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Alternating Offers in Economic Environments

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  • Harold Houba

    (Faculty of Economics, Vrije Universiteit Amsterdam)

Abstract

This discussion paper resulted in an article in Economics Letters (2007). Vol. 96, pp. 316-324. The Nash bargaining solution of a modified bargaining problem in the contract space yields the pair of stationary subgame perfect equilibrium proposals in the alternating offers model, also for positive time between proposals. As time vanishes, convergence to the Nash bargaining solution is immediate by the Maximum Theorem. Numerical implementation in standard optimization packages is straightforward.

Suggested Citation

  • Harold Houba, 0000. "Alternating Offers in Economic Environments," Tinbergen Institute Discussion Papers 05-064/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20050064
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    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer.
    3. Roemer, John E., 1988. "Axiomatic bargaining theory on economic environments," Journal of Economic Theory, Elsevier, vol. 45(1), pages 1-31, June.
    4. Victor Ginsburgh & Michiel Keyzer, 2002. "The Structure of Applied General Equilibrium Models," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262571579, April.
    5. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-1364, November.
    6. Harold Houba, 2005. "Stochastic Orders of Proposing Players in Bargaining," Tinbergen Institute Discussion Papers 05-063/1, Tinbergen Institute.
    7. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, September.
    8. repec:bla:scandj:v:88:y:1986:i:2:p:383-400 is not listed on IDEAS
    9. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    10. Herrero, Maria Jose, 1989. "The nash program: Non-convex bargaining problems," Journal of Economic Theory, Elsevier, vol. 49(2), pages 266-277, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Hans Kremers & Harold Houba, 2007. "Bargaining for an Efficient and Fair Allocation of Emission Permits to Developing Countries," Energy and Environmental Modeling 2007 24000028, EcoMod.
    2. Houba, Harold & Pham Do, Kim Hang & Zhu, Xueqin, 2012. "Transboundary Water Management: A joint management approach to the Mekong River Basin," 2012 Conference (56th), February 7-10, 2012, Fremantle, Australia 125063, Australian Agricultural and Resource Economics Society.
    3. Houba, Harold & Pham Do, Kim Hang & Zhu, Xueqin, 2011. "Saving the Mekong River Basin," MPRA Paper 37407, University Library of Munich, Germany.
    4. Corong, Erwin & Cororaton, Caesar & Cockburn, John, 2007. "One step forward, two steps back: Economic and poverty impact of trade policy reversals in the Philippines," Conference papers 331603, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Houba, Harold, 2008. "On continuous-time Markov processes in bargaining," Economics Letters, Elsevier, vol. 100(2), pages 280-283, August.

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    More about this item

    Keywords

    Bargaining; Negotiation; Alternating offers; subgame perfect equilibrium; Nash bargaining solution; Maximum Theorem; Applied General Equilibrium;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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