Self-control and bargaining

Shih En Lu

Journal of Economic Theory, 2016, vol. 165, issue C, 390-413

Abstract: This paper examines a bargaining game with alternating proposals where sophisticated quasi-hyperbolic discounters negotiate over an infinite stream of payoffs. In Markov perfect equilibrium, payoffs are almost always unique, and a small advantage in self-control can result in a large advantage in payoff. In subgame-perfect equilibrium, a multiplicity of payoffs and delay can arise, despite the complete information setting. Markov perfect equilibria are the best subgame-perfect equilibria for the agent with more self-control, and the worst for the agent with less self-control. Naïveté can help a player by increasing their reservation value.

Keywords: Self-control; Bargaining; Time inconsistency; Quasi-hyperbolic discounting (search for similar items in EconPapers)
JEL-codes: C78 D90 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:165:y:2016:i:c:p:390-413

DOI: 10.1016/j.jet.2016.05.003

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