Efficient delays in a stochastic model of bargaining

Antonio Merlo, Charles Wilson

    Research output: Contribution to journalArticle

    Abstract

    We consider a k-player sequential bargaining model in which both the cake size and the identity of the proposer are determined by a stochastic process. For the case where the cake is a simplex (of random size) and the players share a common discount factor, we establish the existence of a unique stationary subgame perfect payoff which is efficient and characterize the conditions under which agreement is delayed. We also investigate how the equilibrium payoffs depend on the order in which the players move and on the correlation between the identity of the proposer and the cake size.

    Original languageEnglish (US)
    Pages (from-to)39-55
    Number of pages17
    JournalEconomic Theory
    Volume11
    Issue number1
    DOIs
    StatePublished - 1998

    ASJC Scopus subject areas

    • Economics and Econometrics

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