Using ultimatum power as a leverage in resolving a bargaining conflict

Emin Karagözoğlu () and Kerim Keskin
Additional contact information
Emin Karagözoğlu: Bilkent University
Kerim Keskin: ADA University

International Journal of Game Theory, 2025, vol. 54, issue 2, No 7, 12 pages

Abstract: Abstract We introduce an arbitrator into a well-known bilateral bargaining game (see Nash Econometrica 21:128–140, 1953). This arbitrator (i) (optimally) splits a unit-size pie into two pieces, k and $$1-k$$ , (ii) lets players divide k in a simultaneous-move bargaining game, and then (iii) assigns an ultimatum power to the less greedy player in that game in the division of the remaining portion. Our modeling choices are motivated by gradualism (step-by-step approach), reasonableness (no severe punishment), and promotion of agreeableness (assigning favorable roles to more agreeable parties). We assume that the arbitrator aims to induce a particular division of the pie. We characterize his optimal split of the pie that eventually induces the desired division as the unique equilibrium outcome. Our results highlight a road map to resolve bargaining conflicts while respecting various procedural justice and efficiency concerns.

Keywords: Arbitration; Bargaining; Conflict; Divide-the-dollar game; Equal division; Take-it-or-leave-it offers (search for similar items in EconPapers)
JEL-codes: C72 C78 D63 D74 K40 (search for similar items in EconPapers)
Date: 2025
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s00182-025-00956-0 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jogath:v:54:y:2025:i:2:d:10.1007_s00182-025-00956-0

Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/182/PS2

DOI: 10.1007/s00182-025-00956-0

Access Statistics for this article

International Journal of Game Theory is currently edited by Shmuel Zamir, Vijay Krishna and Bernhard von Stengel

More articles in International Journal of Game Theory from Springer, Game Theory Society
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().