Limit Solutions for Finite Horizon Bargaining Problems

Haruo Imai and Hannu Salonen
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Haruo Imai: Kyoto Institute of Economic Research, Kyoto University, Kyoto, Japan
Hannu Salonen: Department of Economics and PCRC, University of Turku, 20014 Turku, Finland

No 51, Discussion Papers from Aboa Centre for Economics

Abstract: We investigate a random proposer bargaining game with a dead line. A bounded time interval is divided into bargaining periods of equal length and we study the limit of the subgame perfect equilibrium outcome as the number of bargaining periods goes to infinity while the dead line is kept fixed. This limit is close to the Raiffa solution when the time horizon is very short. If the dead line goes to infinity the limit outcome converges to the time preference Nash solution. The limit outcome is given an axiomatic characterization as well.

Keywords: Nash solution; Raiffa solution; bargaining (search for similar items in EconPapers)
JEL-codes: C71 C72 C78 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth
Date: 2009-06
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