A continuous-time model of bilateral bargaining

Juan Ortner

Games and Economic Behavior, 2019, vol. 113, issue C, 720-733

Abstract: This paper constructs a continuous-time model of bilateral bargaining to study how fluctuations in bargaining power affect the outcomes of negotiations. The paper deals with the technical complexities that arise when modeling games in continuous time by building strategy restrictions into the equilibrium definition. These restrictions select a unique equilibrium, which is characterized by a system of ordinary differential equations. This unique equilibrium corresponds to the limiting subgame perfect equilibrium of discrete-time bargaining games with frequent offers.

Keywords: Bargaining; Continuous-time games; Time-varying bargaining power (search for similar items in EconPapers)
JEL-codes: C73 C78 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:113:y:2019:i:c:p:720-733

DOI: 10.1016/j.geb.2018.12.001

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