A non-cooperative foundation for the continuous Raiffa solution

Bram Driesen (), Peter Eccles and Nora Wegner ()

International Journal of Game Theory, 2017, vol. 46, issue 4, No 11, 1115-1135

Abstract: Abstract This paper provides a non-cooperative foundation for (asymmetric generalizations of) the continuous Raiffa solution. Specifically, we consider a continuous-time variation of the classic Ståhl–Rubinstein bargaining model, in which there is a finite deadline that ends the negotiations, and in which each player’s opportunity to make proposals is governed by a player-specific Poisson process, in that the rejecter of a proposal becomes proposer at the first next arrival of her process. Under the assumption that future payoffs are not discounted, it is shown that the expected payoffs players realize in subgame perfect equilibrium converge to the continuous Raiffa solution outcome as the deadline tends to infinity. The weights reflecting the asymmetries among the players correspond to the Poisson arrival rates of their respective proposal processes.

Keywords: Continuous Raiffa solutions; Non-cooperative foundation (search for similar items in EconPapers)
JEL-codes: C78 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s00182-017-0567-9

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