Optimally Stubborn

Anna Sanktjohanser ()
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Anna Sanktjohanser: Cowles Foundation, Yale University

No 2255, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: I consider a bargaining game with two types of players – rational and stubborn. Rational players choose demands at each point in time. Stubborn players are restricted to choose from the set of "insistent" strategies that always make the same demand and never accept anything less. However, their initial choice of demand is unrestricted. I characterize the equilibria of this game. I show that while pooling equilibria exist, fully separating equilibria do not. Relative to the case with exogenous behavioral types, strong behavioral predictions emerge: in the limit, players randomize over at most two demands. However, unlike in a world with exogenous types, there is Folk-theorem-like payoff multiplicity.

Keywords: Reputation; Bargaining; Behavioral types; War of attrition (search for similar items in EconPapers)
Pages: 71 pages
Date: 2020-08
New Economics Papers: this item is included in nep-gth and nep-mic
Note: Includes supplemental material
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