A Continuous-Time Model of Multilateral Bargaining

Attila Ambrus and Shih En Lu

American Economic Journal: Microeconomics, 2015, vol. 7, issue 1, 208-49

Abstract: We propose a finite-horizon continuous-time framework for coalitional bargaining, in which players can make offers at random discrete times. In our model: (i) expected payoffs in Markov perfect equilibrium (MPE) are unique, generating sharp predictions and facilitating comparative statics; and (ii) MPE are the only subgame perfect Nash equilibria (SPNE) that can be approximated by SPNE of nearby discrete-time bargaining models. We investigate the limit MPE payoffs as the time horizon goes to infinity and players get infinitely patient. In convex games, we establish that the set of these limit payoffs achievable by varying recognition rates is exactly the core of the characteristic function. (JEL C78)

JEL-codes: C78 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/mic.20100029
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Related works:
Working Paper: A Continuous Model of Multilateral Bargaining with Random Arrival Times (2008)
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