Riskless versus Risky Bargaining Procedures: the Aumann-Roth Controversy Revisited

Maria Montero () and Akira Okada
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Akira Okada: Kyoto University

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Abstract: In a series of papers, Aumann and Roth discussed a game in which players can cooperate in pairs and two of them prefer to form a coalition with each other. Roth argued that the only rational outcome is that the players who prefer each other form a coalition; Aumann argued that all three coalitions are possible because the players have a problem of expectation coordination. A noncooperative analysis provides additional support for Aumann's arguments and shows that the difference between Aumann's and Roth's views can be traced back to a difference (risky versus riskless) in the bargaining procedure.

Keywords: coalition formation; noncooperative bargaining; random proposers (search for similar items in EconPapers)
JEL-codes: C71 C72 C78 (search for similar items in EconPapers)
Date: 2003-05-23
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpga:0305002

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