Alternating-offer games with final-offer arbitration

Kang Rong

Games and Economic Behavior, 2012, vol. 76, issue 2, 596-610

Abstract: I analyze an alternating-offer model that integrates the common practice of having an arbitrator determine the outcomes if both playersʼ offers are rejected. I assume that the arbitrator uses final-offer arbitration (as in professional baseball). I find that if the arbitrator does not excessively favor one player, then the unique subgame-perfect equilibrium always coincides with the subgame-perfect equilibrium outcome in Rubinsteinʼs infinite-horizon alternating-offer game. However, if the arbitrator sufficiently favors the player making the initial offer, then delay occurs in equilibrium.

Keywords: Alternating-offer game; Final-offer arbitration; Rubinstein equilibrium; Delay in bargaining (search for similar items in EconPapers)
JEL-codes: C78 J52 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:76:y:2012:i:2:p:596-610

DOI: 10.1016/j.geb.2012.07.013

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