Efficiency and Disagreement in Repeated Infinite Horizon Bargaining Games

James Dearden ()

International Economic Review, 1991, vol. 32, issue 2, 267-77

Abstract: M. Satterthwaite and S. Williams (1987) characterize regular equilibria of the sealed bid k-double auction that, in some cases, are efficient. The sealed bid k-double auction specifies one period of simultaneous offers and requires agents to sometimes disagree at the end of the first period when gains from continued bargaining exist. This paper constructs a theory of disagreement based on reputation in repeated bargaining games. Agents make the offers of a Satterthwaite-Williams regular equilibrium in the first round of a negotiation. Then, if no trade results, the agents terminate the negotiation in spite of possible gains from the option of continued bargaining. Copyright 1991 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1991
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