow of conflict

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Abstract

e present a novel approach to N-person bargaining based on the idea that the agreement reached in a negotiation is determined by how the direct conflict resulting from disagreement would be resolved. Our basic building block is the disagreement function, which maps each set of feasible outcomes into a disagreement point. Adding this function to the description of the bargaining problem, a weak axiom based on individual rationality leads to a unique solution: the agreement in the shadow of conflict, ASC. This agreement must be constructed as a sequence of partial agreements, each of which is reached as a function of the parties' relative power in the disagreement scenario. We also provide non-cooperative implementation.

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  • Joan Esteban & Jozsef Sakovics, 2006. "A theory of agreements in the shadow of conflict," Edinburgh School of Economics Discussion Paper Series 139, Edinburgh School of Economics, University of Edinburgh.
    • Handle: RePEc:edn:esedps:139
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    Cited by:

    1. Erik O. Kimbrough & Roman M. Sheremeta, 2012. "Why Can’t We Be Friends? Entitlements, bargaining, and conflict," Working Papers 12-16, Chapman University, Economic Science Institute.
    2. Pelosse, Yohan, 2009. "Mediated Contests and Strategic Foundations for Contest Success Functions," MPRA Paper 18664, University Library of Munich, Germany.
    3. Garfinkel, Michelle R. & Skaperdas, Stergios, 2007. "Economics of Conflict: An Overview," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 2, chapter 22, pages 649-709, Elsevier.
    4. Erik O. Kimbrough & Roman Sheremeta, 2010. "Make Him an Offer He Can’t Refuse: Avoiding Conflicts through Side Payments," Working Papers 10-23, Chapman University, Economic Science Institute.

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    More about this item

    Keywords

    bargaining; conflict; disagreement;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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