Rubinstein bargaining with two-sided outside options

József Sákovics and Clara Ponsati

Economic Theory, 1998, vol. 11, issue 3, 667-672

Abstract: In this note we show that if in the standard Rubinstein model both players are allowed to leave the negotiation after a rejection, in which case they obtain a payoff of zero, then there exist a continuum of subgame-perfect equilibrium outcomes, including some which involve significant delay. We also fully characterize the case in which, upon quitting, the players can take an outside option of positive value.

Date: 1998-05-05
Note: Received: February 27, 1996; revised version: March 28, 1997
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