Abstract
Abstract This chapter examines noncooperative bargaining models and links them with cooperative bargaining concepts in accordance with the Nash program. Following a discussion of what matters in real-life bargaining, the case in which commitment is possible is studied using the Nash Demand Game. It is shown that a Nash equilibrium of the smoothed version of the Nash Demand Game implements the Nash bargaining solution. Nash threat games are then considered with an application to collusion in Cournot models. The case in which commitment is impossible is considered. Rubinbstein's bargaining model is introduced using one-stage and two-stage Ultimatum Games to set the scene. Rubinstein's theorem that his model has a unique subgame-perfect equilibrium is proved. The outcome is shown to converge on an asymmetric version of the Nash bargaining solution when the time interval between successive proposals becomes sufficiently small. The chapter ends with a discussion of common mistakes in applying the theory.
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
