Abstract
This paper investigates whether "tough" bargaining behavior, which gives rise to inefficiency, can be evolutionarily stable. We show that in a two-stage Nash Demand Game such behavior survives. Indeed, almost all the surplus may be wasted. We also study the Ultimatum Game. Here evolutionary selection wipes out all tough behavior, as long as the Proposer does not directly observe the Responder's commitment to rejecting low offers.
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