Alternating Offers in Economic Environments

Harold Houba

No 05-064/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This discussion paper resulted in an article in Economics Letters (2007). Vol. 96, pp. 316-324.

The Nash bargaining solution of a modified bargaining problem in the contract space yields the pair of stationary subgame perfect equilibrium proposals in the alternating offers model, also for positive time between proposals. As time vanishes, convergence to the Nash bargaining solution is immediate by the Maximum Theorem. Numerical implementation in standard optimization packages is straightforward.

Keywords: Bargaining; Negotiation; Alternating offers; subgame perfect equilibrium; Nash bargaining solution; Maximum Theorem; Applied General Equilibrium (search for similar items in EconPapers)
JEL-codes: C72 C73 C78 (search for similar items in EconPapers)
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Journal Article: Alternating offers in economic environments (2007)
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