BARGAINING MODEL WITH SEQUENCES OF DISCOUNT RATES AND BARGAINING COSTS

Agnieszka Rusinowska

International Game Theory Review (IGTR), 2004, vol. 06, issue 02, 265-280

Abstract: The paper is a kind of generalization of Rubinstein bargaining model. Rubinstein assumed that preferences of the players were constant in time, and he analyzed models in which preferences of each player were defined either by constant discount rate or by constant bargaining cost. In this paper, a bargaining model is presented, in which preferences of each player are expressedsimultaneouslybysequenceof discount rates andsequenceof bargaining costs varying in time. The results presented in the paper concern subgame perfect equilibria. There is a theorem concerning sufficient and necessary conditions for the existence of subgame perfect equilibrium of the game. Moreover, some theorems presenting forms of subgame perfect equilibria for various cases of the model analyzed have been proved here. A possibility of delay in reaching an agreement is also considered in the paper. If we analyze a class of strategies, that depend on the former history, a delay can appear for some models. The adequate examples are presented. In the paper, some applications of the bargaining model are also described.

Keywords: Bargaining game; discount rates varying in time; bargaining costs varying in time; subgame perfect equilibrium (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 C7 D5 D7 M2 (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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DOI: 10.1142/S0219198904000198

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