Mediation and the Nash bargaining solution

Charles A. Wilson

    Research output: Contribution to journalArticle

    Abstract

    This paper analyzes a model of bargaining in which two parties use a mediator who sequentially makes random proposals until agreement by both parties is reached. I show that as the cost of delay shrinks to zero, the subgame perfect payoff converges to the asymmetric Nash bargaining solution with weights determined by the relative discount rates of the players. I also establish conditions for the uniqueness of the subgame perfect equilibrium for arbitrary discount rates.

    Original languageEnglish (US)
    Pages (from-to)353-370
    Number of pages18
    JournalReview of Economic Design
    Volume6
    Issue number3-4
    DOIs
    StatePublished - 2001

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)

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