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On a class of linear-state differential games with subgame individually rational and time consistent bargaining solutions

Simon Hoof ()
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Simon Hoof: Paderborn University, Germany

The Journal of Mechanism and Institution Design, 2020, vol. 5, issue 1, 79-97

Abstract: We consider n-person pure bargaining games in which the space of feasible payoffs is constructed via a normal form differential game. At the beginning of the game the agents bargain over strategies to be played over an infinite time horizon. An initial cooperative solution (a strategy tuple) is called subgame individually rational (SIR) if it remains individually rational throughout the entire game and time consistent (TC) if renegotiating it at a later time instant yields the original solution. For a class of linear-state differential games we show that any solution which is individually rational at the beginning of the game satisfies SIR and TC if the space of admissible cooperative strategies is restricted to constants. An application drawn from environmental economics illustrates the results.

Keywords: Differential games; bargaining solutions; time consistency. (search for similar items in EconPapers)
JEL-codes: C61 C71 C78 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:jmi:articl:jmi-v5i1a3

DOI: 10.22574/jmid.2020.12.003

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