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Repeated bargaining

Shiran Rachmilevitch

No WP2017/5, Working Papers from University of Haifa, Department of Economics

Abstract: Two symmetric players bargain over an in nite stream of pies. There is one exogenously given pie in every period, whose size is stochastic, and the pies are iid. Play can be in a tabula rasa mode or dispute mode. When it is in the former, Nature selects a proposer and a responder with equal probabilities, and a proposal is made by the proposer regarding the division of the present pie. If there is agreement then it is implemented and play moves on to the next period, where it is again in tabula rasa. If there is rejection then dispute starts, which means that the players start to bargain over the disputed pie according to Rubinstein's (1982) protocol. As long as the disputed pie is Rubinstein- bargained over, all the new pies that arrive are not available for consumption (they disappear right after they materialize). Once a dispute settles, the game shifts back to tabula rasa. I characterize the game's unique stationary subgame perfect equilibrium

Keywords: Bargaining; Repeated games. (search for similar items in EconPapers)
JEL-codes: D70 D74 (search for similar items in EconPapers)
Pages: 12
New Economics Papers: this item is included in nep-gth and nep-mic
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