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Limit Solutions for Finite Horizon Bargaining Problems

Author

Listed:
  • Haruo Imai

    (Kyoto Institute of Economic Research, Kyoto University, Kyoto, Japan)

  • Hannu Salonen

    (Department of Economics and PCRC, University of Turku, 20014 Turku, Finland)

Abstract

We investigate a random proposer bargaining game with a dead line. A bounded time interval is divided into bargaining periods of equal length and we study the limit of the subgame perfect equilibrium outcome as the number of bargaining periods goes to infinity while the dead line is kept fixed. This limit is close to the Raiffa solution when the time horizon is very short. If the dead line goes to infinity the limit outcome converges to the time preference Nash solution. The limit outcome is given an axiomatic characterization as well.

Suggested Citation

  • Haruo Imai & Hannu Salonen, 2009. "Limit Solutions for Finite Horizon Bargaining Problems," Discussion Papers 51, Aboa Centre for Economics.
    • Handle: RePEc:tkk:dpaper:dp51
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Nash solution; Raiffa solution; bargaining;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • 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

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